POA, in Texas, in violation of Texas law in regards to ACC - does it matter?

Started by RogerJ1 • 28 replies • 1027 views

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RogerJ1 (Texas)
Posts: 550

Posted:

New Texas Property code amendment/addition, effective September 1, 2021, " Directors [board members], their spouses and other members of their household may no longer serve on architectural review committees (ACC/ARC). " https://www.fsresidential.com/texas/news-events/articles/13-ways-sb-1588-affects-your-texas-hoa/

A board member's spouse, who lives in same household as that board member, sits on my POA's ACC - I think he is the ACC chairman. We have over 40 lots, 56, and are not in declarant control - so no exception to the law for our POA. So it, seems to be a violation of law, but it kind of seems minor??

Is this a "who really cares" violation that could be ignored with no consequences, or could there be serious consequences, and the person should get off - or perhaps by law the person's spot on the ACC is void?

AdamL1 (UnitedStates)
Posts: 559

Posted:

is there any sort of runway clause that says they have until the next election cycle to make the change?

I would think that any ACC decision could be easily challenged and vacated if the ACC person was not legally allowed to be there in the first place...

RogerJ1 (Texas)
Posts: 550

Posted:

Quote:

Posted By AdamL1 on 12/06/2021 11:09 AM
is there any sort of runway clause that says they have until the next election cycle to make the change?

I would think that any ACC decision could be easily challenged and vacated if the ACC person was not legally allowed to be there in the first place...

Not really sure. It is in section 209-00505: "(c) A person may not be appointed or elected to serve on an architectural review authority if the person is:

(1) a current board member;

(2) a current board member's spouse; or

(3) a person residing in a current board member's household."

It literally states appointed or elected, so if the person was already on the committee???

RogerJ1 (Texas)
Posts: 550

Posted:

Quote:

Posted By RogerJ1 on 12/06/2021 11:16 AM

Perhaps it is retroactive and that person's election or appointment is void because that change seems to be incorporated into a chapter that is effective Jan 01, 2002:

Top of chapter 209 states, "CHAPTER 209. TEXAS RESIDENTIAL PROPERTY OWNERS PROTECTION ACT

Sec. 209.001. SHORT TITLE. This chapter may be cited as the Texas Residential Property Owners Protection Act.

Added by Acts 2001, 77th Leg., ch. 926, Sec. 1, eff. Jan. 1, 2002."

MaxB4
Posts: 3,513

Posted:

A owner doesn't put their trash cans away after trash pick up, should it be treated as "who really cares" or is the owner going to be cited.

The new law is trhe new law. Apparently, on architectural issue, board can't be judge, jury and executioneer. Good for Texas.

BillH10 (Texas)
Posts: 1,217

Posted:

Roger

I think you sense there could be consequences and I agree with AdamL1 in that ACC decisions made with the Director and/or spouse participating in committee meetings and decision making after September 1, 2021, could be challenged in light of the legislative changes made to Section 209.

I recommend a consultation with the association attorney as to next steps. This is so new I doubt there is any relevant TX case law on this specific point regarding a Director or spouse serving on the ACC committee however, there may be pervious decisions regarding similar provision in Section 209. Frankly, the Director should never have had a voting role on the committee in any case. It is quite common for a director to act as a liaison to the Board but not as a voting member of the committee.

The absolute safest course of action would be for the Board to request the resignations of both the Director and spouse; if not forthcoming they should be 'fired' to protect the association. If the committee has sufficient members to function following the resignations, it should do so. Of course a call should be issued to the owners seeking replacement members.

BarbaraT1 (Texas)
Posts: 821

Posted:

The spouse who is the ACC member should resign. Perhaps your board is unaware of the new laws; you may want to send an email or bring it up at the next meeting.

Realistically - you’re right, it is a small thing and its only going to be an issue if the ACC denies something and the owner appeals and the board upholds the denial and the owner sues the association. But you do the right thing because it’s the right thing, not because your chances of getting caught are slim.

RogerJ1 (Texas)
Posts: 550

Posted:

Quote:

Posted By BillH10 on 12/06/2021 1:23 PM
Roger

I think you sense there could be consequences and I agree with AdamL1 in that ACC decisions made with the Director and/or spouse participating in committee meetings and decision making after September 1, 2021, could be challenged in light of the legislative changes made to Section 209.

