IS YOUR HOA PREPARED FOR A TURF WAR?

In 2003, Texas law protected the use of “water conserving turf” but it failed to define what constituted water conserving turf.  Naturally, arguments ensued over the right to install synthetic turf (think of the lush groundcover at AT&T Stadium) versus natural turf (examples include Bermuda, St. Augustine, and Buffalo Grass).  A mere 10 years later, SB 198 or Texas Property Code Section 202.007 clarifies, protects, and gives owners the right to install water conserving or drought-resistant landscaping.  This law received broad support from many advocacy groups as an important way to address the water crisis in our State.

For owners, the days of a property owners association’s (POA) absolute right to deny drought-resistant landscaping are a thing of the past.  Subject to POA approval (see below), owners can install water-efficient landscapes.  This option is very attractive and earth-friendly, not just economical.  A xeriscape is the smart thing to do if you live in where water is scarce or are subject to water restrictions.  Owners are no longer limited to installing the “Arizona look” but rather have many options to achieve a lush and beautiful landscape. 

Not only do xeriscape materials save water, if maintained, they become a self-sustaining, low-maintenance natural landscape for your home.  As part of the architectural application process, owners should be prepared to submit a detailed description or plan for the installation. Owners are encouraged to provide a to-scale drawing of the plan, along with photos and descriptions of the various plant materials, groundcover, etc.

For POAs, Section 202.007 provided needed guidance on what constitutes turf and whether the POA could promulgate guidelines relating to drought resistant landscaping.  As background to the “turf” issue, an owner fought to tweak the bill to protect his expensive synthetic lawn.  Ironically and much to the owner’s dismay, the new law lists "natural" turf, confirming that artificial, synthetic, fake grass doesn't qualify as xeriscaping in the POA context. 

The law also allows POAs to establish drought resistant landscaping guidelines.  The POAs standard of review for the application is to ensure “maximum aesthetic compatibility” with other landscaping in the community and, such determination cannot be “unreasonably withheld”.  POAs are encouraged to work with its management company, landscape vendor, and legal counsel to establish the community’s standards for installation of drought-resistant landscaping to include, among other things, the types of plants, rocks, gravel, border, maintenance requirements, and what percentage of the visible lot must contain sodded grass.

If guidelines are not established, including a requirement to obtain prior approval, then the POA may not be able to restrict xeriscaping.  Once approved, the guidelines must be filed in the county’s real property records.

As my wife frequently reminds me, communication is key.  The POA must effectively communicate its requirements to the owners via established guidelines.  The owners must effectively communicate their drought-resistant landscaping plans via review of the guidelines and presentation of detailed plans.

Best of luck in avoiding a turf war in your POA.  For more on this topic also see this recent blog post.

About our Guest blogger:  Vinay B. Patel is a senior associate attorney at Henry Oddo Austin & Fletcher, P.C.     He has the unique experience of both serving on HOA Boards and representing HOAs as general counsel.  This article is not a substitute for legal advice and should not be construed as a legal opinion. If you have specific inquiries, please contact Vinay @ vpatel@hoaf.com.

What should be in the minutes of board meetings?

The HOA Pulse newsletter recently offered several tips for making board meetings more efficient. Here's one item.

Minutes - Minutes are the official record of actions taken by the board of directors at a meeting. As such, we feel that minutes should only reflect action items and decisions made. Minutes should not be a verbatim transcript of the entire meeting. While a prior article published in HOA Pulse provided a checklist for minutes, that checklist was intended to identify the items that might be documented in the minutes. It did not discuss the overall structure of the minutes.

Minutes should typically include:

• The time the meeting was called to order and the time it was adjourned.
• A listing of board members who were present and those who were absent.
• Approval of the prior meeting minutes.
• All motions made during the meeting, whether or not they were approved.
• The maker of each motion, the second of the motion, and a list of board members who voted for, dissented, or abstained from the motion.
• Approval of any specific financial transactions.
• Acceptance of the treasurer’s report.

ReadMore about making board meetings more efficient.

Funding Condominium Reserves by Percentage of Assessments

If you live in a Condominium community, you may need to find out if your association is setting aside sufficient reserve funds for future replacements and maintenance. In a short case study article, Gary Porter, a CPA and reserve specialist, recounts the experience of a small California condo community and tells why they had to change their method of setting aside reserves and plan for a special assessment.

