A homeowners association can be a big plus when choosing to buy a home, but it can also come with some serious drawbacks.
Lawmakers passed a massive overhaul of homeowners associations last session in Senate Bill 1588. The law, which took effect a year ago, required homeowner associations to register with the state, and it added certain rights for homeowners: limited fees on resale certificates; prevention of conflicts of interest on boards of directors; and requires a quote request for any purchase over $50,000.
Realtors are urging lawmakers to go further with due process in the upcoming session regarding landlord disputes. SB 1588 moved disputes from district court to small claims court. Texas Realtors, the state association, would rather 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 association officer, told the House Business & Industry Committee on Thursday. “But we also hear a lot from our members about the challenges they and their customers face when buying, selling or even living in association homes.”
Those challenges include high fees, difficulty resolving disputes and invasions of privacy, Gessler said. The stories were so prevalent that Texas Realtors launched a website where homeowners can post their own HOA dilemmas, My HOA Story.
All HOAs must now register with the Texas Real Estate Commission, or TREC. TREC has no regulatory authority, but it does publish 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 harder to hear from homebuyers who are told of unexpected costs at the last minute.
“I can tell you that we hear about how high fees are crippling residents and people 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 opportunity for a buyer or seller to pay.”
Saying “no” to these unexpected charges could mean losing a home, Gessler said. One HOA in Round Rock recently added a $500 administrative fee for collecting simple tenant contact information. A landlord who fails to comply can be fined $250 a day, according to a form Gessler shared with committee members.
Gessler also urged lawmakers to consider a forum — possibly at TREC — where HOA disputes — major and minor — can be arbitrated before they end up in court.
“We don’t have middle ground,” Gessler said, adding that homeowners who are bullied often don’t show up in court. “We know this is a complex and sensitive topic, but when you’re talking about people’s homes, we need to make sure our systems and structures are in place to protect all Texas residents.”
Lawmakers should consider a gradual step-by-step route before any suit is filed in court. “Maybe some of these issues can be resolved quickly, rather than taking court time,” she said.