00:00:00:00 - 00:00:01:17 Unknown our next door neighbor routinely had 00:00:01:20 - 00:00:03:20 Unknown car on blocks in the front yard. 00:00:03:20 - 00:00:07:09 Unknown Dogs tied to the gas meter thing, property in disrepair. 00:00:07:15 - 00:00:08:23 Unknown And my parents 00:00:08:23 - 00:00:11:03 Unknown Had the house listed for five years and couldn't sell it. 00:00:11:06 - 00:00:16:01 Unknown it just always hit me like a ton of bricks. Oh, I see the value in 00:00:16:04 - 00:00:17:04 Unknown an HOA 00:00:17:06 - 00:00:17:17 Unknown restrictive 00:00:17:17 - 00:00:18:20 Unknown covenants on the land. 00:00:18:22 - 00:00:25:03 Unknown If that neighborhood that I grew up in had, that there would be mechanisms to address those issues, 00:00:25:05 - 00:00:31:05 Unknown to increase the property values and to make the property more trackable. 00:00:31:07 - 00:00:50:19 Unknown Welcome to the uncommon area where we're dedicated to reimagining ways. We provide board members and managers with the resources to create uncommon communities where residents love their HOA and truly love where they live. 00:00:50:21 - 00:00:52:11 Unknown Welcome to the Uncommon Area. I am 00:00:52:13 - 00:01:17:09 Unknown Matthew Holbrook, and I'm glad that you can join us for this episode. Grant even fewer. Partner at the law firm of Cagle, Pew in Dallas, Texas, joins me in this episode, and Grant and I get into a really good discussion around some of the things that every board member should understand. If you're going to serve on the board of directors of a homeowner's association or a condo association. 00:01:17:11 - 00:01:34:00 Unknown In this episode, we unpack, some of the basics regarding the roles of board members and their responsibilities and where you might have legal liability. And, what are some of the areas where you have obligations as a board member? And also maybe 00:01:34:00 - 00:01:37:22 Unknown what are some of the things that you can do to protect yourself? 00:01:37:23 - 00:01:58:01 Unknown As a board member and, what are some of the things that, can just make you more effective as a board member, coming from two people who have been in the industry for decades as we talk about what we've observed and seen in, different board members. So, I hope that you check it out. I think you'll find it to be really helpful. 00:01:58:03 - 00:02:00:10 Unknown well, Grant, thank you so much for being here in the uncommon area. 00:02:00:13 - 00:02:04:11 Unknown appreciate the invite. It's a pleasure to be here, Matthew. Yeah. Glad to be able to, to 00:02:04:14 - 00:02:10:20 Unknown talk about board members and what they need to know when they're serving on the board of directors of an association. 00:02:10:22 - 00:02:12:09 Unknown And, 00:02:12:09 - 00:02:12:23 Unknown maybe right out 00:02:12:23 - 00:02:23:02 Unknown the gate. Talk to us a little bit, grant, about what is this entity that you've been elected to if you're a board member that has been elected? Sure. 00:02:23:02 - 00:02:29:18 Unknown if you're a homeowner and you volunteer to to to serve on your board and you're elected, you kind of need to know what you are. 00:02:29:20 - 00:02:45:09 Unknown And there's there's this vernacular I think is a big deal. So a po a a property owners association or in some areas you call it a city, a common interest community that basically are are umbrella terms for, you know, a 00:02:45:11 - 00:02:53:08 Unknown for sale residential real estate. And, and then it gets broken down into two other things single family homes or land properties. 00:02:53:08 - 00:03:16:00 Unknown It also encompasses condos. And and then there's a unique thing with townhomes here in Texas where they're not really a legal system, but they all fall under this kiddy, play thing. But I think what, what, newly elected directors need to understand is that all of these HOA condos, whatever you want to call it, are nonprofit corporations. 00:03:16:00 - 00:03:35:18 Unknown So you have been elected to serve as a board of directors or on a nonprofit corporation, that was created by the Declarant through the Declaration of Covenants and Conditions and Restrictions to operate and manage the community and so on and so forth. I think that's one of the key things that board 00:03:35:18 - 00:03:40:08 Unknown members need to understand is they are a they are running a nonprofit corporation. 