“The fact is, using a flat percentage of assessments just doesn't work as a reserve funding model. FHA funding requirements notwithstanding, an association must project future expenditures to determine an appropriate funding level. No two associations are the same; therefore, no two funding plans are necessarily the same, and no flat percentage number will work for all associations.”

ReadMore in HOA Pulse newsletter.   

New Law Allows All Homeowners to Install Water Saving Landscapes

Senate Bill 198, passed by the Texas Legislature and signed into law in June 2013, prohibits property associations (POAs) from banning water-efficient, drought-resistant landscaping. The law went into effect last September 1.

Under SB198, POAs can still require prior approval before homeowners switch to such landscapes, and POAs can adopt guidelines on what kind of plants and designs are acceptable as long as they do not “unreasonably restrict” water-conserving landscapes. This bill enjoyed a wide range of support from environmental groups like Clean Water Fund to Texas Community Association Advocates and businesses like The Home Depot.

A Texas home shows attractive drought-resistant landscaping.

  

Texans know that water is in short supply in our state for a variety of reasons, such as rising population, drought, and a changing climate. Municipal water demand is rising faster than any other sector and by 2060 is predicted outstrip all other sectors, including agriculture. 

Lawn watering is the major driver of municipal demand, and can account for as much as 60% of a household’s water use. Replacing non-native turf grasses with drought-resistant native plants and ground cover can lower a homeowner’s water bills and save communities money that would otherwise be needed to purchase new sources of water and build expensive new water treatment and distribution infrastructure. It can also leave more water in our aquifers, lakes, and rivers for wildlife and the human recreation and industry these ecosystems support.

Installing a drought-tolerant landscape does not mean limiting yourself to grass and cacti, or creating an 'Arizona look' in your front yard. These landscapes can include a wide variety of colorful plants that provide food and shelter to native wildlife. 

SB 198 allows POAs to maintain aesthetic harmony through a variety of means, by for example, limiting plants to those from a specific list or catalog, requiring a minimal amount of turf grass, directing that all vegetated beds have a border whose color and style is compatible with the home's architecture, and banning or limiting the use of gravel. However, POAs are no longer allowed to ban drought-tolerant landscapes outright. If properly implemented, SB 198 can provide a 'win-win' for proponents of water conservation and POA advocates alike. 

David Foster is State Director for Clean Water Fund, a nonprofit that provides free presentations and workshops on how POAs can implement SB 198. See www.cleanwaterfund.org/xeriscape

Cutting Corners on Bankruptcy Searches Can Be Costly

By following best practices in bankruptcy checks, attorneys protect community associations and their management team.  One unequivocal principle of bankruptcy is that all collection activities must stop when an owner files for bankruptcy protection.  Many community associations may not realize the true cost to a community and/or management company if a collection notice, or even a simple statement, is inadvertently sent to a debtor in bankruptcy. 

A short time ago, settlements in stay violation cases averaged $3,000.  Recently, settlements in these cases are hovering around $7,000, with some even reaching the $15,000 range.  With large portfolios and automated procedures, following best practice for flagging protocols and communications with legal counsel are a must to prevent a violation of the automatic stay and painful settlement checks.

  

By filing for bankruptcy, an automatic federal mandate to stop all collection activity surrounds the debtor.  The automatic stay is a federal court order.  Make no mistake, despite its automatic nature federal bankruptcy judges hold the automatic stay sacrosanct.  Bankruptcy judges will send the appropriate message to any creditor that the judge feels does not implement protocols to prevent even seemingly harmless violations of the automatic stay.  It is a strict liability standard, so the fact that the notice or statement may have accidently gone to the debtor does not matter.  If a notice is sent to a debtor in bankruptcy, the automatic stay has been violated. 

Checking the bankruptcy status as part of each step of the collection or compliance process falls on the shoulders of legal counsel.  Checking bankruptcy status is not the duty or concern of the board members or community manager.  Their duty is to notify legal counsel and properly flag the account to prevent notices and statements from the management or board level.  Lawyers can obtain access to a nationwide government website that will document every bankruptcy filed in the United States.  Bankruptcy checks by lawyers are quick, affordable, and well worth the time, considering that one letter can result in a settlement payment by the association and/or management of $7,000 or more.