I recommend a consultation with the association attorney as to next steps. This is so new I doubt there is any relevant TX case law on this specific point regarding a Director or spouse serving on the ACC committee however, there may be pervious decisions regarding similar provision in Section 209. Frankly, the Director should never have had a voting role on the committee in any case. It is quite common for a director to act as a liaison to the Board but not as a voting member of the committee.

The absolute safest course of action would be for the Board to request the resignations of both the Director and spouse; if not forthcoming they should be 'fired' to protect the association. If the committee has sufficient members to function following the resignations, it should do so. Of course a call should be issued to the owners seeking replacement members.

Thanks. There are signs a corp., that recently bought one of the last vacant lots in our POA, might try to commercially develop it. So, I am concerned if this ACC/Board arrangement could jeopardize actions against that if the new owner does try to develop that lot.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By RogerJ1 on 12/06/2021 11:46 AM
It is in section 209-00505: "(c) A person may not be appointed or elected to serve on an architectural review authority if the person is:

(1) a current board member;

(2) a current board member's spouse; or

(3) a person residing in a current board member's household."

It literally states appointed or elected, so if the person was already on the committee???

RogerJ1, FWIW the above means that the first version of the Texas RPOPA became effective Jan 1, 2002. These sites indicate that the section about which you are concerned became effective only on Sep 1, 2021:

https://statutes.capitol.texas.gov/Docs/PR/htm/PR.209.htm

https://capitol.texas.gov/tlodocs/87R/billtext/html/SB01588F.HTM (I believe what is underlined is what is new.)

I thought about your argument and I happen to buy it. In other words, arguably the presence of the spouse on the ARC is not a violation of the statute until such time as he seeks re-appointment.

Regarding the allegation that it would be easy to shoot down a violation that the ARC issues or maybe the ARC's rejection of an architectural improvement application, I disagree. If push came to shove and an owner (tagged with a violation or rejection of an architectural improvement application) objected to the spouse's presence on the ARC, then first, the owner has to appeal to the board. If the owners says, "Hey, I think the spouse's presence on the ARC violates the law... " then the board can fix this. Second, even if the board does not fix it, in my opinion Texas courts are going to home in on whether a substantive violation actually exists. The trial court judge might look sternly at the HOA attorney and order the Board to fix the violation of the statute (as it pertains to spouses on the ARC), but otherwise, I think the court will look more sternly at the owner and nail him/her if they are in fact non-compliant.

AugustinD
Posts: 3,698

Posted:

Let me add: I like the new law, and HOAs should comply with it, but I also recognize that most HOAs battle to keep the board seats and ARC seats filled.

RogerJ1 (Texas)
Posts: 550

Posted:

Quote:

Posted By AugustinD on 12/06/2021 3:23 PM

Regarding the allegation that it would be easy to shoot down a violation that the ARC issues or maybe the ARC's rejection of an architectural improvement application, I disagree. If push came to shove and an owner (tagged with a violation or rejection of an architectural improvement application) objected to the spouse's presence on the ARC, then first, the owner has to appeal to the board. If the owners says, "Hey, I think the spouse's presence on the ARC violates the law... " then the board can fix this. Second, even if the board does not fix it, in my opinion Texas courts are going to home in on whether a substantive violation actually exists. The trial court judge might look sternly at the HOA attorney and order the Board to fix the violation of the statute (as it pertains to spouses on the ARC), but otherwise, I think the court will look more sternly at the owner and nail him/her if they are in fact non-compliant.

Bit of trivia. The person, potentially involved, recently and successfully sued the state of Texas.

BenA2 (Texas)
Posts: 1,273

Posted:

According to our attorney, any member in violation of the statute must be removed as of September 1, 2021.

At best, I think someone could argue successfully that the ACC member is, in fact, not on the ACC and their vote is invalid. If they are counted for the purposes of a quorum, the entire vote may be invalid.

At worst, a member can sue you in the Justice of the Peace (JP) court and the HOA could be ordered to pay a penalty. There is another new law (209.017) that allows any member to sue an HOA board for any violation of Sec. 209 and the JP court can award up to a $20,000 penalty. The $20K came from our attorney and is not in the law. I assume that is the maximum a JP court can award.

