History
Texas law initially protect homeowners.
Much of the law in the United States developed by reference to what is called “common law” starting from England in the 18th Century (and before). Common law can be thought of as “judge-made” law. I have heard it said that ‘We are governed by common law, as modified by statute.’ (That is not always intended as a compliment to Legislators.)
Judges, particularly in olde England, strongly protected property rights, including the rights of (often wealthy) homeowners. As applied to homeowner rights, the Texas Supreme Court recognized this as recently as 1987, in Wilmoth v. Wilcox, 734 S.W.2d 656, 657, stating:
covenants restricting the free use of land are not favored by the courts, but when they are confined to a lawful purpose and are clearly worded, they will be enforced. … All doubts must be resolved in favor of the free and unrestricted use of the premises, and the restrictive clause must be construed strictly against the party seeking to enforce it.
Such a rule helps homeowners. If applied correctly, you can read your deed restrictions and (mostly) understand what powers associations can apply against you.
In 1987, the Texas Supreme Court denied homeowners constitutional protection against foreclosure.
The Texas Constitution, in Article XVI §50, states strong protection that could bar foreclosure of homesteads. That protection was tested in the case of Inwood North Homeowners’ Ass’n v. Harris.
After being served with a lawsuit seeking assessments, the homeowners never filed an answer, and in no way appeared in court. The trial court (the Honorable Jack O’Neill) issued a default judgment for money due but, enforcing the Constitution, declined to allow the association to foreclose.
The Association appealed, and still the homeowners did not appear. The Court of Appeals affirmed, unanimously. 707 S.W.2d 127 (Tex.App. – 1st Dist. [Houston] 1986), continuing protection against foreclosure. Again the association appealed, and again the homeowners did not in appear.
A divided Supreme Court allowed the foreclosure. Dissenting Justices lamented:
This is not merely a private dispute between two litigants regarding the collection of a private debt. This court should, at the very least, provide for a pauper’s funeral if it insists on burying the body of constitutional protection against forced sale of homesteads. … No one appeared before this court to assert the constitutional protection we all were taught in law school years, yea decades ago. This sacred constitutional protection should not be sacrificed on the altar of economic gain for the few at the expense of the multitude without at least the semblance of due process. If our constitutional rights and liberties are to be taken from us one at a time, let us at least have the common courtesy to give those heretofore precious and cherished rights and liberties a respectful hearing before they are snatched from us and succeeding generations, as yet unborn, who have no voice and no advocate.
736 S.W.2d 632, 637 (1987) (Mauzy, J., dissenting).
Unfortunately, in Inwood North Homeowners’ Ass’n v. Harris, 736 S.W.2d 632 (Tex. 1987), the Supreme Court allowed foreclosures. The situation deteriorated rapidly
Starting no later than 1987, the Legislature increasingly undermined homeowner rights.
Lobbyists for association directors seeking power over their neighbors, the property managers they hired, and lawyers who represent associations long have advocated for powerful laws that protect what they want, at the expense of homeowners. Some lawyers increasingly operated mills that generated large attorney fees to enforce small violations, and “foreclosure factories” extracting attorney fees from homeowners who were forced to settle or risk immense attorney fees to defend their homes.
In 1987, the Legislature adopted Property Code 202.003(a), which states: “A restrictive covenant shall be liberally construed to give effect to its purposes and intent.” Some courts have concluded that “there is no discernable conflict between the common law and section 202.003(a).” Uptegraph v. Sandalwood Civic Club, 312 S.W.3d 918, 926 (Tex.App. – Houston [1st Dist.] 2010, no pet.). Others have found this statute alters the common law. Id. “The Texas Supreme Court has noted the potential conflict between the common law and section 202.003(a).” Id., citing Pilarcik v. Emmons, 966 S.W.2d 474, 478 (Tex. 1998). (Perhaps when you read this, the Court will have clarified how this statute affects the common law protections.)
Property Code 202.004 unambiguously sought to undermine homeowner rights with respect to (what should be) “their” associations. Its subsection (a) provided that discretionary decisions by associations would be approved as “reasonable” unless shown to be “arbitrary, capricious, or discriminatory.” Its subsection (c) purported to authorize courts to impose civil damages on homeowners of up to “$200 per day for each violation” of a covenant. This (and other provisions of Property Code Chapter 202) apply both for subdivisions and for condominiums. Some courts now have limited the worst aspects the $200 per day charges, but many associations ignore those protections.
In 1993 and 1995, the Legislature granted extraordinary default powers to directors of associations.
In 1993, the Legislature sought to rationalize condominium law, with enactment of Property Code 82. While much of that is, indeed, good, section 202.102(a) granted extraordinary default powers to associations created starting in 1994. Among its worst provisions, the law states:
Unless otherwise provided by the declaration, the association, acting through its board, may:
(1) adopt and amend bylaws;
(12) impose … fines …;
(13) adopt and amend rules regulating … the application of payments;
(17) suspend the voting privileges of … an owner delinquent … in the payment of assessments; [and]
(21) exercise any other powers necessary and proper for the government and operation of the association.
This made it impossible for an owner to know what rules would govern association operations, and enabled associations to limit who voted by imposing fines against Unit Owners – while some might have doubted associations would impose fines to prevent critics from winning elections, some did exactly that.
Adoption of Property Code Chapter 204, in 1995, marked a new low. Legislators recognized that “there is a special relationship between property owners’ associations and the property owners within subdivisions.” House Bill 2152, §2(b)(2). That should have entitled homeowners to extra protections. In an Orwellian twist, however, the bill radically cut back homeowner rights, including the adoption of provisions akin to Property Code 82.102(a), quoted above.
Fortunately, Chapter 204 initially was limited to Harris County. Unfortunately, it later was expanded to several adjoining counties, including Galveston and Montgomery. Its geographic reach was even further expanded at one point, then cut back. For the rest of Texas, Legislators never have accepted that subdivision associations need such powers – and indeed they do not.
The tide has turned.
After 1995, association powers over homeowners increased for a time, but homeowners began to push back. After significant publicity concerning foreclosure against Wenonah Blevins, the Legislature finally began enacting pro-homeowner reforms in 2001, with the adoption of Property Code Chapter 209.
A leading advocate was Geneva Kirk Brooks, who had been sued (with several others) in 1998. I eventually represented Ms. Brooks. Central to this case was the force of default powers granted to directors in Property Code 202.010(a). In the trial court, we persuaded the trial Judge that Texas law did not allow an injunction against Ms. Brooks’ exercise of free speech, but not of much else.
Shortly after adoption of Property Code 209, we won a reversal, partial persuading the Court of Appeals that the default power must be limited, and did not apply here. 76 S.W.3d 162 (Tex.App. – Texarkana, 2002). The association appealed and, on the significant points, the Supreme Court affirmed homeowner rights, limiting Property Code 204.010(a). Northglen Ass’n v. Brooks, 141 S.W.3d 158 (Tex. 2004).
There have been more good decisions since then. Chapter 209 as originally adopted had limited effect but, starting in 2011, homeowners increasingly have made progress with good statutes. See Recent Legislation.