Texas HOA Executive Session voting record

JosephS27 (Texas)
Posts: 19

Posted:

A homeowner in our HOA is delinquent on long overdue dues and fees. After multiple friendly reminders, requests, demand letters, etc., our HOA's BofDs choose to go into executive session with the HOS's attorney to discuss initiating a foreclosure action on the resident for delinquent fees. I believe that the HOA's governing documents should simply specify a repeatable process for this type of stuff that's followed each time without any variation, to insure fairness, etc. A BofDs member says that the Board's attorney recommended that the BofDs vote on whether or not to initiate this specific foreclosure, opening the door to favoritism and other problems - the votes were not recorded as part of the minutes.

My understanding of the Texas HOA laws, specifically Texas Property Code Chapter 209.0051(c) and section 209.0051 (h) (3) specifically requires an open meeting for the BofDs to consider or vote on foreclosure actions, as shown below:

The board may not, unless done in an open meeting for which prior notice was given to owners under Subsection (e), consider or vote on:
(1) fines;

(2) damage assessments;

(3) initiation of foreclosure actions;

(4) initiation of enforcement actions,

I've requested a record of the votes - the BofD's President has refused - what's my recourse in this situation, aside from suing the BofDs?

BillH10 (Texas)
Posts: 1,217

Posted:

Joseph

I assume you are a Texas Property Code Section 209 HOA.

That being the case, your association should have in place a Collections Policy, to be applied when an account is past due, which describes specifically the steps to be taken, the time line for each step, and what happens if the requirements of the various steps are not met.

To quote from your post "I believe that the HOA's governing documents should simply specify a repeatable process for this type of stuff that's followed each time without any variation, to insure fairness, etc."

You are 100% correct about that.

The Legislature mandated a Collections Policy be developed and filed by every HOA in the state governed by Section 209 in the 2011 Session. Your attorney should be aware of this requirement. If your association was created after 2011, the policy should be an attachment to the Declaration, along with a number of others.

If you do not have such a policy, I recommend you find another attorney who specializes in HOA matters to put one in place for you. Then, your association/board must follow his or her guidance regarding this account. From your description, it sounds like the proper steps may have been followed until the point of going into ES was reached.

BTW, typically, there are no notes, records of votes, or minutes taken in ES. Your request for a record of the votes from the ES is asking for information which normally does not exist.

JosephS27 (Texas)
Posts: 19

Posted:

BillH10 - thanks for responding - when ya said "BTW, typically, there are no notes, records of votes, or minutes taken in ES", from reading the section of Texas law that I copied into my post, it looks like foreclosure discussions must be considered and voted on during an open session - what am I missing? Thanks . . .

JosephS27 (Texas)
Posts: 19

Posted:

BillH10 - thanks for responding - when ya said "BTW, typically, there are no notes, records of votes, or minutes taken in ES", from reading the section of Texas law that I copied into my post, it looks like foreclosure discussions must be considered and voted on during an open session - what am I missing? Thanks . . .

JosephS27 (Texas)
Posts: 19

Posted:

BillH10 - thanks for responding - when ya said "BTW, typically, there are no notes, records of votes, or minutes taken in ES", from reading the section of Texas law that I copied into my post, it looks like foreclosure discussions must be considered and voted on during an open session - what am I missing? Thanks . . .

BillH10 (Texas)
Posts: 1,217

Posted:

Joseph

I don't think you are missing anything. Based on your citation of 209.0051 et. al. the vote to proceed to foreclosure must take place in an open meeting, apparently the consideration to proceed to foreclosure must be an open discussion as well.

Why the Board and attorney choose to use ES I cannot say.

You should have the opportunity to address the Board at each Board meeting in an Owners Forum, you should concisely and cogently raise your points and request an explanation.

MichaelT21 (Arkansas)
Posts: 501

Posted:

Quote:

Posted By JosephS27 on 07/13/2022 5:56 AM
BillH10 - thanks for responding - when ya said "BTW, typically, there are no notes, records of votes, or minutes taken in ES", from reading the section of Texas law that I copied into my post, it looks like foreclosure discussions must be considered and voted on during an open session - what am I missing? Thanks . . .

