3 Major Laws Changing Texas HOAs and COAs in 2023: HB 886, HB 614, HB 1193
Now that another Texas legislature special session is in the books, it’s time to take a closer look at the new state laws that will affect your homeowners association (HOAs) or condominium owner associations (COAs), both also known as property owners associations (POAs). Naturally, if you serve on your board, you’re probably wondering if or how these changes will impact your association and what steps your board should take next.
For starters, let’s all breathe a collective sigh of relief. Unlike the long list of action items that resulted from the 2021 Texas legislative session, this year’s laws are much more manageable. In fact, most of the new state laws simply require Texas associations to ensure their policies or governing documents are compliant with the new laws.
Below, we’re outlining the major laws that came from the 88th Texas legislature special session, what you need to know, and what they mean for your association.
Quick links:
Note: Before updating your association’s policies, it’s always best to consult your HOA or COA attorney or have your management company’s legal counsel make these updates on your behalf. An experienced management company in Texas should always have the resources and expertise ready to ensure these changes are seamlessly implemented in your community.
Why should board members familiarize themselves with these new laws?
Although this year’s special session didn’t result in an overwhelming list of action items for Texas associations, staying on top of state laws is always important. Texas law supersedes any POA governing documents, which tend to be updated by numerous people over time, leaving room for numerous interpretations. Before drafting, changing, or enforcing any policies in your governing documents, remember: the laws of the land come first.
POAs are self-governing entities with their own sets of policies and regulations that help foster a community of consistency and fairness for all residents. However, your board has its own set of rules to follow, most of which are defined by the Texas Property Code, chapters 81, 82, 209, and 202.
For Texas associations, state laws are the only dedicatory instrument that outranks your Covenants, Conditions, and Restrictions (CC&Rs, your association’s “Boss Doc”).
Overall, a thorough understanding of Texas state laws helps your board:
- stay in compliance with the Texas Property Code;
- ensure governing docs reflect state laws; and
- make more informed decisions.
Here are the 3 major laws impacting your association in 2023:
1. HB 886 (Assessment Lien Filing)
Effective date: September 1, 2023 | Single-family only
What is it?
HB 886, a.k.a. Assessment Lien Filing, defines an “assessment lien” as a lien, lien affidavit, or other lien instrument evidencing the nonpayment of assessments or other charges owed to a POA and is a legal instrument affecting title to real property filed in the official public records of a county.” This 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, HB 886 originated from a desire to regulate the process of filing liens for assessment debts for single-family residential property owners associations. The legislative intent was to offer homeowners a fair opportunity to address any outstanding dues and prevent sudden liens.
In simple terms, HB 886 mandates that before your HOA (or HOA attorney) can file a lien or notice of lien against homeowners, you must send them three monthly written notices:
- First notice: sent via first class mail or email.
- Second notice: sent via certified mail (return receipt requested), at least 30 days after the first notice was sent.
- Third notice: notice of assessment lien; cannot be sent until at least 90 days after the second notice was sent.
Each notice must:
- detail the amount owed;
- clarify the homeowner’s rights; and
- provide at least a 30-day period in which the homeowner can pay the owed amount without any additional charges.
What does this mean for my association?
First and foremost, if the Declaration for your POA provides for a lien on encumbered properties for nonpayment of assessments, this law does not affect the POA’s lien. In simple terms, HB 886 mandates that before your POA can file a lien notice against homeowners in the real property records, you must send them two written notices – the first notice by first class mail or email; the second notice via certified mail (return receipt requested). These notices must:
- detail the amount owed; and
- clarify the homeowner’s rights
Note: The second delinquency notice may not be sent until 30 days have passed since the date of the first delinquency notice. Before your POA can file a lien, it must wait 90 days after the second delinquency notice to the homeowner. If the homeowner still hasn’t paid the owed amount by the 90-day mark, then your board can file the lien (or notice of lien) with the county clerk’s office.
What now?
Work with your board’s legal counsel to have prepared an amended Collection Policy that reflects this new procedure.
2. HB 1193 (Anti-Discrimination Based on Section 8 Status)
Effective September 1, 2023
What is it?
HB 1193 requires Texas associations to remove any restrictions based on a tenant’s payment method. This 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 law do?
HB 1193 changes Chapter 202 of the Texas Property Code. The legislative intent behind this bill was to increase protection for tenants who rely on assistance to pay for housing.
What does this mean for my association?
Starting September 1, 2023, Texas POAs must accept any form of payment, including those made with Section 8 housing vouchers. This also includes rental vouchers, rental assistance, or rental subsidies from a non-governmental organization. This change helps ensure tenants have equal access to housing, regardless of method of payment.
