3 New Laws Effecting your HOA in 2023-2024

3 New Laws Effecting your HOA in 2023-2024

During the 88th Legislative session of Texas governing body 3 laws were passed effecting Homeowners Association (HOA) that HOA Boards and even homeowners need to be aware of. It is vital to stay up to date on new laws that impact your community to make sure your governing documents are enforceable in the ever changing legal landscape. This is a benefit of hiring a competent property management company that can keep the HOA board members at the forefront of changing laws. Here are 3 major legislative changes that passed in Texas for 2023 legislative session that you need to know about.

1. Texas House Bill 614: Fines and Enforcement Policy

What is the new law?

House Bill 614, also known as the Fines and Enforcement Policy law, requires all Texas HOAs to establish a clear enforcement policies detailing restriction types and a set schedule for each fine.

What does this law do?

This bill aims to increase clarification in the HOA's policies, ensuring communities are compliant in federal guides for enforcing rules. The law states:

“A property owners' association board shall adopt an enforcement policy regarding the levying of fines by the property owners' association.  The policy must include:

(1) general categories of restrictive covenants for which the association may assess fines;
(2) a schedule of fines for each category of violation; and
(3)  information regarding hearings…” 

What does this mean for your HOA?

The HOA board will need to update your enforcement policy to include:

1. A schedule of fines for each violation type.
2. Information on the hearing and verification process before the board.
3. Categories of restrictions that may result in fines.

Note: The policy can allow the board to continue to adjust fines on a case-by-case basis, ensuring flexibility.

Next Steps?

Consult your property management company and hire a lawyer to review and update your current fines and enforcement policy. You need to make sure it includes a schedule of fines for categories of violations to comply with the new Texas state law by January 1, 2024.

2. Texas House Bill 886: Assessment Lien Filing

What is the new law?

House Bill 886, also known as the Assessment Lien Filing law, defines an “assessment lien” as any lien instrument that shows nonpayment of assessments or charges owed to a Homeowners Owners Association (HOA). It affects the title to real property and is filed in the county's official public records. The law states:

“Before a property owners' association files an assessment lien, the association must provide three separate monthly notices of delinquency…” 

What does this law do?

An amendment to Section 209.0094 of the Texas Property Code, House Bill 886 aims to regulate the process of filing liens for assessment debts in single-family residential HOAs. It ensures homeowners are given a fair opportunity to address outstanding dues and prevents sudden liens.

What does that mean? 

Your HOA must send three monthly written notices before filing a lien against a homeowner. 

1. First Notice: This notice can be sent via first class mail or email.
2. Second Notice: This notice needs to be sent via certified mail (return receipt requested), at least 30 days after the first notice.
3. Third Notice: This is a notice of assessment lien, sent at least 90 days after the second notice.

Each notice must include 3 things:

1. Tell the property owner how much is owed.
2. Inform and clarify the homeowner of their rights.
3. Provide at least a window 30 days for payment without additional charges being added on.

What does this mean for your HOA?

If your HOA’s Declaration allows for a lien on properties for nonpayment of assessments, this law mandates sending two written notices before filing a lien can be filed. The third notice of assessment lien can only be sent 90 days after the second notice if the debt is still unpaid. Remember, federal and state law supersedes the HOA's governing documents. 

Next Steps?

Have a lawyer prepare an amended Collection Policy that reflects this new procedure and have the HOA's board vote and approve the policy. 

3. Texas House Bill 1193: Anti-Discrimination Based on Section 8 Status

What is the new law?

House Bill 1193 requires Texas associations to eliminate any restrictions based on a property owner's method of payment.

What does this law do?

House Bill 1193 amends Chapter 202 of the Texas Property Code, increasing protection for homeowners who rely on assistance, such as homeowner using Section 8 housing vouchers. The Law States:

“A property owners’ association may not include or enforce a provision in a dedicatory instrument that prohibits or restricts a property owner from renting a dwelling to a person based on the person’s method of payment.” 

What does this mean for your HOA?

Texas HOA's must accept all forms of payment, including Section 8 housing vouchers, rental vouchers, rental assistance, or subsidies from non-governmental organizations. This allows for equal access to housing for all tenants, regardless of payment method used.

Next Steps?

Review your HOA's governing documents to ensure any restrictions against specific payment methods are removed.

Conclusion

Staying compliant with new legislation is vital for smooth HOA operations. The recent changes brought by the 3 new House Bills that shows the importance of transparency, fairness, and consistency within your community. By understanding and adapting to these laws, your HOA can ensure homeowners are treated fairly and that your community's policies remain clear and enforceable.

If you are unsure if your HOA's governing documents are up to date and enforceable reach out to us here at PMI Cross Timbers and we would be happy to review and walk you through the necessary next steps for your HOA.