The passing of SB 1588 (Senate Bill 1588) is a HUGE win for Texas property owners living in communities governed by property owners’ associations (POA). This bill brings forward a lot of much needed reform and balance between property owners and POAs. The 87th Texas Legislature passing SB1588 is exciting news that initiated several changes as of September 1, 2021. Thank you Senator Bryan Hughes and Texas REALTORS® for your work in this bill! Here are a few changes this bill brings forth.
Capping Property Resale Fees
Selling a property located in a POA also means paying the POA various ‘selling’ fees. One of these fees is the Subdivision Information. The cost of this fee depends on that particular POA, and many POAs were getting extravagant on their fees. We had seen some POAs charge as high as $750-$1000 on one fee!
SB 1588 caps the Subdivision Information fee at $375 and limits a resale certificate update to $75. This bill also shortens the turn around time from 7 days to 5 days.
While this sounds fabulous, title companies are already seeing POAs circumvent this bill. Sure, they’ll lower the resale certificate fee. But now, they’re increasing other fees and adding miscellaneous ‘nonsense’ fees. POAs are making up their monetary ‘loss’ in other forms, totally sabotaging the point of SB 1588.
New Regulations on Negative Credit Reporting
Credit scores can effect various aspects of life – the ability to obtain a loan, credit card, be approved on a lease, etc. POAs used to be able to report delinquencies to credit bureaus without any regulations. POAs now have to take certain steps before reporting delinquent fines, fees, or assessments.
When a fine, fee, or assessment(s) is in dispute between a property owner and association, POAs now have to follow a couple of steps. Before POAs may report delinquencies to credit bureaus, they now have to provide a detailed report of all delinquent charges owed, at least 30 business days before reporting. They also have to give the property owner an opportunity to enter into a payment plan.
Dispute resolution between property owners and associations was usually a one-way street. This legislation opens the road to two lanes. It provides some protection to property owners by ensuring availability of payment options and additional legal avenues when property owners are trying to get financially back on track.
POAs Can’t Prohibit That Anymore!
SB 1588 is another huge win for Texas property owners because it prohibits POAs from banning 3 items specifically.
Many property owners’ associations prohibit flying of certain flags on one’s property. Now thanks to SB 1588, POAs can’t prohibit property owners from displaying religious flags and other religious displays on their property.
POAs cannot prohibit property owners from installing swimming pool enclosures that conform to applicable state or local safety requirements.
POAs cannot prohibit a property owner from installing security measures, like a security camera, motion detector, or perimeter fence. (This does not include condominiums or master mixed-use developments.)
Lease Agreements
Property owners’ associations cannot require access to lease agreements anymore. But they may request tenant’s contact information, as well as request the lease beginning and end dates.
Solicit Bids
Sometimes, neighborhoods need major repairs or additions. These repairs and additions can cost quite a bit of money! Before SB 1588, POAs could hire any company they wanted without soliciting bids. Now, if the services are over $50,000, POAs are required to solicit bids.
SB 1588 provides monumental POA reform legislation. More items, not included in this blog, may be read about here. Texas lawmakers made a lot of progress on POA reform in 2021, but more still needs to be done. If you want to report your POA experience and stories, go to My HOA Story.
As always, we are here to help you, whether you need to buy a property, sell, or just have general questions. Contact us today so we may help you!
