Property owners gain support
Courtesy + Copyright 2002 Houston Chronicle

Senate panel recommends limits on homeowner groups
Tactics employed by homeowners associations to collect dues, fines and fees from errant property owners should be reined in, a Texas Senate panel said Tuesday. 

Advocates for reform said the recommended measures would sharply reduce the number of foreclosure suits filed by these associations. Research by local activists showed that more than 1,500 such actions were filed in Harris County in 2001, although only a handful led to people losing their homes.

The subcommittee of the Senate Intergovernmental Relations Committee, after a year of study and hearings, recommended 17 changes in state law spelling out the relative rights of property owners and

Key recommendations from the Senate subcommittee that examined homeowners associations: 
· Limit foreclosure suits to collection of dues 

· Two-year waiting period before lawyers are involved 

·Require vote of homeowners before increasing dues 

the associations that represent them. The report will be a starting point for work on the issue when the Legislature convenes in January. 

The subcommittee's work was propelled in part by public outrage over the case of 83-year-old Wenonah Blevins, who lost her $150,000 home for a time in 2001 because she was delinquent in paying $814.50 in association dues. 

The panel stopped short of calling for a ban on foreclosures by homeowners associations, as some activists had sought. However, it said foreclosures should only be authorized to collect mandatory assessments -- the dues associations charge all property owners they represent -- rather than to enforce deed restrictions. 

The panel also called for a waiting period before an association could retain a lawyer to collect unpaid dues. Rob Edwards, an aide to Sen. Jon Lindsay, R-Houston, who chaired the subcommittee, said the waiting period would be "roughly two years." 

David Kahne, a lawyer who has represented property owners sued by associations and who testified before Lindsay's panel, said the waiting period is a key recommendation. 

"This will help to close that foreclosure factory by delaying the involvement of attorneys," Kahne said. "Good neighbors solve their problems cooperatively. Too often, pre-emptive attorney involvement prevents sensible resolution and serves basically to profit attorneys at the expense of homeowners." 

Darlene Marcum, owner of a property management company that works closely with homeowners associations, disagreed. 

"Oh, my God. That's bad," Marcum said when told of the two-year proposal. 

Marcum said that the statute of limitations in such cases is four years, meaning that if this recommendation were enacted, "half of that time is gone before you can use the court system to collect a debt." 

Michael T. Gainer, a Houston lawyer who represents associations, agreed that a two-year waiting period would be onerous. For relatively small associations with a high proportion of property owners in arrears, he said, the inability to collect dues for that long could lead to drastic reductions in services. 

Gainer and Marcum said, however, that they support most of the subcommittee's recommendations. For example, both said they support a recommended ban on nonjudicial foreclosures in neighborhoods of single-family homes. 

"I am well pleased" with the report, Marcum said. 

During hearings in Austin and Houston, reform advocates argued that lack of regulation had allowed some homeowners groups to run roughshod over property owners, filing lawsuits and piling up legal fees over matters as trivial as a basketball hoop without a net or a small delinquency in dues. 

Association representatives and their attorneys, including Gainer, said foreclosure authority was a necessary tool to keep the associations on firm financial footing and maintain services such as community swimming pools and other amenities. 

The issues debated by the subcommittee apply only to associations where membership is mandatory. Hundreds of Harris County neighborhoods are represented by voluntary civic clubs that do not have foreclosure authority. 

Lindsay and Democrats John Whitmire of Houston and Royce West of Dallas, the three subcommittee members, agreed unanimously on the report released Tuesday, Edwards said. 

The panel also recommended that the Legislature: 

· "Consider other alternatives" to foreclosure to enforce assessments, although no specific alternative was proposed. 

· Permit a homeowner sued by an association to recover legal fees if the association's lawsuit is found to have "no reasonable basis." The law now provides for associations, but not homeowners, to recover legal fees in certain circumstances. 

Texas Senate Committee on Intergovernmental Relations