The bill that had become the focus for Property Owners Associations (“POAs”) during the 87th Texas Legislative Session, Senate Bill 1588, has now passed both the House and the Senate, but not before multiple last-minute amendments were made (many of which were already separately debated bills). Now POAs are left wondering…What will be the effect of SB 1588 should the Governor sign the bill? Below is a summary of the enrolled version of the bill highlighting the key provisions that may soon become law. Please also note that different sections of this bill will become effective at different times. Please view Part I of our 87th Texas Legislative Session Recap for a more in depth analysis of this and other bills that have passed the House and Senate.
Section 1 – Collection of Assessments:
This provision would amend Section 202.006 of the Property Code by adding Subsection (c) stating that a POA may not collect a regular assessment (as defined by Section 209.002 of the Texas Property Code) if the dedicatory instrument authorizing the collection of the regular assessment is not filed the real property records.
Section 2 – Religious Displays:
This provision would amend Section 202.018(a) of the Texas Property Code relating to the display of religious items. The amendment states that a POA may not adopt or enforce a provision in a dedicatory instrument (including a restrictive covenant) that would prohibit an owner from displaying or affixing on the owner’s “property” or “dwelling” (current law limits to entryway of home) one or more religious items. The provision would permit a POA to regulate: 1) a religious item that threatens the public health or safety; 2) violates a law (other than prohibition of the display of religious free speech); 3) contains graphics or language that is patently offensive to a passerby (for reasons other than its religious content) and 4) is installed on common area property or association property, violates building lines, easements, or setbacks, or is attached to a traffic control device, lamp, fire hydrant or utility pole.
Section 3 – Swimming Pool Fences
This provision would add Section 202.022 to the Texas Property Code to prohibit POAs from adopting or enforcing a provision in a governing document that prohibits or restricts an owner from installing a swimming pool enclosure that conforms to applicable state or local safety requirements. A POA may enforce a provision in a dedicatory instrument related to the appearance of the enclosure, including regulation of colors, provided such regulation does not prohibit a black swimming pool enclosure that consists of transparent mesh set in metal frames.
Section 4 – Security Measures
This provision would add Section 202.023 to the Texas Property Code to prohibit a POA from adopting or enforcing a restrictive covenant that prevents an owner from building or installing security measures (including security cameras, motion detectors and perimeter fencing). A POA is not prohibited from banning the installation of a security camera in a place other than an owner’s private property or regulating the type of fencing that an owner may install. This provision would not apply to a condominium or master mixed use POA in Texas.
Section 6 – Resale Certificates
This provision would amend Section 207.003(c) of the Texas Property Code to cap resale certificate fees at $375.00 and updated resale certificate fees at $75.00. The deadline to deliver a resale certificate after the second request was delivered by an owner under Section 207.004(b) would be changed from seven days to five days. An owner would be permitted to seek a judgment against the POA for not more than $5,000 for failure to deliver such information in a timely manner (currently, amount is $500).
Section 8 – Online Subdivision Information
This provision would amend Section 207.006 of the Texas Property Code to require POAs to make current versions of the POA’s dedicatory instruments available on an internet website maintained by the POA or management company on behalf of a POA and available to POA members. This section only applies to POAs composed of at least 60 lots or a POA that has contracted with a management company.
Section 9 – Management Company Definition
This provision would amend the definition of “Management Company” under Section 209.002 of the Texas Property as follows: “Management company” means a person or entity established or contracted to provide management or administrative services on behalf of a property owners’ association.”
Section 10 – TREC Filings
This provision amends Section 209.004 of the Texas Property Code and requires management certificates to include declaration amendments, the phone number and email address for the managing agent or representative, website information and amount and description of transfer fees. Not later than the seventh day after the date a POA files a management certificate or amended management certificate, the POA must electronically file the management certificate with the Texas Real Estate Commission (“TREC”). Owners will not be liable for attorney’s fees incurred by a POA relating to collection of assessments or interest if such fees accrue during the period a management certificate is not recorded with a county clerk or electronically filed with TREC.
