Bylaws: Are They Required for Your HOA?
Broadly speaking, there are two main documents (although there may be others) that govern your HOA—the Declaration and the Bylaws. The Declaration by and large places restrictions on the use of the land governed by the HOA, while the Bylaws generally lay out rules and guidelines for the HOA to enforce those restrictions. The Declaration is the most binding of these documents—pursuant to Tex. Prop. Code 82.053(c), “If there is a conflict between the provisions of the declaration and the bylaws, the declaration prevails….”
In some cases, old or poorly run HOAs may not have Bylaws or may not have filed them correctly with the county in which they are located. Most HOAs are formed as non-profit corporations. The Texas Business Organization Code, Chapter 82, governs non-profit corporations.
Pursuant to Tex. Bus. Org. Code Sec. 22.102(a): “The initial bylaws of a corporation shall be adopted by the corporation’s board of directors or, if the management of the corporation is vested in the corporation’s members, by the members.”
Pursuant to Tex. Bus. Org. Code Sec. 22.104(a): “After the certificate of formation [the document which forms the is filed, the board of directors named in the certificate of formation of a corporation shall hold an organization meeting of the board, either in or out of this state, at the call of the organizers or a majority of the directors to adopt bylaws and elect officers for other purposes determined by the board at the meeting.”
Pursuant to Tex. Prop. Code Sec. 209.005(m)(1): “A property owners’ association composed of more than 14 lots shall adopt and comply with a document retention policy that includes, at a minimum, the following requirements: (1) certificates of formation, bylaws, restrictive covenants, and all amendments to the certificates of formation, bylaws, and covenants shall be retained permanently….”
In Sterling/Suggs Ltd. P’ship v. Canyon Lake Island Prop. Owners Ass’n, the HOA filed an action to enforce a Rule 11 settlement agreement entered with a homeowner. No. 03-20-00131-CV, 2022 Tex. App. LEXIS 1309 (Tex. App.—Austin Feb. 25, 2022, no pet.). The parties were ordered to arbitration. The arbitrator found, and the parties agreed, that the HOA had not filed their bylaws with the county in accordance with Tex. Prop. Code Sec. 202.006(b) which states, “a dedicatory instrument has no effect until the instrument is filed in accordance with this section.” The arbitrator found that the HOA did not have the authority to enter into any agreement because they had not filed their bylaws which would “create and empower the Board of Directors to act.”
As an aside, Sterling and a number of other cases support the conclusion that bylaws are a dedicatory instrument (necessitating they be filed with the county), however there is case law to support the fact that bylaws are not necessarily dedicatory instruments. See Stork v. Tres Lagos Property Owners Ass’n, Inc., 442 S.W.3d 730, 738 (Tex. App.—Texarkana 2014, pet. denied).
In Sterling, while the HOA had adopted bylaws, the court held the HOA was unauthorized to act simply because the Bylaws had not been filed with the county pursuant to Tex. Prop. Code Sec. 202.006(b). Accordingly, if an HOA has failed to file their bylaws with the county, or has failed to adopt bylaws at all, there is a strong argument to be made, similar to Sterling, that at least some actions they might take are not authorized. Furthermore, on a logical level, the decision in Sterling makes sense considering that if an HOA board is allowed to act without bylaws to govern their actions, there could be tyrannical consequences.
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Nacol Law Firm P.C.
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Disclaimer: The information provided in this article is in no way intended to constitute legal advice. The information provided is merely an overview of the relevant law. Do not act on this information. Always consult an attorney for legal advice.
A Short Guide to Liens in Residential Subdivision Homeowner’s Associations
Under Texas law, an HOA has the right to place a lien on a property if the property owner fails to pay assessments (dues), fees, or fines. However, whether or not an HOA can foreclose on a property is dependent on if the lien is due to failure to pay assessments. Pursuant to Texas Property Code Sec. 209.009, an HOA cannot foreclose on a lien if “the debt securing the lien consists solely of: (1) fines assessed by the association; (2) attorney’s fees incurred by the association solely associated with fines assessed by the association….”
For example, imagine a homeowner has previously failed to pay dues, but is currently up to date on their dues, and as a result of the previous missed payments, the HOA imposed fines in addition to the assessments. Because the homeowner is up to date on their assessments, even though they have not paid their fines, the HOA may not foreclose on the property. Fines and attorney’s fees alone are never grounds on which an HOA may foreclose on a property.
However, a lien on your property due only to fines or attorney’s fees levied by your HOA may still affect the sale of the property. A lien secures the payment of a debt when a property gets sold. Therefore, while the HOA cannot force the foreclosure of your property under these circumstances in order to recover the debt, a lien filed to recover fines and attorney’s fees may still require the property owner to pay off the debts pursuant to the lien before the property can be sold.
