Going The Distance with Deed Restriction Enforcement The Basics

Transcription

1 Going The Distance with Deed Restriction Enforcement The Basics Gregory P. Crinion and Kourtney Schroeder Crinion Davis & Richardson LLP

2 The Rules of the Road: The Four Principles of Deed Restriction Enforcement We are neighbors and should act like neighbors in all things. All rules apply to everyone in all things. Management company, board member/ officer, committee or attorney has no power without Board approval. We live in a difficult economic time be cognizant that some neighbors have financial issues.

3 Where Are the Rules for Deed Restriction Enforcement Federal/State Laws Articles of Incorporation Deed Restrictions Association By-Laws Policies/ Rules/ Guidelines Subdivision Plats

4 Hierarchy of Rules Governing Enforcement Federal/State Laws Articles of Incorporation Deed Restrictions Subdivision Plats By-Laws Policies/Rules/ Guidelines

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10 Avoiding Potholes Your association s governing documents must be recorded with your County Clerk together with information about the subdivision and your management company. You can be personally liable for damages if you fail to file these documents. You cannot enforce any documents including policies that have not been recorded (including charging late fees, fines, etc.). Make sure your governing documents cover all sections of the neighborhood.

11 Avoiding Potholes Every board member should have a complete set of governing documents, Internal Revenue Service letters, Comptroller tax exemption letter, and subdivision plats, and every board member needs to read and understand them. Ask your association attorney to give you a one hour tutorial on your governing documents.

12 Duties of the Board of Directors Duty of Good Faith Duty of Ordinary Care Duty of Loyalty Duty of Obedience Confidentiality

13 Duty of Good Faith Act in the best interests of the Association at all times Sincere effort to perform obligations, prepare for meetings, follow the rules and advice given by the management company and attorney. Unless good reason not to do so

14 Duty of Ordinary Care Exercise judgment that a reasonable, prudent person would use in the same circumstance Be knowledgeable about Association activities and details Make informed decisions and vote accordingly Read and understand governing documents Be consistent with decisions Do not play favorites

15 Duty of Loyalty Act in the best interests of the Association A Board Member may NOT: Borrow or lend money to the Association to make a profit or misdirect Association funds Enter into agreements with the Association when another deal more favorable to the Association is available Be reimbursed for personal or frivolous expenses Reimbursement should be authorized by the Board Duty to vote NO

16 Duty of Obedience Board members must obey: Federal law Texas law Governing Documents of the Association Board members must not act based on personal opinions or beliefs of what the rules should be

17 Confidentiality Board members are obligated to maintain confidentiality of confidential matters Including to spouse, friends, neighbors, etc. Confidential matters include Deed restriction violations Collection matters Attorney briefing Personal information

18 Board Member Liabilities Violating duties Failure to record documents Personal assets at risk Intentional misconduct not covered under Director and Officer s Insurance

19 Property Maintenance Travel in to the repair shop for a tune up!

20 Is There a Violation? The Problem A potential violation is reported The Governing Documents Does the problem conflict with your governing documents? Past Practices How has the Board Addressed similar situations in the past? Texas Residential Is it legal to enforce? Property Owners How to Act enforce?

21 How to Enforce Your Deed Restrictions Suspend Common Area Usage Required Notice & Opportunity for a Hearing Fine File a Suit

22 Filing a Suit A lawsuit is filed to request an Injunction Request to collect any fines and attorney s fees Request for up to $200 per day civil damages for the violation Proof Documenting violation may be difficult Potential Outcomes Injunction is granted Ordered to Mediation Settlement Lose

23 The New Roads Paved by the Texas Legislature

24 Flag Poles May not prohibit display of U.S., Texas, or U.S. armed forces flag Allowed Restrictions Size of flags and flagpoles over 20 feet Number and location of flagpoles Condition of flags and flagpoles Noise concerns Lights used to illuminate the flags

25 Solar Energy New Limitations on Restriction of Solar Energy Devices Allowed Restrictions Threatens public health or safety Located somewhere other than a roof or fenced in yard Extends beyond or higher than roof/fence line or does not conform to slope of roof Certain colors Requiring approval by the Association

26 Shingles May NOT prohibit installation of damage resistant or energy efficient shingles if they are aesthetically similar to the rest of the community Religious Symbols May NOT prohibit certain religious symbols displayed on the door or door frame of a dwelling

27 Rain Barrels Regulation limited to Size Type Shielding Materials May not make installation uneconomical May prevent installation on common area or between the street and the front of a home

28 Have you Followed the Rules of the Road? We are neighbors and should act like neighbors in all things. All rules apply to everyone in all things. Management company, board member/ officer, committee or attorney has no power without Board approval. We live in a difficult economic time be cognizant that some neighbors have financial issues.

29 Questions?