Texas HOA--mandatory/non-mandatory???

This is a long and tedious question with lot of backstory--
at least I think it requires backstory to get proper insight for an answer...
thanks for everyone's time

My HOA is in TX. It opened in 2003 and was controlled by a single developer who created articles of incorporation as a non-profit, public corporation with bylaws and CCR documents. It was designated a mandatory HOA but because the name of the HOA/corporate entity was not eligible for filing in TX, the filing for incorporation failed. The developer either did not know or care to change the name and refile. Thus, from what we understand from an attorney's opinion, that initial incorporated HOA was not a legal entity--but it operated as such and was never questioned by the city/state it operated in nor any owner who bought lot/home from the developer. The bylaws and CCR documents were executed by the officers of the supposed corporation, filed with the county clerk, and were/are public record. Owners who bought property during this period were given those documents at closing via their title company.

When about 80% of the lots/homes were sold, the developer honored his incorporation document and moved to transfer control from his HOA/corporation to a homeowners' HOA. There was another article of incorporation filed for that non-profit, public entity (with a legal name accepted by the state); there were new bylaws written by 7 people on the first Board of directors which were supposedly submitted and "voted on". But there is significant question as to exactly how the current bylaws were enacted by the membership at the time. These bylaws are terrifically weighted in favor of the Board of Directors and offer very little power to the general membership. No member of the HOA who owned property before the transfer remembers receiving notification of the change or any new copy of the bylaws or even voting at any general meeting to accept them. (But we understand that does not automatically mean those things did not happen.)

The CCR documents appear to be the same ones created by the original developer but were never refiled by the new HOA with the county clerk. The current HOA bylaws were likewise never filed with the county clerk, so they are not available as a matter of public record. Some people who have bought property after the transfer received a copy of bylaws/CCR documents from the developer's incorporation because those are the ones still on file with the county--bylaws to a now non-existant HOA. And some owners were simply emailed bylaws and CCR documents by someone on the HOA board at the time of the sale--not through the title company--but from a personal computer. None of the new/current bylaws we have seen have been signed or dated.

The attorney we spoke with about this conflict said that
1--the current bylaws (even though very unfair) might or might not be legally binding on any member of the HOA who owned property at the time of transition--depending on how the bylaws were adopted but
2- there was definitely a separation between mandatory members (initial ones) of the HOA and any new members who bought land/house AFTER the transition happened. There is a 30 day requirement to file the corporation's bylaws after adoption. If they are not filed with the county clerk, then they are not binding on any new owners since documents were not publicly recorded and thus open for inspection. And
3--there is even a question based on the original corporate filing being rejected by the state as to whether the first legal entity/mandatory HOA was even legal--despite the fact that the original bylaws/CCR documents were filed with the county. IF it was not a legal incorporation initially, then there might not have been any mandatory HOA to be transferred to owners' control--thus there is no mandatory HOA even now-and the CCR restrictions might be moot as well...

I checked the ownership records for my subdivision. There are probably 15 lots or homes that are "new" meaning they changed title AFTER the HOA transition. The developer owns about 18 lots that likely will be sold to be built because our developer is doing no spec homes here. At least 1/3 of homes in our subdivison likely would not be MANDATORY members of the HOA--all scattered around on different streets. Any new home coming on the market and being sold could also move from mandatory to non-mandatory. There are approximately 5 houses for sale in my subdivision currently. And if this is true, there would be fewer and fewer of the mandatory homes within the HOA as time passes and homes change hands...creating more burden on fewer owners to cover the financial burden if nothing else.

I just view this a horrible problem those 7 people created. We have been told by one of the 7 original directors that they got NO legal counsel to accomplish this transfer--they apparently thought they had the power to make all decisions and what they decided was OK. They also did not feel they had money to spend on this--eventhough the developer gave them at least $5K for seed money until they could start collecting dues.
We can't even go to the standing Board to address these issues.

The current board held an apparent invalid election in June for new Board of directors. At the meeting, the members voted to disavow that election result (tainted/inaccurate/incomplete ballots) and have a second election. The Board sent a letter to all HOA members outlining that proceedure and then renigged on it w/o any explanation or even a notice to membership at large. It simply revived the election results that were uunanymously rejected at the meeting. This Board also is made up of 4 of the 7 original directors who created the problem with the mandatory/non-mandatory fissure.