I can't speak for Texas, but our Board does this:

Discusses items (without voting) in executive session
Votes on items discussed in executive session during open session. To protect privacy, we vote based on account number (only known to Board) rather than address or name of homeowner.

Thus, we make all decisions in open session and our decisions are recorded in the minutes. We do not take minutes in executive session.

BillH10 (Texas)
Posts: 1,217

Posted:

Michael

I cannot speak for other associations of course but what you describe is the process we have our clients follow; they are not governed by TPC 209 however. It is, or has been, followed by the master and sub HOA in which we reside as they are governed by TPC 209.

I've not assimilated the changes mandated by the Legislature last year as we are fortunate not to have collections issues.

However, Joseph cites Texas Property Code 209.0051(c) and section 209.0051 (h) (3) (which) specifically require(s) an open meeting for the BofDs to consider or vote on foreclosure actions, as shown below:

It is the use of the word "consider: which makes problematic discussions regarding foreclosure in ES and not in an open meeting format.

JosephS27 (Texas)
Posts: 19

Posted:

Thanks again, BillH10 - I'm not a lawyer, but I was an English major, and I would make the case that in this instance, "consider" is more related to having a discussion or "make a case for", since it's used as "consider or vote on foreclosure actions" - the BofDs is either considering or voting - I'd interpret the law as an open meeting being required for either considering or voting.

CathyA3 (Ohio)
Posts: 6,299

Posted:

The only reason I can think of for the board to be in executive session with the attorney is to protect attorney-client privilege, which is a legitimate concern. The board wants to make sure they know what they're doing in case the homeowner files a lawsuit over this and the HOA attorney will have to defend the association.

That's different from actually voting on this in open session.

I agree about the value of a collections policy to ensure all owners are treated consistently.

On the other hand, there is some nuance to foreclosures, and it's in the best interest of an association to make sure that a foreclosure action makes financial sense in individual cases. Things such as a mortgage loan that is either current or is also in default will affect the chances of an association being able to collect outstanding assessments, unless state law places HOAs/COAs as the priority lien (most don't, I think). So there are reasons *not* to have a hard and fast process in situations like this. Yes to guidelines - but you don't want to tie your hands in situations that are not one-size-fits-all.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Just an observation, since state law is what it is:

Given the amount of personal, private information that may be discussed when trying to decide whether or not to foreclose on someone, I'm a bit surprised that such matters would have to be addressed in open session. It seems like a liability issue.

For example, if I were trying to decide if a foreclosure is the best option, here are things I'd be interested in:

* Does the owner have a mortgage (since in my state the lender is the priority lien)? If so, is the mortgage is default, and how much is currently owed?

* Is the owner currently employed? If not, are they permanently disabled/retired/other? In other words, do they have a steady stream of income?

* Are we dealing with medical debt or other creditors?

* Is the homeowner likely to file for bankruptcy?

* Is the homeowner mentally ill or otherwise judgment-impaired?

* Is there any chance that Fair Housing laws may come into play?

* What are the chances that the homeowner may simply sell the home, in which case letting the lien ride may be the cheaper solution for the association?

* An unusual one: is the owner an LLC or other non-person entity? Entities of this sort are much more able to walk away from losing a home since the rest of their assets are protected - this isn't the case for others.

In other words: YIPES, that's a lot of personal information potentially under discussion.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By CathyA3 on 07/13/2022 9:42 AM
Just an observation, since state law is what it is:

Given the amount of personal, private information that may be discussed when trying to decide whether or not to foreclose on someone, I'm a bit surprised that such matters would have to be addressed in open session. It seems like a liability issue.

For example, if I were trying to decide if a foreclosure is the best option, here are things I'd be interested in:

* Does the owner have a mortgage (since in my state the lender is the priority lien)? If so, is the mortgage is default, and how much is currently owed?

* Is the owner currently employed? If not, are they permanently disabled/retired/other? In other words, do they have a steady stream of income?

* Are we dealing with medical debt or other creditors?

* Is the homeowner likely to file for bankruptcy?

* Is the homeowner mentally ill or otherwise judgment-impaired?