Section 11 – ACC Members
This provision would prohibit a person from serving on an architectural review committee (“ACC”) if the person is: 1) a current board member; 2) a current board member’s spouse; or 3) a person residing in a current board member’s household. An owner is permitted to appeal a decision by the ACC to the board. Notice of denial must be provided to the owner meeting the requirements therein and the board must hold the hearing within 30 days after the date the board receives the owner’s request for a hearing. A notice must be sent to the owner providing the date, time and place of the hearing not later than 10 days before the date of the hearing (only one hearing is required). During the hearing, the board (or designated representative) and the owner are provided an opportunity to discuss, verify facts and resolve the denial by the ACC. Both the board and owner are permitted to postpone for a period of not more than 10 days. Audio recording is permitted by both parties.
Section 12 – Board Meetings
This provision would amend Section 209.0051 of the Texas Property Code to provide a board meeting notice requirement of at least 144 hours before the start of a regular board meeting (current statute provides for 72 hours) and at least 72 hours before the start of a special board meeting.
Section 13 – Contract for Services
This language would amend Section 209.0052 of the Texas Property Code to require a POA to solicit bids or proposals using a bid process established by the POA if it chooses to contract for services that will cost more than $50,000.
Section 14 – 209 Enforcement Action Notice
This provision would amend Section 209.006(a) of the Texas Property Code to require POAs to send the requisite enforcement action “209” notice under Section 209.006(a) of the Texas Property Code to an owner prior to reporting a delinquency to a credit reporting service.
Section 16 – 209 Assessment Delinquency Notice
This language would require a POA to give an owner 45 days (current law is 30 days) to cure a delinquency before further collection action is taken (including turning an account over to a collection agent).
Section 17 – Credit Reporting Services
This section prohibits a POA or collection agent from reporting fines, fees, or assessments to a credit reporting service if the charges are disputed. The fees, fines, or assessments may be reported only if: 1) 30 days prior to reporting the POA sends a notice of all delinquent charges to the owner; and 2) the owner has had an offer of a payment plan. A POA may not charge a fee to an owner for the reporting of the delinquent payment history of assessments, fines, and fees to a credit reporting service.
Section 18 – 209 Hearings
This section would amend Section 209.007 of the Texas Property Code related to 209 hearings requested by owners. Specifically, it provides that, not later than 10 days prior to the hearing, the POA must deliver a packet to the owner containing its evidence it will introduce at the hearing (photos, documents, communications, etc.). If the evidence is not provided, an owner is automatically entitled to a 15-day postponement. During the hearing, the board must present its case first, and then the owner is entitled to present his/her case.
Section 20 – Lease Information
This provision would amend Section 209.016 of the Texas Property Code to provide that a POA may request the following information regarding a lease or rental applicant: 1) contact information, including the name, mailing address, phone number, and e-mail address of each person who will reside at a property in the subdivision under a lease; and 2) the commencement date and term of the lease.
Section 21 – JP Court Jurisdiction
This section would add Section 209.017 to the Texas Property Code to permit owners to bring an action for a violation of Chapter 209 of the Texas Property Code against a POA in the justice court of a precinct in which all or part of the subdivision is located.
Section 22 – Repeal of Current Laws
Repeal of Sections 202.018(c) and (d) of the Texas Property Code. These provisions are below:
(c) Except as otherwise provided by this section, this section does not authorize an owner or resident to use a material or color for an entry door or door frame of the owner’s or resident’s dwelling or make an alteration to the entry door or door frame that is not authorized by the restrictive covenants governing the dwelling.
(d) A property owners’ association may remove an item displayed in violation of a restrictive covenant permitted by this section.
Repeal of Section 209.007(b) of the Texas Property Code. This provision is below:
(b) If a hearing is to be held before a committee, the notice prescribed by Section 209.006 must state that the owner has the right to appeal the committee’s decision to the board by written notice to the board.
Repeal of 209.016(a) and (c) of the Texas Property Code. These provisions are below:
(a) In this section, “sensitive personal information” means an individual’s:
(1) social security number;
(2) driver’s license number;
(3) government-issued identification number; or
(4) account, credit card, or debit card number.
(c) If a copy of the lease or rental agreement is required by the property owners’ association, any sensitive personal information may be redacted or otherwise made unreadable or indecipherable.