POAs in the 2005 Legislature

1. POAs in the 2005 Legislature • The Good • The Bad • And the Really Ugly • Connie N. Heyer • Niemann & Niemann LLP • Austin, Texas

2. Who is CAI? • Nonprofit, nation-wide trade association representing the interests of POAs and their members • Education • Board and manager training • Seminars • Active legislative presence nation wide

3. CAI lobby efforts • Texas Lobbyists • Connie Heyer • Senator J.E. “Buster” Brown • Jennifer Brown • Plus, mid-session hired two additional specialists to assist in killing extremely harmful bills

4. Lobby Activities in General • Read all captions of 5000+ bills filed • Track in detail all bills, amendments, committee referrals, that have potential affect on POAs • Write amendments, lobby members and staff, attend hearings • Send legislative alerts • Organize grassroots lobby efforts • More than 80 bill amendments, reports, alerts, info packets prepared

5. Good news & Bad news • Not one bill passed with significant adverse effects on POAs and their members • The most onerous “anti-POA” legislation to date was introduced and almost passed,and it isn’t going away

6. Summary of Bills Passing • HB 638 (Hegar-Katy) Chapter 201 expansion. Limited power to extend/renew restrictions - bracketed bill • HB 873 (Dukes - Austin) Political signage • Effective June 2005. • Cannot prohibit political signs on owner’s property • Can adopt rules restricting signage to, for example • One sign per issue or candidate • If desired, speak with your POA’s attorney regarding drafting a rule so that what lawful limitations you may place on signage may be placed

7. Bills Passing, cont. • HB 1631 (Hilderbran, Kerrville)- allows 67% vote to amend declaration if declaration silent or requires unanimous vote - bracketed bill • HB 1632(Hope - Conroe)Expands reach of Chapter 204 (Harris county only) • HB 1690 (Keel - Austin) allows a condo association to be sued if it knowingly tolerates a nuisance situation • SB 1018 (Staples-Palestine) allows POAs to circulate petition to reinstate or extend restrictions - bracketed bill

8. Bills Not Passing, contd. • HB 399 (Villarreal-San Antonio) Sales price disclosure • HB 927 (Dutton - Houston) homestead exemption from foreclosure • Without foreclosure rights, only real remedy is expensive lawsuit with “paper tiger” judgment • Lien filed of record means little until home sells, or owner wants to borrow money

9. Bills not passing, cont. • HB 1072(Casteel - NewBraunfels) provided that POAs lose their lien if their management certificate not accurate • HB1465 (Flores-Mission) provided that no tow could be made from a condo or townhome community without actual consent of the person entitled to use the parking space • SB 362(Carona - Dallas) gave condo owners the right to redeem foreclosed unit if 3rd party purchased the unit at foreclosure sale

10. Bills not passing, cont. • SB 534 (Lindsay-Houston)gave County Attorney the power to enforce deed restrictions • SB 892 (Carona - Dallas) clarified record availability and provided privacy protections;clarified record retention requirements • SB 1234 (Fraser-Marble Falls) provided that owners could by 2/3 vote amend restrictions if restrictions required unanimous approval

11. Bills not passing, cont. • SB 1886 (Lindsay-Houston)required judicial foreclosure in all cases • Judicial foreclosure is not in the best interest of associations or their members • Much more expensive - two to three fold more expensive • More time consuming • Makes it harder for owners to redeem homes - additional $2,000 in attorneys fees to come up with as a condition for redemption

12. The “Brown Lawn” Bill • Proposed last session, too • HB 2425 (Puente-San Antonio) • Allowed home owners to do anything with their landscaping if it conserves water • Never watering conserves water • Never mowing conserves water • POAs could not dictate maintenance standards if they were not “water conserving”

13. HB 2425, cont. • Owners could let their landscape return to “natural or native vegetative state” • POAs could not require lawn watering so as to achieve minimum visual standard • No mandatory sprinkler systems • No mandatory turf grass • CAI attempted numerous times to meet with author and offer acceptable amendments - author (those pushing the bill) not interested • Author tried to tack this bill onto other legislation that almost passed

14. Application of payments bill • SB 244 (Wentworth-San Antonio/HB 1446 Orr-Burleson) • Mandated HOAs apply all payments in this order, ONLY to: • Overdue assessments • Current assessments • Fines • Attorney fees associated with fines • Problem: list not all-inclusive. Atty fees not associated with fines? Late fees? Collection fees? Damage assessments? Association would have to absorb all of them presumably.

