Texas Legislative Update 2021: Issues Affecting Developers of Planned Communities and Condominiums and Developer-Controlled Communities – Real Estate and Construction
The 2021 Texas Legislative Session is over and some changes are coming for planned communities. Compared to the 2019 legislative session, 2021 has been more active with around 30 bills introduced that would have had an effect on the administration of planned communities in Texas. In the end, four significant bills were passed (five if you count a bill with a duplicate language). Fortunately, for developers, there are no major changes in the way we structure communities for our clients, nor any significant dilution of registrant rights to develop, operate, market and sell condominium lots or units. .
Below is a brief summary of each bill with some observations on the articles of each bill and the steps to consider with respect to existing or future governance systems and association operations in order to ensure compliance with new laws. A warning first. These invoices are “fresh” and one is somewhat complex. It will take time to see how practitioners interpret them over time and what best practices emerge.
Senate Bill 318 (by Huffman (R); District 17, Houston)
Effective September 1, 2021
CONDOMINIUMS ONLY: RECORDS AND DOCUMENT RETENTION
Texas Property Code Chapter 82 Amendment
During the 2019 legislative session, Senator Huffman introduced Senate Bill 639, which would have conformed condominiums to the same voting rules, council eligibility standards, open council meeting requirements, and filing requirements. Records apply to non-condominium corporations under Chapter 209 of Texas Property. Coded. If passed, Senate Bill 639 would have been problematic for condominiums, as the new requirements could have made it more difficult for consumers to obtain home loans and / or mortgage insurance. The bill has not moved forward.
In 2021, Senator Huffman introduced Senate Bill 318, removing problematic provisions from the 2019 bill, but retaining the same document production requirements already applicable to non-condominium corporations. In fact, on September 1, 2021, non-condominium associations and condominium associations will have to comply with the same procedures and deadlines to respond to a request from an owner of association files. Since these “new” condominium requirements have been in effect for non-condominiums since 2012, compliance should not be too burdensome. A change for condominiums that does not apply to non-condominiums concerns the remedy if the association does not provide records in accordance with the new law. For condominiums, if a member is denied access and a court awards court costs and attorney fees to the member, the member is not authorized to deduct the price of the contributions of the co-ownership association.
There are, however, two new requirements that will need to be implemented. before September 1, 2021:
Requirement 1: All condominium associations will be required to adopt a document production and copying policy, which includes the costs of producing documents. Costs are limited to the costs of copying public information, which can be found in Title 1, Texas Administrative Code, Section 70.3, and cannot exceed the actual costs incurred by the association. This policy will be similar to the policy that must be adopted by a non-condominium corporation (since the requirements are the same). Document production and copying policy should be recorded in the records of the county where the plan is located
Requirement 2: If the condominium association has eight or more units, the association will have to adopt and comply with a document retention policy. This policy will be similar to the policy that must be adopted by a non-condominium corporation (since the requirements are the same). Although not expressly stated, we believe that the document retention policy should be recorded in the registers of the county where the regime is located.
Senate Bill 581 (by Hancock (R): District 9; Taylor (R): District 11; West (D): District 23)
CO-OWNERSHIP (KIND OF) AND NON-CO-OWNERSHIP: RELIGIOUS POSTINGS
Texas Property Code Chapter 202 Amendment
Senate Bill 581 is essentially a “flush and repeat” of similar bills that have been introduced in recent sessions, each aimed at giving homeowners more flexibility to display religious symbols or other religious content. outside or on their home. Previous bills, for a number of reasons not necessarily related to their content, have never been adopted. This has changed. Those of you reading this who have followed this issue may recall that in 2011, the Legislature passed a bill that provided flexibility, allowing homeowners to display a religious object at home. front door of their house, but allowing the association to limit the object to 25 square inches. 25 inches is now “infinity and beyond” and not just limited to the entrance to a residence.
You may need to strengthen your knowledge of constitutional rights with respect to religious freedom and what constitutes a sincere religious belief when assessing whether a sign can be regulated by the association, but there are some exceptions in the draft. Senate Law 581 that might help. Some of these exceptions were in the previous law, but they are repeated here with underlined text showing what was changed in Senate Bill 581 and our comment in brackets. Namely, you can ban any sign or display that: (1) threatens public health or safety; (2) violate a law other than a law prohibiting the display of religious speech [meaning
that if there is another law prohibiting the display of religious
items the association cannot prohibit because of that law]; (3) Contains language, graphics or any other display that is clearly offensive to a passer-by for reasons other than its religious content; (4) is installed on a property: (A) owned or maintained by the owners association [CONDO AND MAYBE NON-CONDO CARVE-OUT];
or (B) held in common by the members of the owners association [CONDO CARVE-OUT]; (5) violates any applicable construction line, right-of-way, setback or easement; or (6) is attached to a traffic control device, lamppost, fire hydrant or sign, post or light fixture.
What does it mean?
What does this mean for governance?
If your return includes the typical post-2011 language (25 square inches allowed), it no longer applies. We don’t think you need to go back and amend to remove language restricting religious displays to comply with the law since … Just be aware that you can’t limit to 25 square inches. For pre-2011 statements and news, there will most likely be a sign ban (or improvements that are defined broadly enough to cover signs) unless approved by the architectural review authority. Just know that you have your settings for a denial. Despite the comments we saw the opposite, don’t panic! Best practices in the face of new changes like this take time to develop. Waiting,
we recommend that you consult a lawyer when facing the new paradigm and please do not try to write a policy on sincere religious beliefs!
When structuring governance systems, we believe that it is worth considering what is characterized as general common elements in relation to a unit (since a unit is not held in common and signs religious would be allowed on the units), and how maintaining the association is defined in relation to the unit, home or yard space, and to bring these thoughts through the prism of Bill 581 of the Senate.
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The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.