Further, your HOA must follow notice requirements set forth in the Texas Property Code in order for a lien on your property to be valid and proper. Before an HOA may file a lien with the county, they must send a homeowner two notices. The first notice may be sent by first class mail or e-mail, and the second notice must be sent by certified mail at least 30 days after the first notice.
We often receive phone calls from homeowners indicating that their HOA has placed a lien on their property, or that their property is being foreclosed on when they had no idea of any assessment or fine delinquency. If you have received a Notice from your HOA indicating a lien has been placed on your property, or that your property is being foreclosed on, it may be in your interest to contact us to ensure that the HOA is acting within their rights, or otherwise ensure that your property remains in the lawfully correct hands.
Nacol Law Firm P.C. – Dallas Texas HOA Attorneys
Disclaimer: The information provided in this article is in no way intended to constitute legal advice. The information provided is merely an overview of the relevant law. Do not act on this information. Always consult an attorney for legal advice.
Building a Fence in an HOA: What, Why, and How?
We often receive calls from frustrated homeowners who have either had their request to build a fence around their property denied by their Homeowner’s Association’s Architectural Committee, or who have been fined by their Homeowner’s Association for erecting or altering a fence around their property. While there may be some limitations to the appearance of your fence, a Texas Homeowner’s Association is prohibited from restricting your right to build a fence around the perimeter of your property.
Pursuant to Section 202.023(b) of the Texas Property Code, a Homeowner’s Association may not include or enforce any provision in their governing documents that “prevents a property owner from building or installing security measures, including but not limited to a security camera, motion detector, or perimeter fence.”
However, Section 202.023 does allow Texas Homeowner’s Associations to regulate “the type of fencing that a property owner may install.” In our extensive experience examining the governing documents of Homeowner’s Associations, these provisions typically take shape as limits to the height, material, and color of the fence. If your Architectural Committee has denied your application to build a fence on these grounds, or you have been fined because your fence is not in accord with restrictions to this effect, it is likely that they have every right to enforce those restrictions.
It is worth noting that the above referenced Section 202.023 is titled “Security Measures” within the Texas Property Code. So, while the HOA can place some restrictions on a homeowner’s fence, if those restrictions reasonably interfere with the security a fence can provide, a homeowner may have a valid objection to such a provision within an Association’s restrictive covenants, however it is important to contact a qualified attorney to make an assessment to that effect. In conclusion, if your Homeowner’s Association is limiting your ability to put up a perimeter fence for reasons other than aesthetics, it would likely be beneficial to contact The Nacol Law Firm to determine any recourse you may have.
What is a Restrictive Covenant?
When a homeowner purchases a home controlled by an HOA, the homeowner (and the HOA) agrees to and are bound by certain restrictive covenants. These covenants are stated in the governing documents of the HOA⎯specifically, the HOA’s Covenants, Conditions, & Restrictions (“CC&Rs”). Typically (or rather, hopefully), all of the HOA’s governing documents are provided to the home buyer prior to or at closing. Unfortunately, although understandably, because these governing documents are filled with hundreds of pages of legal jargon, the vast majority of homeowners do not care to read these restrictive covenants prior to purchasing their home, nor do they even know where to look.
Here is what you need to know about restrictive covenants:
In essence, a restrictive covenant limits the permissible uses of land within the HOA. In other words, they provide the homeowner with a set of limitations as to what they can and cannot do with their property. These restrictions can be wide ranging; however, most homeowners encounter issues when attempting to modify or alter their property or landscape in some way. Restrictive covenants are treated as contracts between the homeowner and the HOA, and a breach of these covenants can result in one party seeking legal remedy against the other. A 2017 Texas Court of Appeals case described restrictive covenants as such:
“A declaration containing restrictive covenants in a subdivision defines the rights and obligations of property ownership, and the mutual and reciprocal obligation undertaken by all purchasers in a subdivision creates an inherent property interest possessed by each purchaser.”
It is important to note, however, that any restrictive covenant must not violate any Texas statute⎯most importantly, the Texas Property Code⎯or else it is a violation of Texas law. Texas Property Code §§ 202.003 & 202.004 lay the groundwork for the construction and enforcement of restrictive covenants:
Texas Property Code § 203.003
(a) A restrictive covenant shall be liberally construed to give effect to its purposes and intent.
