Texas Legislative Update 2021: Issues Affecting Developers of Master-Planned Communities and Condominiums and Developer-Controlled Communities – Landlord and Tenant – Leases

The 2021 Texas legislative session is over and there are a few changes coming for planned communities. Compared to the 2019 legislative session, 2021 was more active with about 30 bills introduced that would have had an effect on the administration of planned communities in Texas. In the end, four meaningful bills passed (five if you count one bill with duplicate language). Fortunately, for developers, there are no major changes to the way we structure communities for our clients, nor any significant dilution of registrants’ rights to develop, operate, market and sell lots or condominium units. .

Below is a brief summary of each bill with some observations on the sections of each bill, and what measures should be considered regarding existing or future governance systems, and association operations in order to ensuring compliance with new laws. A caveat first. These bills are “fresh” and one is somewhat complex. It will take time to see how practitioners will interpret them over time and what best practices will 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 made condominiums conform to the same voting rules, board eligibility standards, open board meeting requirements, and filing requirements. of documents applicable to non-condominium corporations under Chapter 209 of the Texas Property Code. If passed, Senate Bill 639 would have been problematic for condominiums since the new requirements could have made it more difficult for consumers to obtain home loans and/or mortgage insurance. The invoice has not advanced.

In 2021, Senator Huffman introduced Senate Bill 318, removing the problematic provisions of the 2019 bill, but retaining the same filing requirements already applicable to non-condominium corporations. Concretely, on September 1, 2021, non-co-owner associations and co-owners will have to comply with the same procedures and deadlines to respond to an owner’s request concerning association files. Since these “new” condominium requirements have been in effect for non-condominiums since 2012, compliance shouldn’t be too burdensome. A change for condominiums that does not apply to non-condominiums concerns recourse if the corporation does not provide documents in accordance with the new law. For condominiums, if a member is denied access and a court awards court costs and attorney’s fees to the member, the member is not allowed to deduct the reward from condo corporation dues.

There are however two new requirements that will need to be implemented before September 1, 2021:

Requirement 1: All condominium corporations will be required to adopt a document production and copying policy, which includes the costs of document production. 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). Records production and copying policy must be recorded in the records of the county where the plan is located

Requirement 2: If the condominium syndicate has eight or more units, the syndicate must adopt and respect 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 specifically stated, we believe the document retention policy should be registered with the records of the county where the plan is located.

Senate Bill 581 (by Hancock (R): District 9; Taylor (R): District 11; West (D): District 23)

Effective immediately

CONDOMINIUMS (GENE OF) AND NON-CONDOMINIUMS: RELIGIOUS POSTERS

Amendment to Texas Property Code Chapter 202

Senate Bill 581 is essentially a “rinse and repeat” of similar bills that have been introduced in recent sessions, each aimed at providing homeowners with more flexibility to display religious symbols or other religious content. outside or on their house. Previous bills, for a number of reasons not necessarily related to their content, were never passed. This has changed. Those of you reading this and following this issue may recall that in 2011 the Legislative Assembly passed a bill that provided some flexibility, allowing property owners to display a religious item at the front door of their home, but allowing the association to limit the item to 25 square inches. 25 inches is now “infinity and beyond” and not just limited to the entrance of a residence.

You may need to learn more about constitutional rights with respect to religious freedom and what constitutes honest religious belief to assess whether a sign may be regulated by the association, but there are some exclusions in the draft. Senate Bill 581 that might help. Some of these exclusions were in the previous law, but they are repeated here with underlined text indicating what was changed in Senate Bill 581 and our commentary in parentheses. Namely, you may prohibit a sign or display that: (1) threatens public health or safety; (2) breaks 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 display that is obviously offensive to a bystander for reasons other than its religious content; (4) is installed on property: (A) owned or maintained by the homeowners association [CONDO AND MAYBE NON-CONDO CARVE-OUT];
or (B) owned in common by members of the owners’ association [CONDO CARVE-OUT]; (5) violates any applicable construction limit, right-of-way, setback or easement; or (6) is attached to a traffic control device, lamp post, hydrant, or sign, post, or fixture.

What does it mean?

What does this mean for governance?

If your statement includes typical post-2011 language (25 square inches allowed), it no longer applies. We don’t think you need to go back and edit to remove language restricting religious manifestations in order to comply with the law because…it’s the law. Just know that you can’t limit yourself to 25 square inches. For pre-2011 and new declarations, there will most likely be a ban on signs (or improvements defined broadly enough to cover signs) unless approved by the architectural review authority. Just know that you have your settings for a decline. Despite the comments to the contrary, do not panic! In the face of new changes like this, best practices take time to develop. Waiting,

we recommend that you seek legal advice when confronted with the new paradigm and please do not attempt to write a policy on sincere religious beliefs!

When structuring governance systems, we believe it is worth thinking about what is characterized as general common elements with respect to a unit (since a unit is not held in common and the signs religious would be allowed on the units), and how the maintenance of the association is defined in relation to the unit, home or yard space, and putting 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.

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