00:03:40:10 - 00:03:40:22 Unknown Yeah, 00:03:41:00 - 00:04:03:03 Unknown well, there's a lot there. So I'm going to pick it a few things. First, maybe just out of the kind of curiosity angle you, you quickly dropped in. Well, here in Texas, you have townhomes and they're not really a thing. Yeah. Townhomes. I'll take a stab at this. Townhomes are a thing, but it's a it's more of a, a developer marketing term than anything else. 00:04:03:03 - 00:04:29:08 Unknown Yeah. Typically, if from a legal standpoint, there'd be condos here in, in Texas, from a legal standpoint, a townhome can be either a condo or a single family HOA. It is all dependent on how the developer set up the declaration. If the declaration says it's one, two, three Main Street townhomes, but the declaration substance called for it to be a condo, it's a condo. 00:04:29:10 - 00:04:51:01 Unknown But if that same declaration calls for it to be a single family HOA, and there's things that make it that, then it's a single family HOA. So in Texas, townhomes are, are construction terms, architectural terms, not legal terms for for what it is. So yeah, that's the key thing. It's funny when you have a board member call you and say, hey, I, I'm a board member at this townhome or a townhome association. 00:04:51:02 - 00:04:55:18 Unknown I said, well, that's great, but are you a condo or single family? And so we walk through this. Right. 00:04:55:20 - 00:05:17:12 Unknown And so the reason that that's important specifically here in Texas is there's actually a different area of law related to HOA versus condos. Yeah. You know, it's interesting. It's that's a great question, Matthew. You probably the first thing a lawyer in this space, a property manager in this space or a board member in this space needs to understand when they're tackling issues. 00:05:17:12 - 00:05:36:02 Unknown Is the first question is, is this a single family HOA or is this a condo? Why? Because condos are governed by two specific statutes here in Texas, chapters 81 and 82 of the Texas Property Code, based on when the declaration was recorded with the county. And then if you're a single family HOA, you're governed by two totally different sections. 00:05:36:04 - 00:06:01:11 Unknown Similarly, chapter 209 and a couple others. So it's very important because it's two different bodies of law, that have to a lot of different requirements. So that's key. Question number one. Yeah, it's a very important distinction. So I know in other states oftentimes obviously there are legal distinctions between condos and single family homes. But the body of law that governs them is all one in Texas. 00:06:01:11 - 00:06:21:13 Unknown Here you have these two different, sections. Do you know of any other states that, that are like that? You know what I don't, I don't I, when I've looked into it to try to get guidance on, for instance, we have the Texas Uniform Condominium Act. It's a uniform act. A similar act has been adopted by other states. 00:06:21:15 - 00:06:30:02 Unknown When I've had to do research, I've. I've been curious to see if I can find a distinction in other states, but I haven't been able to come across it. So I don't know if that's unique to us here in Texas. Well, I 00:06:30:02 - 00:06:42:02 Unknown have a feeling we might find out. We have people that listen to this all over the country, and somebody will let us know in the comments someplace and say, hey, our state does this also, you also highlighted that, 00:06:42:02 - 00:06:47:14 Unknown these condo associations, homeowners associations, they are nonprofit corporations. 00:06:47:15 - 00:07:18:02 Unknown And so a board member is a board member of a corporation, and there are certain corporate responsibilities that that come with that. Correct? Anything that should be highlighted in that, in that way that, board members should know about, well, you know, HOA fees, condos, part of them, they're creatures of contract. So so the declaration but they're also creatures of statutory law, obviously, for a condo here in Texas, like most states, they are a creature of 00:07:18:06 - 00:07:22:15 Unknown statute, too. And you you kind of look at it from a legal perspective. 00:07:22:15 - 00:07:44:18 Unknown You look at there's contractual issues. If there's a particular question that comes up, you're going to look at the the contracts or the governing documents of the declaration or bylaws, whatever the case may be. And then you have these specific statutes that govern single family homes in Texas and condos. But because they are nonprofit corporations, they're also subject to general corporate statutes, principally here in Texas. 