The 87th Texas Legislative Session has brought sweeping changes to the property owners association (POA) industry. Among the changes that will bring the most impact are the way management certificates will have to be prepared and filed with the Texas Real Estate Commission (TREC). What does the statute say needs to go into the management certificates, and how will certificates need to be filed with TREC?
The bill that is bringing in these sweeping changes is Senate Bill 1588. As we have discussed in prior articles, SB 1588 is an omnibus bill with 27 sections effecting POAs. The sections affecting management certificates are Section 9 and Section 10.
Section 9 amends the definition of a “Management Company” under Section 209.002 of the Texas Property Code. A “Management Company” will now be defined as a person or entity established or contracted to provide management or administrative services on behalf of a POA.
Section 10 amends Section 209.004 of the Texas Property Code. The amendments will require management certificates to include declaration amendments, the phone number and email address for the managing agent or representative, website information and the amount and description of fees related to the transfer of property.
Beginning December 1st, POAs will have seven days from the date the association files a management certificate in the county real property records to electronically file the management certificate with TREC. For POAs who file a management certificate before December 1, they must have their management certificate filed with TREC by June 1, 2022.
If the management certificate is not filed with the county or TREC, owners will not be liable for attorney’s fees incurred by the POA relating to the collection of assessments, or interest if fees accrue during the period a management certificate is not recorded.
What Should Be Included in a Management Certificate?
Section 209.004(a) spells out what should be included with the management certificates as follows:
(1) the name of the subdivision;
(2) the name of the association;
(3) the recording data for the subdivision;
(4) the recording data for the declaration and any amendments to the declaration;
(5) the name and mailing address of the association;
(6) the name, [and] mailing address, telephone number, and e-mail address of the person managing the association or the association’s designated representative; [and]
(7) the website address of any Internet website on which the association’s dedicatory instruments are available in accordance with Section 207.006;
(8) the amount and description of a fee or fees charged by the association relating to a property transfer in the subdivision; and
(9) other information the association considers appropriate.
Questions have arisen as to what information should be used to fill out the required elements of the management certificates, if some of the information changes, does the certificate have to be refiled and should associations go ahead and refile their certificates?
As mentioned above, all management certificates will have to be filed with TREC after December 1, 2021, and with the changes to what needs to be included in the management certificates, all associations should refile their management certificates with both the county’s real property records and TREC. While the certificates cannot be filed with TREC until December 1, now is the time to begin making plans and compiling the information that will be included.
Most of the information that is included in the management certificate is straightforward and will not change, but certain sections may have to be updated over time. When any part of the management certificate is updated, this includes new amendments to the association’s declarations, the management certificate will need to be refiled in the county’s real property records and with TREC. To avoid having to refile the management certificate in the situation of a manager changing, the association’s designated representative should be the management company name and the email address used should be a generic email that can be transferred between any employees. In the event the management company changes, the management certificate will have to be refiled with the county’s real property records and TREC.
POAs and management companies should be taking the next few weeks to organize and prepare their procedures on how to file management certificates moving forward. The process for filing with TREC still has unknowns. As more information is released by the state, we will post updates in our Newsletter and on our website. For more information on the changes to management certificates, please watch the webinar I recently co-hosted with Sipra Boyd that dove even deeper into the changes and addressed the changes coming to 209 Hearings.