This article is a summary of certain legislation that was passed in the 88th Texas Legislative Session that affects property owners’ associations and condominium associations. This document does not contain summaries for all legislation that may impact your association. It does include summaries of laws that we believe are most important.
These summaries are not intended to provide legal opinions or substitute for the advice of legal counsel. The information contained herein encompasses proprietary and confidential information of Riddle & Williams, P.C. and shall not be used, disclosed, or reproduced, in whole or in part, for any purpose, and the information contained herein shall not be furnished to others without the prior written consent of Riddle & Williams, P.C.
COLLECTION NOTICES FOR POAs
House Bill 886
Applies only to POAs: Does not apply to condominiums
Effective 9/1/23
This bill amends Section 209.0094 of Chapter 209 of the Texas Property Code, specifically by adding Subsections (c) through (g) thereto.
Subsection (c) provides that, before the association can file a lien against an owner’s property, the association must first send two notices of delinquency.
Subsection (d) addresses the first notice. This first notice must be provided either by first class mail or by email. Subsection (d) does not otherwise include any requirements for this notice. The notice presumably must inform the owner of the delinquency. Since the second notice cannot be sent until 30 days after this first notice, the first notice may also give the owner 30 days to cure the delinquency.
Subsection (e) addresses the second notice. This second notice must be sent by certified mail, return receipt requested, and as noted above, cannot be sent earlier than the 30th day after the first notice. Subsection (e) also does not include any requirements for this second notice. As we will discuss below, we believe this notice can be combined with the notice required by Section 209.0064 of the Texas Property Code in order to expedite the collections process.
Subsection (f) prohibits an association from filing an assessment lien before the 90th day after the date the second notice under Subsection (e) was sent.
Subsection (g) provides that the two notices referenced in Subsections (c), (d), and (e) do not apply to an association who is providing an owner with the protections afforded by the Servicemembers Civil Relief Act.
To summarize the timeline in Section 209.0094, the association must send the first notice, then must wait 30 days from the date the first notice was sent to send the second notice, then must wait 90 days from the date the second notice was sent to file a lien.
Section 209.0064 of the Texas Property Code governs third-party collections. It provides that an association cannot hold an owner liable for attorney’s fees unless the association first sends the owner a notice by certified mail that:
- Specifies each delinquent amount and the total payment required to bring the account current;
- Describes options to avoid having the account turned over to a collections agent (attorney), including information regarding the availability of a payment plan; and
- Provides a period of at least 45 days for the owner to cure before further collection action is taken.
In order to maximize the efficiency of this process, we believe associations can follow the below timeline for collections, up to and including the lien stage:
| COLLECTIONS STAGE | TIME PERIOD | TOTAL LAPSED TIME |
| First notice | 30 days to cure delinquency | 30 days |
| Second notice/ 209.0064 notice | 45 days to cure | 75 days |
| Referral to legal counsel | Satisfied | Satisfied |
| Fair debt notice from legal counsel | 35 days to cure | 110 days (*being also 80 days from the date the second notice was sent) |
| Ordering title report | Roughly 10 days to obtain | Approximately 120 days (*being also 90 days from the date the second notice was sent) |
Following the above timetable for milestones should allow associations to move as quickly as possible through the collections process prior to filing the assessment lien.
Next steps: If your association has adopted a collections policy, the policy likely must be amended to account for this new process. These changes must be implemented on or before September 1, 2023, so these changes should be implemented with speed.
ENFORCEMENT POLICIES FOR POAs
House Bill 614
Applies only to POAs: Does not apply to condominiums
Effective 1/1/24
This bill adds a new Section 209.0061 to Chapter 209 of the Texas Property Code.
Subsection (a) thereto provides that it does not apply to associations where the governing documents do not authorize fining. As such, this statute cannot be used as independent authority for an association to fine if the governing documents do not authorize fines as an enforcement method.
Subsection (b) requires that associations adopt an enforcement policy. The policy must include the following:
- General categories of restrictions for which the Association may impose fines;
- A schedule of fines for each category; and
- Information regarding the owner’s right to request a hearing pursuant to Section 209.007 of the Texas Property Code.
Subsection (c) provides that the schedule of fines may still give the Board the right to vary from this schedule on a case-by-case basis.
Associations that have the authority to fine will need to prepare and record new/revised enforcement policies that satisfy this bill’s requirements. Associations may want to consider outlining several categories of violations but also include a “general” category that captures all violations not expressly listed in the policy.
Subsection (d) requires that the association provide a copy of this enforcement policy to each owner. This policy must be furnished by either (1) posting the policy on the association’s website that is accessible to the owners, or (2) sending a copy annually to each owner by either hand delivery, first class mail, or email. Additionally, the policy must be available on any website maintained by the association or its agent that is accessible to the public.
