A homeowner association can be a big plus when choosing to purchase a home, but it also can come with a serious downside.
Lawmakers passed a massive overhaul of homeowner associations last session in Senate Bill 1588. The law, which went into effect a year ago, required homeowner associations to register with the state, and it added some rights for homeowners: limited fees on resale certificates; prevented conflicts of interest on governing boards; and requires a bid solicitation for any purchase of more than $50,000.
Real estate agents are urging lawmakers to go further with due process next session around homeowner disputes. SB 1588 moved disputes from District Court to small claims court. Texas Realtors, the state association, would prefer to see something even less intimidating.
“Many real estate buyers seek out these HOAs for amenities or standards of care,” Liberty Hill Realtor Christie Gessler, an officer in the association, told the House Business & Industry Committee on Thursday. “But we also hear a lot from our members about challenges that they and their clients face when buying, selling or even living in homes in associations.”
Those challenges include high fees, difficulties in resolving disputes and invasions of privacy, Gessler said. The stories were so pervasive that Texas Realtors launched a website where homeowners can publish their own HOA dilemmas, My HOA Story.
All HOAs are now expected to register with the Texas Real Estate Commission, or TREC. TREC has no regulatory authority, but it has posted a searchable database that includes contact information for each HOA, as well as fees set by the association.
Setting HOA fees can be a complicated process, Gessler said. It’s even tougher to hear from homebuyers who learn about unexpected charges at the last minute.
“I can tell you that we hear about how high fees are crippling to residents and people who are trying to buy or sell in some of these managed communities,” Gessler said. “It’s very common for us to hear reports of thousands of dollars in HOA fees being charged at the closing table with no option for a buyer or seller to pay up.”
To say “no” to these unexpected fees could mean losing a home, Gessler said. One HOA in Round Rock recently added a $500 administrative fee for the collection of simple tenant contact information. An owner that fails to comply can be fined $250 a day, according to a form Gessler shared with committee members.
Gessler also urged lawmakers to consider some forum — possibly at TREC — where HOA disputes —major and minor — can be mediated before it ends up in a court setting.
“We have no middle ground,” Gessler said, adding that homeowners who are intimidated often fail to show up for court. “We know it’s a complex and sensitive topic, but when you’re talking about people’s homes, we need to make sure our systems and structures are set up to protect all Texas residents.”
Lawmakers should consider a step-by-step progressive path before any action is filed in a court. “Maybe some of these issues can be remedied early, rather than taking up the court’s time,” she said.