What now?
Most POAs do not restrict such methods of payment, however, boards and managers of Texas associations should review their dedicatory instruments and ensure any restrictions against specific payment methods are not enforced.
3. HB 614 (Fines and Enforcement Policy)
Effective date: January 1, 2024 | Single-family only
What is it?
A returning bill from previous legislative sessions, HB 614, also known as “Fines and Enforcement Policy,” requires all Texas HOAs to establish enforcement policies detailing types of restrictions and the schedule of fines for each. This law specifically 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 law do?
This legislation aims to increase clarity in Texas HOA policies. This ensures that communities remain compliant and consistent when it comes to enforcement of rules.
What does this mean for my association?
Your board will need to seek legal counsel to adjust your enforcement policy to outline these three things:
- restrictions, arranged by category, that may result in fines if violated;
- a schedule of fines for each type of violation; and
- information about the hearing and verification process before the board.
Note: Your policy can reserve the board’s authority to adjust fines in a case-by-case basis. This allows for flexibility and consideration of any unique circumstances.
What now?
Your association may already have a fine and enforcement policy, but does it include a schedule of fines for categories of violations? To ensure your policy is compliant with the new state law, your board should consult your management company and legal counsel to review your current fines and enforcement policy and update as needed.
Note: Since the effective date for this Texas law is January 1, 2024, this allows some time for your association to adopt or adjust your fine and enforcement policy. Any fines levied before January 1, 2024 will be enforced as usual, whether the association has established a new policy or not. Fines that are due after the effective date will be subject to the association’s new policy under Texas state law.
Honorable mentions.
The new Texas laws described above are the major ones from this year’s Texas legislature special session – they have a more significant impact on your association. However, it’s still important for your Texas board to be aware of the new laws below:
1. HB 2024 (amendment to the Statute of Repose)*
Effective date: Immediately | Single-family homes and townhomes under 3 stories.
HB 2024 incentivizes builders to offer a written warranty for residential construction. By offering a warranty, it reduces the length of the Statute of Repose from 10 to 6 years. The Statute of Repose is a legal framework that limits the amount of time that people can file a lawsuit over damages caused by construction defects.
Note: This change only applies if a written warranty is offered. If no warranty is provided, then the Statute of Repose remains at 10 years.
See the full details of HB 2024 here.
What this means for your board:
Ensure your HOA policies comply with this law as soon as possible as it is already in effect.
2. HB 998 (relating to insurance coverage under FAIR)
Effective date: September 1, 2023 | Single-family only
This new state law allows the Texas Department of Insurance to help underserved areas by including POA insurance in its Fair Access to Insurance Requirements (FAIR) Plan. Essentially, if the commissioner determines that a substantial number of insurable risks don’t have reasonable access to POA insurance via the voluntary market, the department is authorized to take action.
See full details of HB 998 here.
What this means for your board:
Your board should contact your management company or insurance advisor and inquire about available new policies. A seasoned management company should already have close partnerships with insurance providers.
2. HB 2022 (amendment to the Residential Construction Liability Act)
Effective date: September 1, 2023
This law makes it easier for contractors to address defective conditions without the fear of getting sued. It sets limits on a contractor’s liability, which will help them be more confident and proactive in their approach to making any necessary repairs. This, in turn, will help reduce the overall time and cost involved in resolving disputes.
See the full details of HB 2022 here.
What this means for your board:
Review current contracts with contractors and builders to determine any necessary adjustments.
Vetoed: SB 1668 (relating to websites, management certificates, fence regulation, and ARC candidates).
Vetoed by Texas Governor Greg Abbott on June 18, 2023
If passed, this bill would have:
- mandated that boards provide a website and management certificate;
- allowed POAs to appoint residents to their architectural review committees (ARC) when there are insufficient applicants for the roles; and
- regulated placement of private fences in certain circumstances, like for accessing easements and walkways.
See full details of SB 1668 here.
Why was this bill vetoed?
It was deemed unnecessary by the governor since the bill’s requirements are already being fulfilled by most Texas associations voluntarily. Additionally, the governor stated that the bill’s requirements would place too much burden on POAs, ultimately leading to higher costs for residents.
What this means for your board:
Although this bill was vetoed, it’s always best practice to stay informed in case we see something similar in a future legislative session.
Conclusion
To see more results from the 88th Texas legislature special session, check out the Texas State Law Library‘s “new legislation” page for POAs. Again, before making any policy changes or updates to governing documents, it’s best practice for your board to seek legal counsel.