If Board do not come forward with the promised election within the next few days, we are filing an injunction to stop it from acting and force a new election via the courts. Current bylaws require a 66% petition of the entire membership to bring any motion before the Board and compel it to respond--that is likely impossible to achieve. So an injunction is what the attorney said was about the only option to stop the Board's stonewalling.

We are also going to request access to HOA board records to determine how those bylaws were enacted and see for ourselves how well documented the past minutes/meetings/actions of the Board are...we know that there were no minutes taken at the last Board election. Several people asked who was taking minutes since the Secretary was absent--and the chair appointed no one--did not even answer the questions.

Most people we have spoken with want a new board that is more responsive to HOA members in general and who will rewrite bylaws to have balance of power and address issues of transparency and communication that the past Boards have just refused to do. But getting this Board may not be easy even if we can get a new election.

I want to know--
Are we required to notify anyone (the judge/the Board/the membership) of the possibility there could be two classes of voters/members within the subdivision if we go forward with request for injunction?
Should we resolve that issue before a new election just to make sure that any election holds up to scrutiny if challenged?
How long can we wait to question this past election legally with an injunction? Does it have to be within specific time in TX--like within 30 days? If so--it is already too late. The election was held June 2 and promised of new election was mailed to HOA members June 22 with new election supposed to have happened July 20.

It oould take twice as long and be twice as expensive if we open up the two classes of voters/owners. And the HOA Board would not be the one requesting the legal opinion--just a group of home owners--to bear the expense...some might not even be in the mandatory HOA group...
I know those all sound so nit-picky and I am not attorney (obviously) but I know that the law often revolves around small issues for large decisions...

I feel a great deal of animosity toward some of the people on the current Board who were involved in the original transfer of control. Their arrogant attitudes and desire for secrecy and control have likely created problems that this HOA won't be able to solve without spending a lot of time and money--if then. And I doubt that they will ever acknowledge the damage they did. I don't know that having other owners aware of their mistakes and their ineptness is really sufficient punishment.

The Board sent out a new newsletter, received today, which again failed to address why a revoked election in open general meeting June 2 was revived by special secret, emergency meeting of the Board and why a promised election July 22 never materialized...At the June 2 election there were 3 illegal ballots (two written and one oral with nomination from the floor--floor nominations not addressed in the initial ballot mailed to all HOA.

one of the phrases in the letter..."Trust us...there are no secrets..." Yeah--right...

So it is likely we will have to ask for injunction to stop the Board from ignoring its failed promise--
we have an attorney who believes that we have adequate cause for the court to grant a new election...

my question is --what can our HOA to do us as individual homeowners if we go forward with this petition to the court...can we be counter sued as individuals for interrupting the Board's business to operate--making it late with its water bill or electric bill?
This will also be a metter of public record if we file for injunction--how likely is that to be picked up by reporter and go on the news--

Under the bylaws this Board has tremendous power vs almost none by the HOA members--if we do not force this issue in court, there is no guarantee that any new Board nominated in future will be any better or that bylaws will be rewritten in any better form...

Hi Vicki:

Look at your filed Warranty Deed sent to you after you purchased your home. Generally in many states this will mention the Declaration of CCR’s as being attached to the property and rarely have I seen bylaws attached. Bylaws are usually only attached because this is the document which has both bylaws and CCR requirements within one document.

The Declaration is the legal binding document attached to the properties and which everyone is legally bound to follow. Generally to amend the CCR’s requires majority percentage of members to amend.

The Bylaws are the regulations regarding how meetings conducted, describes duties of board/officers, voting notices, etc. In some instances this can be amended by the board of directors OR in other instances it requires membership approval. This would depend on state statutes and what is stated in the documents themselves.

Now while either of these documents can be amended, they cannot be amended to violate the state statutes for HOA or corporate, as applicable. Therefore, my first question is what do your documents state (including original bylaws) with regards to who is allowed to amend?

