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Issued April 23, 2013
Dear POA Afficiandos,
Ye old switcheroo is alive and well at the Capitol. A bill is filed for one purpose, and comes out of committee with a different purpose, or with additional purposes. And it mostly happens behind closed doors.
When the switcheroo helps you, it's a blessing. When it hurts you, it's demonic. So far, this Session's switcheroo gods have smiled on POAs. Why? Effective lobbying, to be sure.
The attached report on the 31 POA-Specific Bills identifies 4 bills that popped out of committee last week as shape shifters - completely re-written. Now I'm hearing that a fifth is in the works.
"WORST POA BILL OF SESSION" MAY BE MORPHING INTO TOLERABLE
Rep. McClendon's office is circulating a breezy all-new 2-page bill to replace the controversial 16-page HB 3803 that asks the State to micro-manage POA finances. The new version requires only one thing - that POAs obtain fidelity bonds (or fidelity insurance) on the people who handle the POA's money. (Projects with fewer than 20 units are exempt.) Many POA docs already authorize the purchase of fidelity bonds, and some require it. Mortgage underwriters and insurers, such as FHA and Fannie Mae, require fidelity coverage for condos. The concept is familiar. If the 2-page version of HB 3803 gets out of committee, I'll describe it in more detail in a future issue. Although blessedly brief, even the 2-pager has "issues".
HB 503 by Hernandez Luna re: Governance-Directors went from prohibiting contracts between POAs and their directors to affirmatively allowing such contracts with conditions.
HB 818 by White re: Governance-Voting went from requiring only secret ballots in POA elections and votes, to allowing the board to choose between signed and secret ballots.
HB 2978 by Parker re: Asses-Expedited Foreclosure went from speeding up the foreclosure process by having one citation serve two purposes to clarifying what constitutes service of citation.
SB 1202 by West re: Asses-Expedited Foreclosure went from encouraging judges to order mediation in an expedited foreclosure proceeding to making it more difficult to order mediation.
CONDO DEVELOPERS, BEWARE OF GIFT HORSES
HB 1933 by Allen is beginning to move. It's set for hearing today - Tuesday April 23rd. With one well-meaning "pro-developer" sentence, HB 1933 threatens to unravel the carefully woven fabric of the Texas Uniform Condominium Act that protects your valuable development rights to build-out the project even after you turn control of the HOA over to the homeowners. TUCA already has three finely honed and distinct concepts that are inherent in all Uniform Acts nationwide - (1) period of development rights, (2) special declarant rights, and (3) period of declarant control. HB 1933 injects a fourth concept ~ "development period" ~ which is out of place in TUCA. Although wrong for TUCA, the definition isn't inherently bad. (Heck, I wrote it many sessions ago as a carve-out in one of Sen. West's bills.) The problem is how it's used. It blurs TUCA's carefully drawn line between controlling the HOA board and selling out the project. If the distinction between governance and development isn't carefully guarded, development rights may be at stake. I hope to heck I'm wrong to think that in a few years we'll look back on this era as the start of the slippery slope of diminishing development rights. The phrase "death by a thousand cuts" comes to mind. HB 1933 has other incompatibilities with TUCA. A more carefully written bill could achieve the bill's laudable goals without causing harm. The devil's in the details. My prayer is for HB 1933 to be backburnered so it can be retooled for 2015.
Part One. The first 7 pages are an overview of 31 POA-specific bills, organized by subject (in alpha order), rather than by consecutive bill number (as is traditional). The bracketed bills are on Page 7. The subject categories are totally of my making ~ they don't match anything on the Legislature's website. The 7-page report also shows the status of each bill - which ones are moving, and which are still at the gate. Some of the bill descriptions have been updated since the last issue.
