Texas HOA Questions And Answers — Homeowners Protection ...

How are Homeowners Associations in Texas Governed in General?

Texas associations are administered by a board of directors (or just “board”) elected by homeowners in accordance with the association’s declaration of covenants (“declaration”) and bylaws. Tex. Prop. Code §§202.001, 204.004, 209.00593.

If provided in the declaration, the developer can appoint board members while the community remains in the development phase, but not longer than 120 days after 75 percent of homes in the community have been sold to an owner other than the developer or a commercial home-builder. Tex. Prop. Code § 209.00591(c).

An HOA’s board appoints officers to carry out the board’s duties and powers and to otherwise act on behalf of the association. Officers and directors have a fiduciary relationship toward members and the HOA and must therefore act reasonably within the association’s and members’ best interests and avoid self-dealing or conflicts of interest. Tex. Prop. Code § 209.0052; Tex. Prop. Code § 82.103.

Duties and powers of an HOA’s board, granted under the TPC and the community’s declaration, include enforcing covenants, adopting budgets, assessing and collecting member fees, appointing of agents to act on the association’s behalf, maintaining of commons areas, and acting on behalf of the association in legal matters. Tex. Prop. Code § 204.010. An HOA board is also empowered to adopt rules for the administration of the community. Tex. Prop. Code § 209.002(4).

An HOA’s corporate structure is governed by its articles of incorporation, a legal document prepared when the association organizes as a corporation and registers with the Texas Secretary of State. Eligibility criteria and duration of terms for officers and board-members are usually set forth in the declaration, bylaws, or articles of incorporation. Most communities provide for annual terms.

An association’s declaration is recorded with the county land records of the county in which the HOA is located. A declaration does not become technically effective until it is filed in the land records. Tex. Prop. Code § 202.006(b).

Along with describing the duties and powers of the board and officers, a declaration sets forth the association’s restrictions and covenants, the manner in which HOA voting and elections occur, the process for calculating and collecting assessments, and any restrictions on the powers of the board or association. Tex. Prop. Code §§ 202.006, 204.001.

Lot owners and any occupants of homes within an association are legally bound to comply with the restrictions and covenants stated in the declaration. See generally Tex. Prop. Code § 209.006.

HOA boards are empowered to impose penalties or take legal action to correct violations, and individual lot owners may also bring compliance actions against non-compliant owners. Tex. Prop. Code § 202.004.

HOA members have a right to vote on certain association matters, including election of board members and adoption or amendment of covenants. Voting generally occurs at member meetings, which must be held at least annually. Tex. Prop. Code § 209.014.

Notice of member meetings must be provided to all members ten to fifty days in advance. Tex. Prop. Code § 209.0056. If a declaration allows for voting outside of member meetings (by written, electronic, or absentee ballot, for instance), notice must be provided at least twenty days in advance of the ballot-submission deadline. Id. Members must be afforded the option of voting via absentee ballot or proxy, should they so choose. Tex. Prop. Code § 209.0592(a-1).

All member votes must be recorded in writing if the vote pertains to the election or removal of a board member, an amendment to a declaration, or a regular assessment increase or special assessment. Tex. Prop. Code § 209.0058(a). Only the person responsible for counting votes may be allowed access to ballots. Tex. Prop. Code § 209.00594(c).

Board meetings must be open to all members, except that special executive meetings may be closed for the purpose of discussing litigation, negotiations, personnel matters, and confidential member information. Tex. Prop. Code § 209.0051. The board must create and retain minutes of all board meetings. Tex. Prop. Code § 209.0051(d).

A board cannot consider or vote on certain important matters outside of an open board meeting, including fines, foreclosure actions, assessment increases, suspension of member rights, annual budget approval, capital improvements, and officer appointments. Tex. Prop. Code § 209.0051(h).