Put together the letters P, O, and A and you will have created an acronym with negative connotations for many people across the United States. As a result, state legislatures in many states are increasing regulations against an industry designed to be self-regulated by its members to protect property values. Moving into the Lone Star State, over the last several legislative sessions, the legislature has been actively involved in attempts to increase legislation. Fortunately, the Texas POA industry has responded in various ways to ensure it is abiding by the new laws and its concerns are heard and addressed by legislators.
Policies
The increasing interest in the regulation of POAs by the Texas Legislature has led to several laws, including SB 1588 from 2021, that required POAs to drastically change the way certain regulations are enforced or adopt new ways of enforcing new regulations in order to maintain compliance with state law. The way POAs have chosen to approach this has been in the form of policies. Policies give POAs the ability to provide guidelines and a framework for homeowners on what is allowed within the POA and overcome the likelihood of not reaching the threshold of voting homeowners needed to approve a change to the deed restrictions. They should be drafted by POA attorneys that are best suited to interpret these new laws. This is because most policies get drafted to not only state the law but to also clarify any ambiguity that has cropped up in the new laws and give homeowners the necessary details to ensure compliance. But the increasing need for policies due to legislative action comes with side effects.
Since 2021, some POAs have been forced to adopt as many as 10 different policies to address changes in Texas law. This further inflates the governing documents for many POAs and can add to confusion for homeowners and board members on how the documents apply within the structure of the POA’s governing documents. This is ultimately having a negative affect for POAs and homeowners.
Volunteer Issues
SB 1588 also brought a major change to the way ACC committees are composed. Since Sec. 209.00505 of the Texas Property Code was added, a POA of more than 40 lots and outside of declarant control has been unable to have 1) a current board member; 2) a current board member’s spouse; or 3) a person residing in a current board member’s household serve on the ACC. Why does this matter? Many times, volunteerism in POAs is low. It is often hard enough for POAs to find volunteers to fill the required number of board positions, so further restrictions on who can serve on what committee are making it impossible for many communities to fulfill the needs of the community using homeowner volunteers. As a result, communities serviced by a management company may have to turn to the management company to fill the role of the ACC. This is causing management fees to go up, which results in an increase of the annual assessment for the homeowner.
TLAC
The POA industry facing a more active legislature is not all negative. The increasingly active legislature has caused the industry across Texas to come together as a whole to ensure the voice and perspectives of the industry are heard. As we discussed last month, this has been done through the efforts of the Texas CAI chapters to form the Texas Legislative Action Committee (TLAC). Thus far, the effort of TLAC has been a success. So much so, that TLAC was awarded the 2024 LAC of the year by CAI National. If not for a veto from Texas Governor Abbott, changes would have been made to the requirements of ACC members and on other laws passed by the Texas Legislature that contained ambiguity in their requirements. TLAC looks to continue their efforts in the 2025 Texas Legislative Session to ensure the concerns of the POA industry are heard, and the bills that are enacted into law are beneficial for all Texans.
What’s Next?
If history is an indicator, the 2025 Texas Legislative Session will be active as far as the POA industry is concerned. This article covered only a couple of examples of how the POA industry has been forced to respond to the increasingly active legislature. The last several sessions have seen the legislature address fines, association websites, security measures and changes to the Texas Uniform Condominium Act amongst other things. While many of these bills have helped bring clarity for both the POA industry and homeowners, some have created increased controversy and confusion that has ultimately proved negative for the industry and homeowners. These controversial bills have ultimately resulted in an increase in regulation and assessments for the homeowners.
For a full breakdown on the effects from recent legislative action, please join RMWBH and Clint Brown for a webinar on June 18 at 11:30 a.m. Clint will further discuss how the POA industry has responded and the ramifications these actions have brought not just the industry, but homeowners as well.