(b) In this subsection, “family home” is a residential home that meets the definition of and requirements applicable to a family home under Chapter 123, Human Resources Code. A dedicatory instrument or restrictive covenant may not be construed to prevent the use of property as a family home. However, any restrictive covenant that applies to property used as a family home shall be liberally construed to give effect to its purposes and intent except to the extent that the construction would restrict the use as a family home.
Texas Property Code § 203.004
(a) An exercise of discretionary authority by a property owners’ association or other representative designated by an owner of real property concerning a restrictive covenant is presumed reasonable unless the court determines by a preponderance of the evidence that the exercise of discretionary authority was arbitrary, capricious, or discriminatory.
(b) A property owners’ association or other representative designated by an owner of real property may initiate, defend, or intervene in litigation or an administrative proceeding affecting the enforcement of a restrictive covenant, or the protection, preservation, or operation of the property covered by the dedicatory instrument.
(c) A court may assess civil damages for the violation of a restrictive covenant in an amount not to exceed $200 for each day of the violation.
Courts tend to hold that the intent of any particular restrictive covenant shall be interpreted by a court if the covenant is disputed. However, courts will hold common law rules favoring the “free and unrestricted use of land” over all else. Furthermore, courts have held that any ambiguity in a covenant must be strictly construed against the party seeking to enforce the covenant.
While this blog is intended to be an overview of restrictive covenants, each situation and covenant is unique and deserves its own analysis as to whether it is binding on a homeowner and whether it complies with Texas law.
Julian Nacol
Nacol Law Firm P.C.
Dallas Texas HOA Attorney
(972) 690-3333
What are Special Assessments and Understanding Them
Special assessments are distinct from regular homeowner association dues in that they are not part of the annual operating budget and are typically levied to cover unforeseen expenses or projects that the association has not saved for in its reserve fund.
Steps for Levying a Special Assessment
- Review Governing Documents: The first step is always to review the HOA’s governing documents to determine the specific procedures and voting requirements for passing a special assessment. These documents dictate how much notice must be given to homeowners, the percentage of votes needed for approval, and any caps on the amount that can be assessed. The right of the HOA to request a Special Assessment are found within the CC&R’s of the association. The procedure to implement the Special Assessment are found in the Bylaws of the Association.
- Board Decision: Generally, the process begins with the HOA board determining the need for a special assessment. This usually involves identifying the specific project or expense, estimating costs, and deciding on the amount needed from each homeowner. This is not always the case, a special assessment may be authorized by a percentage of the members of the association if their call a special meeting an vote for such assessment.
- Notice to Homeowners: Homeowners should be given notice of the proposed special assessment. Texas law and the association’s governing documents will specify how much advance notice must be given before the vote. This notice period allows homeowners to review the proposal, ask questions, and express any concerns before voting takes place. There are certain exceptions that the CC&R’s may allow, such as a minor special assessment increase to maintain an annual budget, but these increases are usually quite limited to a certain percentage per Anum.
- Meeting and Vote: A special meeting of the homeowners is typically called for the purpose of discussing and voting on the proposed assessment. The governing documents will specify whether this vote can happen in person, by proxy, electronically, or by mail-in ballot.
- Voting Threshold: The necessary threshold for approval of a special assessment varies. Some associations require a simple majority of votes, while others may need a supermajority. The specific requirements will be outlined in the HOA’s governing documents.
- Collection of the Special Assessment: If the special assessment is approved, the HOA will notify homeowners of the amount they owe, the due date(s), and the method for making payments. The association must also provide information on how the funds will be used.
Legal Actions Pertaining to Special Assessment
- HOA Foreclosures: an HOA may not foreclose on a home residence solely for fines and attorney’s fees, though an HOA may foreclose on a residence for non-payment of annual or special assessments. This may be done pursuant to judicial or non judicial foreclosure depending on the dedicatory instruments of the HOA.
Challenges and Disputes
Disputes over special assessments are not uncommon. Homeowners who disagree with the assessment may challenge the process by which it was passed or the necessity of the assessment itself. Homeowners likely have to seek remedy in a District Court requesting either a temporary restraining order or a temporary injunction to stay such assessment until the Court can determine its validity. If the Management company and HOA Board held an improper meeting, tendered an improper notice, did not conduct a proper ballot for voting, or did comply with the technical requirements then all these requirements may be attacked in a District Court on behalf of the community.
Julian Nacol
Nacol Law Firm P.C.
Dallas Texas HOA Attorney
(972) 690-3333
NACOL LAW FIRM P.C.
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Dallas, Texas 75231
972-690-3333
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Attorney Mark A. Nacol is board certified in Civil Trial Law by the Texas Board of Legal Specialization