00:07:44:18 - 00:08:09:11 Unknown Chapter 22 of the Texas Business Organization Code governs nonprofit corporations and it is kind of a default gap filler statute. But one of the things that's important for a new board member is especially for a single family, HOA. It's that statute that sets out board members and officers duties and what their duties are to the nonprofit corporation. And that's a big deal. 00:08:09:11 - 00:08:25:10 Unknown And then for condos, you have an extra layer, the uniform condominium act. Applies fiduciary duties to condominium board members. So there's there's several things that they need to know beyond the context of their governing documents and these specific statutes that 00:08:25:15 - 00:08:26:08 Unknown govern their 00:08:26:12 - 00:08:29:16 Unknown particular community. So we'll try to unpack all of that here. 00:08:29:16 - 00:08:50:13 Unknown You, you said there are certain responsibilities outlined that board members have of a corporation. And so that brings up the question, do different board members have different kinds of responsibilities? The president versus the treasurer does. Does anybody on the board have extra power? More than that. Another board member. 00:08:50:13 - 00:08:58:12 Unknown do we unpack that? Yeah. You know, I commonly say, you know, your board president does not have some magic wand to to do what he or she wants. 00:08:58:12 - 00:09:00:14 Unknown So my answer would really be no. 00:09:00:17 - 00:09:21:20 Unknown the in condos in Texas are ran by the board and it's based on a majority decision of the board, the officers which would be your president, vice president, treasurer, Secretary. They serve certain roles, but those roles don't come with certain powers to make decisions on behalf of the HOA condo globally, the nonprofit corporation. 00:09:22:00 - 00:09:42:07 Unknown the takeaway there is these communities are ran by the board. And the board makes the decisions, not necessarily the officers how they make those decisions and the duties they have and what they have to discharge those duties under this, Business Organizations code chapter 22, the duties for officers and directors are the same. 00:09:42:09 - 00:09:58:16 Unknown They've got a duty to act in good faith, fair dealing. And what's in the best interest of the association. That's the artful terms of their duties and the filter that they have to run their decisions and actions through to be discharging those duties for the community. 00:09:58:18 - 00:10:00:03 Unknown So highlight those three again, 00:10:00:09 - 00:10:22:02 Unknown good faith, fair dealing and acting in the best interests of the association? So, what exactly is acting in good faith? Yeah, yeah, your guess is as good as mine sometimes, you know, I what I try to do is. And this is an interesting distinction, I, and I think I mentioned it earlier for board members in Texas for single family homes. 00:10:22:03 - 00:10:30:04 Unknown They don't own fiduciary duties. Okay. Condo board members. Oh fiduciary duty. So it's a higher standard of care by beyond those three duties that I just mentioned. 00:10:30:09 - 00:10:40:10 Unknown think it's it's easier to kind of give some practical context to it. You got to be loyal to the community. You can't act in your own best interest or self-interest. 00:10:40:10 - 00:11:01:00 Unknown You got to act in the best interest, the association. You've got to make reasonable decisions. You got to be candid with the community. I think if you look at those kind of things and run decisions through that and try to gather information on that, then, you're going to be satisfying those duties. 00:11:01:02 - 00:11:07:16 Unknown So, if I was a board member, how would you respond to me if I were to say, 00:11:07:18 - 00:11:12:15 Unknown grant, I've looked at our association's financial position. 00:11:12:15 - 00:11:34:11 Unknown We are evaluating our budget for the upcoming year, and it appears that it would, be, appropriate that we raise the assessments this year. We haven't raised assessments for a decade. We need to raise the assessments. However, I'm going to be selling my home next year. And, I don't want to pay higher assessments before I sell my home. 00:11:34:11 - 00:11:54:05 Unknown And it's going to make it harder for me to sell it. Sure. And, Grant, I know that there are other homeowners here who really don't want to pay higher assessments, so I'm acting in my own best interest. But also I'm arguing I'm acting in the best interest of the association as a whole, because I know I have neighbors who don't want to pay higher assessments also. 00:11:54:05 - 00:12:07:04 Unknown So I'm not voting for higher assessments in the new budget. So that's a great hypothetical, Matthew. It's a hypothetical that never actually happens, right? It comes up fairly frequently, as you can imagine. Yeah. 00:12:07:06 - 00:12:26:18 Unknown Here's the deal. I think that would not be acting in the best interest of the association. I get that other owners may be in the same situation personally as this, this director, but for me, if you're acting in the best interest of the association, which is again, is a nonprofit corporation, you've got to think long term. 00:12:26:20 - 00:12:54:23 Unknown And if there's evidence that we need to raise assessments to handle