I would not take any violation of 209 lightly.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By BenA2 on 12/06/2021 6:54 PM

At worst, a member can sue you in the Justice of the Peace (JP) court and the HOA could be ordered to pay a penalty. There is another new law (209.017) that allows any member to sue an HOA board for any violation of Sec. 209 and the JP court can award up to a $20,000 penalty. The $20K came from our attorney and is not in the law. I assume that is the maximum a JP court can award.

At some time, I wish you would ask the attorney for a citation for this. Fining a corporation without advance warning of the possibility of a fine does not seem consistent with small claims court practices. (Texas JoP courts are small claims courts.) Fining a HOA without advance notice of the possibility of fines seems to me to be as wrong as a HOA fining an owner without advance notice of a fine schedule.

TPC Chapter 209 delineates when an owner may be awarded attorney fees when a HOA unlawfully denies records. But like you say, Chapter 209 speaks of no other penalties.

AugustinD
Posts: 3,698

Posted:

Texas JoP courts hear, among other things, civil matters where the dispute involves $20,000 or less. See for example
https://www.smith-county.com/government/courts/justice-of-the-peace-courts/jurisdiction .

BenA2, I wonder if there was some misunderstanding.

RogerJ1 (Texas)
Posts: 550

Posted:

I got an updated list of ACC members. Two are spouses of board members/directors.

BenA2 (Texas)
Posts: 1,273

Posted:

Quote:

Posted By AugustinD on 12/07/2021 5:32 AM
Texas JoP courts hear, among other things, civil matters where the dispute involves $20,000 or less. See for example
https://www.smith-county.com/government/courts/justice-of-the-peace-courts/jurisdiction .

BenA2, I wonder if there was some misunderstanding.

It is possible there is a misunderstanding but I don't think so. I got this information from a webinar I attended about the new Texas laws. There were three or four attorney presenters and one was adamant about the seriousness of this particular law (owners being able to sue in JP court). None of the other attorney's contradicted him so I took that as agreement.

I will ask our attorney the next opportunity I have but it is clear that there can be real consequences to violations of Chapter 209.

RogerJ1 (Texas)
Posts: 550

Posted:

Quote:

Posted By BenA2 on 12/07/2021 7:54 AM

Please post what you learn? My board is being hard-headed on this and other issues - we informed them a month ago when we new one ACC person was a spouse and the news was ignored.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By BenA2 on 12/07/2021 7:54 AM
It is possible there is a misunderstanding but I don't think so. I got this information from a webinar I attended about the new Texas laws. There were three or four attorney presenters and one was adamant about the seriousness of this particular law (owners being able to sue in JP court).

I agree the part about owners being able to sue in JP court to get a HOA to comply with the law is a big deal. I agree it's also a big deal that TPC 209 speaks a good deal about the judge's right to award attorney fees (to the prevailing side).

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By RogerJ1 on 12/07/2021 8:21 AM

Please post what you learn? My board is being hard-headed on this and other issues - we informed them a month ago when we new one ACC person was a spouse and the news was ignored.

Is there a reason you do not want to take the HOA to JP court on this issue? The question you asked in your first post is a good one. The issue is blurry enough that I doubt the judge would order you to pay the HOA's attorney fees.

TPC Sec. 209.017. JUSTICE COURT JURISDICTION. An owner of property in a subdivision may bring an action for a violation of this chapter against the property owners' association of the subdivision in the justice court of a precinct in which all or part of the subdivision is located.

RogerJ1 (Texas)
Posts: 550

Posted:

Quote:

Posted By AugustinD on 12/07/2021 8:31 AM

Posted By RogerJ1 on 12/07/2021 8:21 AM

Please post what you learn? My board is being hard-headed on this and other issues - we informed them a month ago when we new one ACC person was a spouse and the news was ignored.

Nothing to gain/no point. I suspect it would never come up, although since it could result in penalties against the POA and/or nullify any votes by the out of compliance ACC, the non compliant people should be off the ACC to be safe - what is point of staying if it is against the law.