* Is there any chance that Fair Housing laws may come into play?

* What are the chances that the homeowner may simply sell the home, in which case letting the lien ride may be the cheaper solution for the association?

* An unusual one: is the owner an LLC or other non-person entity? Entities of this sort are much more able to walk away from losing a home since the rest of their assets are protected - this isn't the case for others.

In other words: YIPES, that's a lot of personal information potentially under discussion.

I agree and as such, it should be discussed in an Executive Session not in an open meeting..

BillH10 (Texas)
Posts: 1,217

Posted:

I do not disagree but apparently the Texas Legislature does, or it seems the property code language may be interpreted that way.

Texas Property Code section 209.0051 (h) (3) specifically requires an open meeting for the BofDs to consider or vote on foreclosure actions.

The word "consider" does not make it clear what items may be discussed in ES, and what may not. How do you define "consider"?

I appreciate the items a Board must and may consider when moving toward a foreclosure, and some of those may be a factor in the decision making of the Board, especially those which rule out foreclosure as it makes no financial sense. However, the Collection Processes used in this state do not allow for consideration of soft issues such as medical debt or unemployment for special dispensation.

I am sympathetic to those who are dealing with such issues but, what about the owner across the street who is unable to pay the assessments due to the massive increases in property taxes in the last few years in this state due to property appreciation. I faced this in California as a property owner in the 70s before Proposition 13 was enacted.

Is the property tax debt any less worthy of consideration than medical debt? The owner did not cause it to happen, there may not have been reckless use of a VISA or MC.

Under TPC 209 every owner whose account is past due must be offered a payment plan immediately. Many times we have found owners do not wish to avail themselves of this opportunity to obtain some breathing room.

JohnT38 (South Carolina)
Posts: 1,631

Posted:

I thought I remembered someone saying that they notified mortgage company that the HOA was about to foreclose and they actually paid what was owed.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By BillH10 on 07/13/2022 1:11 PM
... snip ...

I am sympathetic to those who are dealing with such issues but, what about the owner across the street who is unable to pay the assessments due to the massive increases in property taxes in the last few years in this state due to property appreciation. I faced this in California as a property owner in the 70s before Proposition 13 was enacted.

Is the property tax debt any less worthy of consideration than medical debt? The owner did not cause it to happen, there may not have been reckless use of a VISA or MC.

Under TPC 209 every owner whose account is past due must be offered a payment plan immediately. Many times we have found owners do not wish to avail themselves of this opportunity to obtain some breathing room.

I agree that certain types of debt don't deserve a special dispensation, although it can be really hard for board members to foreclose on someone who is drowning in medical debt because of a serious or terminal illness. The law is what it is, but that's the kind of thing that gives board members PTSD...

But I mentioned medical debt specifically because it supposedly is the number one cause of bankruptcy in this country. (This came up a lot during the tort reform wrangling where certain groups wanted to portray all credit card debtors as irresponsible scofflaws who liked to live beyond their means and stick others with the bills.)

So certain kinds of debt reduce the chances that the association will see any money out of the foreclosure. For example, medical debt *may* imply serious illness which can also involve unemployment or a bankruptcy filing in the works. That wouldn't be the case with overdue property taxes (although the person may be vulnerable if the county sells property tax liens to investors, which is a topic for another day). It still may make sense to "stop the bleeding", but the financial calculation changes.

JosephS27 (Texas)
Posts: 19

Posted:

Thanks very much to all that replied - truly, I learned a lot, and as my Mother used to say, as far as the complexities of foreclosure, "it's complicated".

In the situation that I was concerned about with my HOA, the powers that be admitted that the vote should have been taken and recorded in OPEN session - in this case, all board members voted to foreclose - my interest was in knowing which board members were willing to say that one HOA member's problems are more worthy of getting a break than another HOA member's problems - IMHO, they law is the law and anytime wiggle room is allowed, it opens the door to favoritism and similar potential problems.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By JosephS27 on 07/16/2022 6:05 AM
Thanks very much to all that replied - truly, I learned a lot, and as my Mother used to say, as far as the complexities of foreclosure, "it's complicated".

