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Thursday, August 29, 2013

How Do Texas Homeowners Associations Work?



Many homes in Texas are located in subdivisions that are governed or managed by a homeowners association, or property owners association, as they are referred to in the state statutes. A property owners’ association is a designated representative of the owners of property in a subdivision (Tex. Prop. Code §204.004). The association must be a non-profit, but many are surprised to learn that no Texas state agency regulates home or property owners’ associations. Yet, disputes between homeowners and their associations are all too common. Here are some basics of how a property owner’s association in Texas functions when it comes to disputes, as outlined in the Texas Property Code.

The association has the power to: (1) adopt and amend bylaws; (2)adopt and amend budgets; (3) hire managing agents and employees; (4) regulate use, maintenance, repair, replacement, and appearance of the subdivision; (5) institute, defend, settle, or compromise litigation or administrative proceedings on matters affecting the subdivision; (6) impose and receive payments and fees for services (§204.010(a)).

Before any enforcement action takes place (suspend right to common areas; file a suit against an owner; charge owner for property damage; or levying fine for violation of restrictions, bylaws, or rules), the association must give written notice to the owner by certified mail, return receipt requested. This notice must describe the basis for the action, and inform the owner of right to cure and her right to request a hearing. (§209.006). 

For disputes that cannot be resolved through hearing or other alternative dispute resolution, the dispute can then go to court. The county attorney is authorized to sue an association as well, to enjoin or abate violations of a restriction contained or incorporated by reference in a real property subdivision. (§203.003). A court may assess civil damages for the violation of a restrictive covenant in an amount not to exceed $200 for each day of the violation.

Note that an exercise of discretionary authority by a property owners’ association concerning a restrictive covenant is presumed reasonable, and will be strictly construed. Only if the court determines by a preponderance of the evidence that the exercise of discretionary authority was “arbitrary, capricious, or discriminatory,” will the covenant not be presumed reasonable (§202.004(a)).

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