State Rep. Ruth Jones McClendon of San Antonio has filed legislation that would cede control over Texas Homeowners Associations/Property Owners Associations to cities and counties, with oversight and monitoring to be conducted by the Texas Attorney General's office.
The initiative -- HB 3803 -- is captioned as "Relating to the municipal and county regulation of and the oversight by the attorney general of property owners ’ associations and unit owners ’ associations; providing penalties."
This bill would authorize Texas cities (in city limits and ETJ) and counties (in unincorporated areas) to regulate HOAs on a variety of matters of "municipal concern," and to require registration with the applicable unit of local government. Other portions of the bill affect the way HOA funds are deposited and maintained (in trust accounts) and contain new bonding and insurance requirements for HOAs and their directors.
Sections 3 and 4 of the bill are particularly dangerous to Texas HOAs because they would require the Texas AG's office to monitor HOAs and investigate complaints about them. These provisions expressly provide for notification to the AG in the event of embezzlement of HOA funds. A particularly interesting, if unclear, section of the bill directs the AG to monitor the banking institution where HOAs maintain the newly-required trust accounts.
The bill was filed on March 8, and was referred to the House Committee on Business & Industry on March 21.
If enacted, this legislation would modify the Texas Local Government Code and Chapter 82 of the Texas Property Code.