In the situation that I was concerned about with my HOA, the powers that be admitted that the vote should have been taken and recorded in OPEN session - in this case, all board members voted to foreclose - my interest was in knowing which board members were willing to say that one HOA member's problems are more worthy of getting a break than another HOA member's problems - IMHO, they law is the law and anytime wiggle room is allowed, it opens the door to favoritism and similar potential problems.

The problem is that I don't think you can draw the conclusion that you're trying to draw. As your mother observed, "it's complicated".

While some HOA issues and laws are black and white, right vs. wrong, foreclosure isn't one of them. Instead we have competing "rights": the board's obligation to foreclose, the principle of avoiding selective enforcement or bias, and the obligation of the board to make financially sound decisions.

Reasonable people can disagree on which of these principles should take precedence. I personally tend to lean toward financial soundness, but it will depend on the details of the particular decision I'm trying to make. This means that two delinquent homeowners may be treated differently simply because one foreclosure action is likely to succeed but the other one is not. If you believe that equal treatment of homeowners should take precedence, then you would either proceed to foreclosure for both, knowing that the association will probably end up eating the legal costs of foreclosing as well as the outstanding assessments for one of these owners, or you let your liens ride and the outstanding assessments accumulate - in other words, you make a decision that you know may well be financially unsound.

There is no way around this when you have competing and conflicting "rights". It's not a matter of deciding one homeowner's problems are more worthy of getting break - it's that one homeowner's situation may be resolved successfully with the tools that the board has but another's may not.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By CathyA3 on 07/16/2022 12:59 PM

Posted By JosephS27 on 07/16/2022 6:05 AM
Thanks very much to all that replied - truly, I learned a lot, and as my Mother used to say, as far as the complexities of foreclosure, "it's complicated".

In the situation that I was concerned about with my HOA, the powers that be admitted that the vote should have been taken and recorded in OPEN session - in this case, all board members voted to foreclose - my interest was in knowing which board members were willing to say that one HOA member's problems are more worthy of getting a break than another HOA member's problems - IMHO, they law is the law and anytime wiggle room is allowed, it opens the door to favoritism and similar potential problems.

The problem is that I don't think you can draw the conclusion that you're trying to draw. As your mother observed, "it's complicated".

While some HOA issues and laws are black and white, right vs. wrong, foreclosure isn't one of them. Instead we have competing "rights": the board's obligation to foreclose, the principle of avoiding selective enforcement or bias, and the obligation of the board to make financially sound decisions.

Reasonable people can disagree on which of these principles should take precedence. I personally tend to lean toward financial soundness, but it will depend on the details of the particular decision I'm trying to make. This means that two delinquent homeowners may be treated differently simply because one foreclosure action is likely to succeed but the other one is not. If you believe that equal treatment of homeowners should take precedence, then you would either proceed to foreclosure for both, knowing that the association will probably end up eating the legal costs of foreclosing as well as the outstanding assessments for one of these owners, or you let your liens ride and the outstanding assessments accumulate - in other words, you make a decision that you know may well be financially unsound.

There is no way around this when you have competing and conflicting "rights". It's not a matter of deciding one homeowner's problems are more worthy of getting break - it's that one homeowner's situation may be resolved successfully with the tools that the board has but another's may not.

Well said. One of the main questions is deciding to foreclose should be, is there anything there for us to warrant the expense of doing so? Let us say you had two owners. One you know to have little to no equity. One you know to have equity. Do you think it is wise to treat them equally?

JosephS27 (Texas)
Posts: 19

Posted:

Thanks again for the friendly explanations of how I was looking at this situation incorrectly, without taking all of the facts into consideration - truly, in cases like this, "equal treatment" would be difficult if not impossible to achieve. I am grateful to the civil and friendly explanations you friendly folks have provided here.

RodgerF (Texas)
Posts: 33

Posted:

You need go to the Justice of Peace, fill out an affidavit notarized, and request an immediate injunction. In Texas that will cost about $300 in court fees. Since the HOA is clearly wrong should be recover those fees too. Just add the reimbursement equest on your affidavit. Very simple process.