With regards to your question on can you be counter sued … anyone can be counter sued, so the best question to ask yourselves would be what could you be counter sued for and if that happens would you win? Generally the basic operations are not nor should not be interrupted. A court potentially would not allow interruption for basic services such as water, electric, etc. In essence if ended up in court the HOA would still operate until determination is made. The best option is to attempt to resolve without court action if at all possible. Maybe the attorney writing letter that there needs to be proper meeting and election will get the action desired by all homeowners. I am not an attorney so some of your questions would be better answered by your attorney concerning your state laws.

Can it be picked up by a reporter … yes, but how much news it makes will depend on how much anyone talks to a reporter if one calls or confronts homeowners.

Vickie,

Your situation is similar to mine, as described in thread titled "What if association is not as declared?"

I think your problem can be divided into two parts: One, was your property ever subject to an HOA and; Two, is the present HOA the rightful successor to the first HOA. If the answer to part one is "No," then part two is moot.

PART ONE

When you purchased your property from the developer it became subject to the Declaration of CC&R's. The declaration most likely has some explicit restrictions, such as no pink flamingo lawn ornaments, and also joins your property to mandatory membership in an incorporated non-profit HOA.

The developer, therefore, had a least two deliverables: Title to the property and an incorporated non-profit HOA. I assume he delivered on the first but since his articles of incorporation were not accepted he failed to deliver an incorporated non-profit HOA.

Assuming that there is a "non-severabilty" clause in the declaration, my opinion is that the explicit restrictions in the declaration are still valid but those parts of the declaration referencing the HOA are not enforceable. The non-severable clause says something to the effect that if one provision is not enforceable that the rest of the provisions remain in effect. The developer should have had all his ducks in a row before he sold the first lot.

The closest precedent I know of (and it's not that close) involves the city of Youngtown, Arizona. Youngtown was incorporated back in the 1950's or 60's and it was incorporated as an age-restricted community. Each home had to have at least one occupant over the age of 55 and no one under 18 could live there. Over the years the city evicted a number of juveniles who lived with their grandparents. About ten years ago they tried to evict another one who fought back. The resident proved to the court that the city's original incorporation as an age-restricted community was flawed. The court ruled in favor of the resident, finding that the age restrictions were void. The fact that no one questioned the incorporation for over five decades did not overcome the flawed beginning.

My opinion, therefore, is that your property is not subject to the HOA.

PART TWO

Even if your property was subject to the original HOA, I would want to know what legal authority a group of owners has to incorporate a new HOA, declare themselves a board of directors, and declare that you and others are mandatory members. This is essentially an amendment to the CC&R's and from what you wrote sounds like it requires the approval of 2/3 of the owners. The fact that one of those directors admitted they acted without legal guidance comes as no surprise. Based on what you wrote I would say that everything these "directors" have done is unenforceable against the owners.

My suggestion is that you get together with those other residents who are not happy with the current situation, pool your resources, and consult an attorney. But be careful what you wish for because what happens if the HOA is found to be invalid? Who pays for maintenance of the common areas?

Wow, alot of content there. First your documents should tell you how an Annual meeting will be held and the process for mailings of such notice. The mailings should have included a candidate form, so that anyone could stand to be elected to the board, a proxy and a ballot to attach to the proxy. Also you can nominate yourself at the Annual meeting in person. They can't stop that from happening. An Annual meeting or General meeting has to have a quorum, which would be indicated in the docs. Simply handing in ballots does not make a quorum. Proxy's and in person, makes the quorum. So you would need a certain percentage to attend in person or by proxy. Meeting minutes must be taken at the meeting. Indicating date of meeting and if a quorum was met to even hold the meeting, accept nominations and count ballots.
You need to talk with an attorney who is very familiar with HOA documents and can advise you. There are many out there. Also, check the state on line in regards to holding meetings for Non profit incorporations/business', as that is what the HOA is.

If your Board of Directors are not adhering to the documents, they are in breach of their fiduciary duties.

A developer can change bylaws and CCR's alone without approval by the membership, if they still have a majority vote. If not, the membership has to vote on changes. Thats why its always difficult after to change the docs because most associations can never get enough people to vote on them. it always requires a high percentage to change the docs.

Remember the CCR's are the LAW for the association. The board members cannot do anything other than follow the docs no matter what. Read them carefully and know where you stand. Then if needed, contact an experienced attorney to help you out.

Good luck!