The fastest growing form of housing in the United States today is “Common Interest Developments,” which include planned unit developments of single-family homes and condominiums. These Common Interest Developments are almost always governed by a “Homeowners Association,” which is a legal entity created by the real estate developer for the purpose of managing the development, maintaining development amenities and commonly-owned improvements, and enforcing development restrictions. In fact, the Community Associations Institute, a national organization for association-governed communities, estimates that as of 2009, there are 305,400 association-governed communities in the United States, which govern more than 24 million homes and 60.1 million residents, an increase of more than 3,000 percent from the same data compiled in 1970.1
Most Homeowners Associations are organized as nonprofit corporations, and are subject to state statutes that govern nonprofit corporations. These nonprofit corporations are always initially controlled by the developer, who usually has exclusive authority to appoint the members of the Homeowners Association’s Board of Directors. In almost all cases, however, there comes a point in time when control of the Homeowners Association transitions from the developer to the homeowners in the community, from which point the members of the Homeowners Association’s Board of Directors are elected from and by the homeowners themselves. According to the Community Associations Institute, almost two million Americans serve as volunteers on Homeowners Associations’ Boards of Directors and hundreds of thousands more participate as members of Homeowners Association committees.2 Often, these volunteer homeowners serving on the Boards of Directors and other various committees are not lawyers or real estate professionals, and for many, it is the first time they have served as a Director of any type of corporation.
As Officers and Directors of a nonprofit corporation, these homeowners are considered fiduciaries and are responsible for carrying out their duties within the formal confines of the Homeowners Association’s governing documents and all applicable laws. These responsibilities can be significant, and their implementation is governed by formal procedures that may be both new and confusing to these homeowners. With the ever-increasing number of laws governing Homeowners Associations, and the litigiousness of our society, most Homeowners Associations have found it necessary to retain legal counsel to keep them abreast of changes in the law, advise them on interpretation of their governing documents, guide them in compliance with requisite procedures and operations of nonprofit corporations, and assist them in collection of assessments and enforcement of restrictive covenants in their communities.
The laws governing Homeowners Associations differ significantly from state to state. Despite the existence of numerous publications on laws generally applicable to Homeowners Associations, there is no publication on the laws applicable to Homeowners Associations in the State of Texas. The purpose of this book is to do just that. It is written specifically for Texas homeowners living in association-governed communities and any individual serving on the Board of Directors or various committees of a Texas Homeowners Association. This book is organized by topic and written in plain English, as opposed to the often-confusing legalese of most statutes and legal case law, and it is intended to serve as a reference handbook to explain the laws applicable to Texas Homeowners Associations and to guide Officers, Directors, and homeowners in their rights, duties, and responsibilities.
This book seeks to accomplish such endeavor by providing a step-by-step explanation of the legal requirements for administration and operation of Texas Homeowners Associations, including Homeowners Associations overseeing Condominium and Subdivision Developments, as well as Homeowners Associations that are incorporated as nonprofit corporations and those that are unincorporated nonprofit associations. This book also seeks to provide answers to the most common questions that arise from time to time in the operation of an Association-Governed Community and contains sets of sample form documents for use by Texas Homeowners Associations. Finally, this book includes a detailed table of contents and a subject index to assist readers in quickly identifying applicable topics by key words or subject matter.
The main commentary on each topic is written in a manner that tries to avoid legalese and unnecessary legal terms, which are often confusing or difficult to decipher, when possible. In such effort, many statutes and case law are summarized or reworded so as to clarify them or make them easier to understand, and in some cases, superfluous or inapplicable provisions have been omitted. Although not intended, it is possible that in trying to explain the applicable laws and concepts in a simpler manner some nuances of these statutes that may be important in certain limited circumstances may be lost in translation. For such reasons, the author has included footnotes with citations to the specific statutes and case law being discussed in each Chapter so that readers may go directly to the source and read the actual statute or case law opinions themselves. A table of authorities is also included in the Appendix that lists all of the statutes and case law opinions cited in this book.
In addition, while the author has gone to great lengths to avoid use of legalese in this book, the use of commonly-used terms of art in the context of Texas Homeowners Association law could not be avoided and are used frequently throughout this book. These commonly-used terms of art have special understood meanings in the context of Texas Homeowners Association law and are often utilized or incorporated into the governing documents of Texas Homeowners Associations. For such reasons, these commonly-used terms of art have been incorporated in this book as well, and are identified by the use of initial capital letters, as in the case of “Homeowners Association,” or all capital letters, as in the case of the abbreviation “HOA.” All such commonly-used terms of art have been included in the Glossary of Terms in the Appendix of this book. If the reader is unfamiliar with the meanings of these terms, he or she is encouraged to review the Glossary of Terms.
Finally, it is the hope of the author that this book will assist homeowners serving in leadership roles within Texas Homeowners Associations in understanding their duties and responsibilities and the regulatory authority that governs their Homeowners Association by simplifying and clarifying the formal and technical elements of association operation under Texas and federal laws and explaining it in plain English so that it does not take an attorney to interpret it. Despite such intentions, many functions of Texas Homeowners Associations will be regulated by each Homeowners Association’s particular governing documents, which can differ significantly from community to community. For such reason, this book is not intended to be a substitute for legal advice from an attorney and should not be relied upon in lieu of seeking legal advice from an attorney familiar with the laws applicable to Texas Homeowners Associations who has reviewed the governing documents applicable to a particular community. Notwithstanding, this book will serve as a useful guidebook and exhaustive reference manual on the laws applicable to Texas Homeowners Associations and enable homeowners to better understand and interpret the governing documents applicable to their community and aid in the administration and operation of the Homeowners Associations in which they serve.
1 See http://www.caionline.org/info/research/Pages/default.aspx. In 1970, there were
only 10,000 association-governed communities in the United States, which governed
over 701,000 homes and 2.1 million residents.
2 See http://www.caionline.org/info/research/Pages/default.aspx.