Top Four Takeaways of Effective Covenant Enforcement
1. ENFORCING RULES
- Take the time to study and learn applicable rules and regulations for your community. Is your community a condominium or an HOA/POA? Should you apply Texas Property Code Chapter 82 (condominium) or Chapter 209 (property owners)?
- If your rules are inadequate or nonexistent, the association should consider adopting and recording proper rules. Partnering with a knowledgeable management company or with your association lawyer can speed up this process, and may help you consider areas of covenant enforcement that are often overlooked.
2. BREAKING RULES
- Know when rules should be broken. Statutes, rules, and guidelines provide notice to association members and ensure consistency throughout your community. However, proper enforcement does not mean an association should be unreasonable and inflexible.
- If an exception is warranted, document the unique circumstances and craft a resolution that preserves the association's ability to enforce the rule going forward. Detailed record-keeping will help future boards of your association avoid actions labeled as "arbitrary" (an action not based in precedent).
3. COLLECTIONS
- Education and communication is essential. Some residents may not have read through the section of the governing documents related to collections. Make sure the applicable documents are easy to locate and review. Consider offering an annual or quarterly publication that summarizes the procedures and related fines. Don't forget that depending on the community demographic, you may want to offer communications in Spanish or other languages.
- Your association should have a plan with certain steps pertaining to the notice and pre-foreclosure process for your community. Your board should discuss and understand key concepts of the process: payment plans, legal notices, suspension of amenity use rights, liens and foreclosure proceedings. Contact industry experts like your management partner or lawyer to learn best practices.
4. LEGAL ISSUES
- Not all rules are created equal - there is a hierarchy of laws applicable to your community. Your board should know which rules may be superseded by a higher authority. In order from most local to highest authority: community Governing Documents, Local/City/County Ordinances, Texas State Law (Nonprofit Corporation Act, Texas Property Code), Federal Law (FHA).
- A number of existing state and federal laws may change your association's rules. Even if you would ordinarily refer such matters to counsel, your board will need to be able to identify the types of matters that require review of state or federal law.
Bonus Takeaway: If the rules of your community are not recorded with the state, they are legally unenforceable and it is illegal to fine unit or property owners. Best practice: Make sure the rule is recorded before it is used to issue a violation.
To download full presentation slides, CLICK HERE.
Takeaways provided by:
Alex Valdes
Winstead PC
www.winstead.com
This article is a general summary of the information shared at the Mastermind Seminar on Covenant Enforcement & Compliance in September 2018 and should in no way replace advice of legal counsel. If you have further questions about any of the topics above, please contact your attorney for clarification.