Note, there are two separate provisions addressing posting the policy on a website. The first is the optional notice method of posting the policy on a website that owners can access. This would include websites where owners must log in to obtain access. The second is the requirement that, if the association maintains a public website, the policy must also be posted on the public website.
Finally, please note that associations with the right to fine must either adopt an enforcement policy or update their current enforcement policy to comply with these requirements on or before January 1, 2024.
Next steps: If your association has the right to fine, the association should ensure that it has either adopted a new enforcement policy or amended the current enforcement policy on or before January 1, 2024, to include categories of violations and a schedule of fines for each category, as well as a reference to the owner’s right to a hearing.
BAN ON DISCRIMINATION BASED UPON PAYMENT METHOD
House Bill 1193
Applies to both POAs and condominium associations
Effective 9/1/23
This bill adds a new Section 202.024 to Chapter 202 of the Texas Property Code.
Subsection (a) thereto defines “method of payment” to include payment made through housing choice vouchers and other rental assistance and subsidies from governmental or nongovernmental organizations, including Section 8 housing choice vouchers.
Subsection (b) prohibits the adoption or enforcement by an association of a prohibition or restriction on rentals based upon the tenant’s method of payment. In other words, associations can no longer adopt restrictions that would prohibit an owner from leasing to Section 8 tenants.
Next steps: If your association has restrictions on Section 8 tenants, the association should immediately cease any and all enforcement of that restriction.
GOVERNOR ABBOTT VETOES SB 1668/HOUSE BILL 3503
As you know, before the session began, representatives of Texas Community Association Advocates (TCAA) met with Representative Turner and representatives from the Texas REALTORS to address some of the unintended consequences created by the 87th Legislature’s SB 1588. There were 2 main problems. One was with front yard fencing and the other was the prohibition of board members serving on architectural review committees. While this bill passed both the Senate and House, unfortunately it became a casualty of the property tax dispute between Governor Abbott and the Senate. SB 1668 was vetoed by Governor Abbott on June 18, 2023.
Senate Bill 1668/House Bill 3503 was an omnibus bill that corrected a number of the issues created by the legislation passed in 2021. For “security” fencing, it would have allowed some regulations on perimeter fencing, including fences in easement areas. It also would have imposed some requirements for condominiums that are currently applicable to POAs such as posting the governing documents on a website, imposing a cap on resale certificate fees, and mirroring the management certificate requirements for POAs. For architectural committees, the bill would have allowed directors to serve on the committee if there were no other volunteers but did require that the association solicit candidates to serve on the committee.
Senate Bill 1668 will not become law unless passed in a future special session or the next regular session of the legislature. This veto means:
- no front yard fencing “fix”,
- no ACC member also serving on the board “fix”,
- condominiums will not need to file new management certificates,
- condominium resale certificate fees are not capped,
- condominiums do not have to have a website with all dedicatory instruments on it,
- ballots cast in condominium votes are not afforded the same protections as those for POAs including the prohibition on candidates tabulating votes and the prohibition on disclosure of how an owner voted; and
- condominium owners do not have the right by statute to hold meetings of the owners by electronic and telephonic means.
OTHER BILLS OF INTEREST THAT PASSED
1. House Bill 1558 – Authorizing voluntary associations to amend/extend their deed restrictions – Signed by Governor 06/12/23 – Effective immediately
This bill does not apply to condominiums or POAs with mandatory membership. This bill provides a mechanism for pre-1947 subdivision plat communities without mandatory association membership (i.e. voluntary associations) to amend or extend their deed restrictions. This bill will only impact communities subject to deed restrictions that have no mandatory membership and no procedure to extend or amend the restrictions.
2. House Bill 2022 – Residential Construction Liability – Signed by the Governor 06/09/23 – Effective on 09/01/23
While this bill is not targeted specifically at condos or HOAs, it will affect most all communities that experience problems with new construction or remodeling/reconstruction projects. The bill changes the definition of a construction defect to those issues where the defect causes: actual physical damage, actual failure of a building component to perform its intended purpose, or a verifiable danger to the safety of residents. It narrows the standards for breach of habitability claims to those where the defect was latent (hidden) and renders the residence uninhabitable. It provides for arbitration to toll any statute of limitations. And it provides that none of these provisions can be waived by agreement of the parties.
3. House Bill 2024 – 6 Year Limitations If Contractor Provides Written Warranty – Signed by the Governor 06/09/23 – Effective immediately
This bill reduces the limitation period to file suit for construction defects involving single family homes from 10 years to 6 years from the date of substantial completion if the contractor provided a written warranty for a minimum period of: 1 year for workmanship and materials; 2 years for plumbing, electrical, and HVAC systems; and 6 years for major structural components.