15. SB 244, cont. • If can’t apply assessment payments to fines first (via rule normally), no incentive for owners to pay fines. • Only other way to collect on fines is to file suit • Many POAs can’t afford the time or money to file suit • Consequence: no teeth behind fines, so violations go uncorrected, or POA files lots of lawsuits each year

16. SB 244, cont. • CAI pulled out all stops and bill still came within minutes of passing • With CAI’s assistance, Rep. Linda Harper-Brown (Irving) identified a “point of order”, and raised it on the House floor, effectively killing the bill

17. HB 2215 • Authored by Kevin Bailey - Houston • POAs must give ALL notices in English and Spanish • POAs must accept payment plans • Required judicial foreclosure only • 2 year right of redemption • Association now out 2 years + of assessments if first lien forecloses or owner declares bankruptcy • No foreclosure sale purchasers is likely result

18. HB 2215, cont. • Applied Public Information Act (Open Records Act) to all POAs • Extremely complicated - meant for government entities • In amendment process, HB 2426 (“brown lawn”) language added on to this bill • Bill made it all the way through the House, and due to CAI’s efforts, did not make it out of Senate committee

19. Legislative Trends • Most all “anti-poa” legislation would make it easier to break or continue to break POA rules or deed restrictions, with the dues-paying, rule-abiding members all bearing the cost • 2 year right of redemption (no assessment collection for 2+years) • Must sue to effectively enforce fines

20. Lessons/Solutions • Most all legislators have heard from at least one constituent unhappy with his POA • Constituents rarely call saying “I like my POA” • Most legislators don’t have time to understand all bills. If some hear “this bill restricts POA powers”, that is all they need to hear to be dead set on voting for the bill

21. Lessons/Solutions, cont. • POAs need to reach out to and educate legislators on the values of POAs. Invite them to annual meetings, help them understand the challenges faced and the services provided. • Be thoughtful about your collections and enforcement. You don’t want to make the news. • Understand what your POA attorney’s procedures and billing practices are.

22. POA Values: • Maintain parks, pools, streets - otherwise cities would bear this cost • Enforce deed restrictions to keep property values up, aiding the appraisal districts and tax revenues • Provide vehicle for settlement of neighborhood disputes

23. Statistics More than 13,000 POAs in Texas More than 1.5 million owners Studies (both CAI and the legislature’s own interim study) show vast majority of owners satisfied with their POA and purposefully seek out deed restricted communities

24. Legislators deserving thanks: • Senators: John Carona (Dallas); Mario Gallegos (Galena Park); Frank Madla (Houston) • Representatives: Linda Harper-Brown (Irving); Frank Corte (San Antonio); Helen Giddings (De Soto); Anna Mowery (Ft. Worth)

25. Important things really did get accomplished: • SCR 8, recognizing the importance of the chuck wagon to Texas history, and designating it as the official vehicle of Texas • HB 107, prohibits lawsuits alleging injury due to weight gain (no more suing McDonalds for your Big Mac habit.) • HB 1813, you may now drink alcohol at historical re-enactment events. Allows historical reenactments in bars so long as live ammo not used.

26. More accomplishments • HB 1476, prohibiting the performance of suggestive cheerleading moves at public school events • Debated for 2 hours, not passed • However, many volunteers to oversee enforcement

27. Next Session • Expect more “anti-POA” legislation • Desire to hire interim lobby team to organize and assist with legislator outreach and education • We need money! The bad stuff won’t go away,the same legislators introduce the same bills year after year • TUPCA will be introduced - CAI will be lobbying for passage provided that final language is acceptable

28. TUPCA in General •Combines the 7+ chapters of the property code that currently apply to POAs. •It is a “gap filling” bill, just as TUCA (the Texas Uniform Condominium Act) was. •Drafted by attorneys representing all “sides”.

29. THE END • Thank you for past support • Please continue to help in these efforts! • CAI TLAC • C/o R. Carol Amar, Treasurer • 1600 NE Loop 410 • San Antonio,Texas 78209