Any time or money saved by avoiding title and bankruptcy status research in the proper databases is expended tenfold in the defense of a suit. Electronic searches are an efficient, reliable means to preserve precious community association resources.  By following this best practice, attorneys can help to avoid unwanted litigation against the community association and/or management company.  

Brady E. Ortego, of Roberts, Markel, Weinberg, PC, is an attorney specializing in community association law.  He is a frequent author and educator on issues affecting community associations and is active in community association industry support groups such as the Community Associations Institute.   

Guidelines for the Homeowner Forum

As a board member of your HOA, you’ll find it worthwhile to schedule times to get input from homeowners, whether there is a specific issue on which opinions may differ, or to get a sense of direction for many decisions the board makes. 

Homeowners may attend any board meeting and be given an opportunity to comment on agenda items at the appropriate time.  Or the association may wish to schedule a Town Hall type of forum to hear owners’ concerns and to answer questions.

The following guidelines are helpful for board members to guide the discussion and share with homeowners in advance of meetings- perhaps through an association newsletter or website.

Suggested Guidelines for Homeowner Forums

In the state of Texas, residents are encouraged to attend and observe association board meetings, except during executive sessions. If you’d like to bring an issue to the board’s attention, you’re welcome to speak during the homeowner forum—generally at the beginning of the meeting.  So that everyone who attends has an opportunity for a meaningful exchange with the board, we ask that you observe the following guidelines:

·         Notify the association manager in advance of the meeting that you will be attending the board meeting and would like to speak.

·         Each person will be allowed to speak no more than five minutes. Please respect the volunteers’ time by limiting your remarks.

·         If you need more than five minutes, please put your comments in writing. Include background information, causes, circumstances, desired solutions and other considerations you believe are important. The board will make your written summary an agenda item at the next meeting.

·         Although we’re all neighbors, this is a corporate business meeting. Please conduct yourself accordingly.

·         You may be asked to sign in and provide your contact information.  You will be called in the order you entered. This also allows the board to contact you if we need further information and to report back to you with an answer.

·         The homeowner forum is an exchange of ideas, not a gripe session. If you’re bringing a problem to our attention, we’d like to hear your ideas for a solution too.

·         To keep the meeting businesslike, please refrain from speaking if you’re particularly upset about an issue. Consider speaking later, speaking privately with a board member, or putting your concerns in writing and e-mailing them to the board.

·         Only one person may speak at a time. Please respect others’ opinions by remaining silent and still when someone else has the floor.

We may not be able to resolve your concerns on the spot, and we will not argue or debate an issue with you during the homeowner forum. We usually need to discuss and vote on the issue first. But we will answer you. 

Research Matters: How cutting corners in legal research costs community associations

Seemingly trivial oversights or cost/time saving techniques are often the root of an association and its management company being co-defendants in unwanted litigation. Our firm has represented management companies, managers and associations in these matters in an exceptionally large number of cases.  Community association lawyers play an integral part in reducing the potential occurrence of unwanted litigation. This article focuses on the proper method for checking record title in collection matters.

The Reliable Way to Do Title Searches

County Title Records

Each time a collection or compliance step is taken, record title to the property should be verified. Reliable title research takes mere minutes, yet many folks in the community association industry, lawyers included, fail to follow best practices. They rely on questionable resources rather than confirming record title through the most accurate resources.  

In many instances, the appraisal district records are used as the sole resource for determining ownership.   While these records can be a good resource for finding alternate addresses, appraisal district records are not determinative of record title to real property.  

 

The only source for current record title is the real property records of the county in which the property is located.  Many counties grant access to these records with “unofficial” documents available at no charge.  For counties that do not grant this type of access, subscriptions to the databases and/or vendor charges for title work are affordable and worth it.

The potential risk to the association and its management company is that a demand for collection or compliance may be sent to the incorrect party or address.  A suit against the community association, management company, and possibly the manager, for violation of the federal and state debt collection laws and a wrongful foreclosure is born. 

  

The amount of protection gained from a quick and affordable title search is immeasurable and good insurance against unwanted litigation.  Board members and management companies should check with their legal counsel to ensure that they are protected by reliable title searches.

Brady E. Ortego, of Roberts, Markel, Weinberg, PC, is an attorney specializing in community association law.  He is a frequent author and educator on issues affecting community associations and is active in community association industry support groups such as the Community Associations Institute.