NEW LAWS RAISE ISSUES: ELECTION OF HOA DIRECTORS

New laws raise questions about the election of HOA directors, including:  (1) is an association required to permit nominations from the floor?; and (2) if an association is required to permit nominations from the floor, are votes cast by absentee ballot counted?

WHAT ABOUT FLOOR NOMINATIONS FOR DIRECTORS?

With respect to elections, does a provision in a dedicatory instrument that prohibits nominations from the floor, and instead requires candidates to be nominated in advance of an election, impermissibly “restrict” an owner’s right to run for the board?  Section 209.00591(a) of the Texas Property Code provides:

Except as provided by this section, a provision in a dedicatory instrument that restricts a property owner’s right to run for a position on the board of the property owners’ association is void (emphasis supplied).

The statute does not define the term “restricts.”  Riddle & Williams believes there are two possible interpretations of this provision. 

Interpretation One:   A provision that prohibits floor nominations does not restrict an owner’s right to run for the board because such a provision does not, on its face, seek to restrict an owner from running for the board.  Rather, such a provision sets forth a procedural mechanism with the purpose of fostering orderly elections.  For example, prior to the effective date of this statute, it was common for associations to enforce provisions in their dedicatory instruments that prohibited owners who were not in good standing from running for the board.  If the statute is directed at those types of provisions, which prevent certain types of owners from running for the board, there is an argument that provisions in dedicatory instruments that merely regulate the election process, such as those that prohibit floor nominations, do not fall within the coverage of this statute.  However, the effect of such seemingly neutral, innocuous provisions is that an owner who fails to be nominated by a nominating committee could be prohibited from running from the board.   

Interpretation Two:  At least two arguments can be made that such provisions do impermissibly restrict an owner’s right to run for the board.  First, the statute identifies two specific situations where an association can restrict an owner’s right to run for and serve on a board, neither of which addresses the issue discussed in this article: (1) where a board member has been convicted of a felony or a crime involving moral turpitude; and 2) during a period of declarant control, where the declarant may appoint and remove board members other than those board members elected by the owners.   Neither of these exceptions to the general rule addresses the issue discussed in this article.  As such, there is an argument that an owner’s failure to comply with a provision in a dedicatory instrument that requires him or her to submit his or her name to the association as a candidate in advance of an election is not a statutorily recognized basis on which to prevent an owner from running for the board. 

Second, the plain and common usage of the term “restrict” arguably dictates that no limitations are permitted on an owner’s right to run for the board.  Section 311.011 of the Texas Government Code provides that when interpreting statutes such as the one at issue: “Words and phrases shall be read in context and construed according to the rules of grammar and common usage.”  Webster’s New College Dictionary (3^rd ed.) defines the term “restrict” as follows:

restricts.  To hold within limits:   CONFINE.

Based on the plain language of the statute and the common usage of the term “restrict,” there is an argument than any limitation on an owner’s right to run for the board (except those limitations that are expressly authorized in the statute) are prohibited.  If the Texas Legislature wanted to prohibit only provisions that facially “prohibited” or “disqualified” owners from running for the board, it could have chosen those terms.  In fact, Section 209.0059 of the Texas Property Code, which immediately precedes Section 209.00591, uses the word “disqualify” in prohibiting provisions which would disqualify an owner from voting.  The use of the word “restrict” in Section 209.00591 rather than the word “disqualify” used immediately above it would seem to indicate that the Texas Legislature intended for the meaning of “restrict” to be something other than mere disqualification.  Under this interpretation, the term “restricts” is a lower threshold that results in the invalidation of provisions that in any way attempt to limit an owner’s right to run for the board.             

No Texas court has addressed this issue yet, and Riddle & Williams is not certain how a court would resolve the issue.  If your association is presented with this potential issue, Riddle & Williams suggests that you contact your legal counsel for guidance. 

This article is not intended to provide legal opinions or substitute for the advice of legal counsel.  The information contained herein encompasses proprietary and confidential information of Riddle & Williams, P.C. and shall not be used, disclosed or reproduced, in whole or in part, for any purpose, and the information contained herein shall not be furnished to others without the prior written consent of Riddle & Williams, P.C.

Dean Riddle is a principal of Riddle & Williams, LLP, specializing in HOA law.  He has practiced in Texas for 27 years.