RogerJ1 (Texas)
Posts: 550

Posted:

Basically, my goal in this thread was to explore possible pitfalls and concerns if the potentially non compliant ACC remained as-is. I wanted that information in case there was ever any formal talk at a public meeting or if a board member asked why it was important.

BillH10 (Texas)
Posts: 1,217

Posted:

Roger

My input is to take the high road and remove from the ACC the Director and spouse. Do so nicely, asking for resignations to ensure the Association is in compliance with the changes to 209 and make it crystal clear to the entire association that is the reason.

If they refuse, the other members of the Board may remove both from their ACC positions. The Director who is the chair of the ACC must recuse him/herself in any deliberations on this subject.

But first, as I previous posted, obtain guidance from the association attorney.

RogerJ1 (Texas)
Posts: 550

Posted:

Quote:

Posted By BillH10 on 12/07/2021 5:50 PM
Roger

My input is to take the high road and remove from the ACC the Director and spouse. Do so nicely, asking for resignations to ensure the Association is in compliance with the changes to 209 and make it crystal clear to the entire association that is the reason.

If they refuse, the other members of the Board may remove both from their ACC positions. The Director who is the chair of the ACC must recuse him/herself in any deliberations on this subject.

But first, as I previous posted, obtain guidance from the association attorney.

You are advising removal of ACC people only or the board members also?

RogerJ1 (Texas)
Posts: 550

Posted:

Wow. I just realized that the 2021 Texas amendments added:

An owner of property in a subdivision may bring an action for a violation of this chapter against the property owners' association of the subdivision in the justice court of a precinct in which all or part of the subdivision is located.

Tex. Prop. Code § 209.017

Added by Acts 2021, Texas Acts of the 87th Leg. - Regular Session, ch. TBD,Sec. 21, eff. 9/1/2021.
See Acts 2021, Texas Acts of the 87th Leg. - Regular Session, ch. TBD, Sec. 26.

I assumed that was already in Chapter 209.

So I assume before this amendment, a plaintiff would have to show damages to sue an HOA/Board for a violation of chapter 209 or a court would rule the plaintiff has no standing, but now a member would have standing by statute and a court would hear a suit even if damages are not shown. Is my assumption correct?

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By RogerJ1 on 12/07/2021 7:27 PM
... I assume before this amendment, a plaintiff would have to show damages to sue an HOA/Board for a violation of chapter 209 or a court would rule the plaintiff has no standing, but now a member would have standing by statute and a court would hear a suit even if damages are not shown. Is my assumption correct?

Before the amendment, I believe a Texas HOA owner could sue, without showing damages, to enforce a private right in state district court.

With the 2021 amendment, it appears owners can now take their disputes to JP court (Texas's small claims court), even if no (monetary, implied) damages are involved. If monetary damages are involved, then up to $20,000, an owner can sue in JP court. If over $200 (two hundred dollars), an owner can sue in state district court.

Whether the dispute involves money or not, JP Court probably moves things along more quickly than the state district courts.

BillH10 (Texas)
Posts: 1,217

Posted:

Roger, both, and ASAP.

You stated in your original post: " Directors [board members], their spouses and other members of their household may no longer serve on architectural review committees (ACC/ARC).

RogerJ1 (Texas)
Posts: 550

Posted:

Quote:

Posted By BillH10 on 12/08/2021 5:50 AM
Roger, both, and ASAP.

You stated in your original post: " Directors [board members], their spouses and other members of their household may no longer serve on architectural review committees (ACC/ARC).

I am still unclear if you are stating board members should step off also or just the ACC spouses.

Two board members have two spouses on the ACC. As I read it, you are advising all FOUR, the two board members and their two spouses on the ACC, should step down, but that seems drastic so I want to confirm. Or do you mean only the TWO ACC spouses, no board members, should step down?

MaxB4
Posts: 3,513

Posted:

All board members and their spouses, NOW!

BenA2 (Texas)
Posts: 1,273

Posted:

There is no need for all spouses to step down.

If Jane and John are married and Jane is on the board and John is on the ACC, then ONE of them has to resign or be removed. It does not matter which one resigns since either one resigning would rectify the situation. The same holds true for any other couple in the same situation.

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