By Sipra Boyd and Eric Tonsul
As a result of the 87th Texas Legislative Session, property owners associations (POA) should be considering consulting with their attorneys about ways to address the impact of the new laws on their governing documents and the potential need to modify existing, or adopt new, policies. This begs the question, what is a policy and how can it be used to assist in the governance of the POA with the other governing documents?
What is a POA Policy?
A policy is a dedicatory instrument that governs the establishment, maintenance and operation of a POA. Policies are adopted by the POA’s board of directors (board) and should be used to either clarify provisions or provide supplemental information, which may be absent in existing governing documents. Policies may take the form of rules and regulations, guidelines, and/or resolutions. A policy is generally a more topic-focused document, used to address specific areas of the POA, i.e., collections, parking, etc.
The Differences Between Policies, Bylaws and Restrictions
While reading this, some of you may be thinking isn’t a policy redundant because the POA already has restrictions or other statutory authority? While policies may provide some redundancy, as mentioned above, policies are helpful in filling gaps and/or providing more clarity of provisions in existing documents. The authority to adopt a policy may stem from the governing documents or state law.
For example, the POA’s restrictions may state that parking on the street is only allowed in certain sections of the association and for a “temporary period.” Assuming the POA has the authority to adopt a policy (and/or rules and regulations), a policy could help outline the specific sections where parking on the street is allowed, define the term “temporary period,” explain how violations are enforced, and other details to help clarify the provision in the restrictions. Additionally, if specifically authorized by statute, as required in Sec. 209.005 and Sec. 82.114 of the Texas Property Code, POAs may be required to adopt policies to comply with state law. For example, a POA’s Open Records Policy provides details on the procedures for inspecting/copying the books and records, associated fees and other relevant information. Policies, such as these, assist residents with understanding their rights and obligations related to various aspects of community association living.
Policies may also differ from other controlling documents because of the feasibility of the board to address issues in the community that may not have previously existed or contemplated by aging restrictions. Policies typically require approval by a majority vote of a quorum of the directors on the board. Amending the restrictions to address new issues or clarify language in the restrictions requires at least a majority (or higher percentage) vote of the owners. Obtaining a majority (or higher percentage) vote of the owners can be very difficult and prevents a POA from addressing issues that may negatively impact property values without the ease and flexibility of adopting policies.
Why are policies important?
Policies are important to POAs because they assist in the enforcement of restrictions and protection of property values. If the POA has authority, Boards should consider adopting policies for the betterment of the community. Policies should be clear in their intent, not contradict the restrictions, and leave no room for guesswork on where the POA stands on the issue the policy addresses.
With the 2021 Legislative Session bringing several changes that take effect on September 1st, POAs should consider adopting policies to maintain compliance with the law. POAs may need to amend existing policies or implement new policies that address the various issues modified by statute.
Boards should contact the POA’s legal counsel with any questions regarding the POA’s authority to address these legislative changes.