Part Two. The last 6 pages focus on the three multi-purpose ("omnibus") bills and consists of these four pieces:
- Condo Laws - a one-page intro for discussing the condo-specific bills
- HB 1933 (Condo Records & Meetings) - a 2-page section by section overview
- HB 2075 & SB 1231 (Condo Potpourri) - a 2-page section by section overview
HB 3803 (Govt Regulation of POAs) - a one-page section by section overview
Committee hearings are full swing. Each bill gets assigned to a committee in its chamber of origin - House Bills are assigned to House committees, Senate Bills to Senate committees. Committees hold hearings. Every filed bill will not be heard. However, a committee hearing is the first step for any bill that hopes to grow into a law.
The Hearing Schedule.
I don't report every time a POA bill is scheduled for a hearing. If you're interested in the hearing schedule, please sign up for automatic alerts on the Texas Legislature's website. Look for the My TLO
feature. (TLO = Texas Legislature Online)
Watch the Hearings at your Desk. In this wondrous techno era, we can watch hearings on our computers
(and other devices, I suppose). Both chambers have webcams in most of the committee hearings, and we can watch hearings "live" or archived. Here's a link to the webcams for the House and for the Senate. For archived hearings it helps to know that this is the 83rd Session.
Committee Action. Typically, the committee doesn't vote on the bill at the hearing. At any time after the public hearing, the committee may vote on the original bill that was heard, or on the substituted version that was not heard. If a substituted version is approved by the committee, the bill number is preceded by C.S. for "Committee Substitute." Hence, SB 198 becomes CSSB 198.
A word about bills that are "pending" in a committee after having a hearing at which testimony was taken. A pending bill can be "substituted" ~ or replaced with a version that doesn't get a hearing. (Seems unfair, but them's the rules.)
COUNTDOWN CONTINUES. 36 days remain until the 83rd Session ends, when we can stop holding our collective breaths ~ hoping that no HOA horror story grabs national headlines resulting in hastily drafted emergency legislation.
YEAR OF CONDOS. We have two multi-part bills that are very important for condos - HB 1933 by Rep. Allen, and HB 2075 by Rep. Anchia (and its companion, SB 1231 by West). What do they address?
- Board meetings - lots of dos & don'ts
- HOA records - lots more dos & don'ts
- Required policies to record
- Loans to HOAs - board decides
- HOA insurance deductibles - owner pays
- Expanding owner's right to redeem after foreclosure
My section-by-section overviews of the Condo Bills are at the back of the attached report.
Condos were largely unscathed by the flood of POA Reform Laws that were passed in 2011 ~ for good reason. Condos have long been subject to a comprehensive State law with a number of consumer protections, and have not generated the consumer and media interest that single family subdivisions attract.
Not saying that the condo laws can't be improved. However, the preferred way is to amend with respect for the "Uniform" pedigree of the "Texas Uniform Condominium Act" ~ sensitive to the tightly woven fabric and terminology of TUCA, and cognizant of how TUCA relates to the model Uniform Act and the Uniform Acts adopted by other states. Sadly, the Texas Bar lacks an organized group of lawyers who act as custodians of TUCA. No one is looking out for TUCA's inherent integrity and internal consistency.
REVISITING 2011 REFORM LAWS. A number of bills respond to the 2011 POA Reform Laws, such as:
- Requiring secret ballots (changing)
- Nonjudicial foreclosures for every HOA
- Streamlining foreclosure process (changing)
- Front yard flag poles (on the move)
- More xeriscape rights (on the move)
- More criteria for approving solar panels
NEW LAND USE RIGHTS & LIMITS.
This Session we have single-topic POA bills involving:
- Owning and using adjacent lots (on the move)
- Electric standby generators (on the move)
- Propane tanks
- Tree removal (on the move)
In case you haven't visited Texas Legislature Online, click here > TLO just for the heckuvit. On the top bar, click Legislation, then Bill Lookup. Set for 83rd Regular Session-2013? Enter a bill number, such as HB 35 (not case or space sensitive). Play around with the tabs at the top and click on some of the links. It's an amazing resource.