expenses that we know or reasonably know are coming in, not only the long term but potentially the short term, especially if a community has raised assessments in a long, in a long time. I think I think making the decision to say we're going to not raise assessments or to keep them below, in part because I for president, am going to sell in a year. 00:12:55:01 - 00:13:21:08 Unknown I think there's an argument that that's not satisfying your duties and standard of care, and I can't justify it by saying, hey, I know my neighbors don't want to pay higher assessments either. Yeah, yeah, I don't think you can, because the minute there is that catastrophic, wall collapse or roof issue, whatever the case may be, and an association hasn't raised assessments in a decade or hasn't properly funded, the reserves. 00:13:21:08 - 00:13:46:03 Unknown And now we have a large expense that might not be covered by insurance. You know, you're going to have some very upset owners when assessments go way high or a special assessment gets raised and they start to question, why haven't we done this? And I would not want to be in that piece of litigation where there's some admission or something in writing that said, I'm going to personally keep these, assessments low because I want to sell. 00:13:46:05 - 00:14:07:09 Unknown Yeah. So I think that's probably in this scenario where it commonly comes up, is it's easy for a board member to underfund the reserves to keep assessments artificially low. Because the consequence on that might be years down the road. And if you're thinking, hey, I'm going to be out of here by then, I don't have to deal with it. 00:14:07:11 - 00:14:23:09 Unknown That's where I think even in a subtle level, where board members may not even, be consciously aware of that, that's how they're framing it. And so there I would argue that board members need to take an intentional, conscious effort to say, am I thinking about these decisions 00:14:23:11 - 00:14:24:00 Unknown in the best 00:14:24:00 - 00:14:27:11 Unknown interests of the whole corporation? I 100% agree. 00:14:27:11 - 00:14:49:06 Unknown I, I, I routinely encourage board members when they're faced with the decision and raising assessments as a decision, because in the short term, there could be, a group of angry owners of, hey, why are we raising assessments? We took pride in not raising assessments for 12 years, and they're not accounting for inflation or increased costs and so on and so forth. 00:14:49:06 - 00:15:11:00 Unknown And Texas, we've had a lot of increased labor material costs just for construction. So I think the board really needs to struggle together and sit down and go, you know, what's the pros and cons of of keeping the assessments the same? What's the pros and cons of doing this so that they show that they struggled to make the decision, whatever it might be. 00:15:11:02 - 00:15:34:13 Unknown And to me, if they if they're documenting that decision and having those conversations and seeking outside opinions and not to be advantageous, seeking legal opinions or guidance from management, at least they're showing that they're acting in good faith. And they're, you know, they're striving to make a decision in the best interest, the association, as opposed to we're not raising dues because I'm going to sell in a year. 00:15:34:15 - 00:15:56:14 Unknown You don't want that to be the only piece of evidence. Now where, we're using this as an example about raising the assessments. Neither of us are on this campaign to, say everybody has to have higher assessments, but it's an easy place where this comes up and there's lots of decisions that can come up in a, in an association where there may be a conflict between your personal interests and the association's interests. 00:15:56:16 - 00:16:01:10 Unknown But the measurement is are you acting on the association's best interest? Correct. 00:16:01:12 - 00:16:21:23 Unknown you did highlight that there is this duty of, of a fiduciary obligation for condo associations, but not on the HOA fees. However, that standard that you're held to, practically speaking, probably doesn't differ a whole lot. And so a, an HOA board member shouldn't say, hey, I don't have a fiduciary duty. 00:16:21:23 - 00:16:35:09 Unknown You still have that that good faith in the best interest of the association. You know, I think when I try to practically explain it to boards, if I'm representing a condo or a single family HOA, but let's use it in the single family HOA context. 00:16:35:11 - 00:16:49:07 Unknown I certainly don't want them representing that they owe fiduciary duties or assuming that that duty, but I want them to try to to achieve that standard of care, because if they achieve that heightened standard of care, they're going to satisfy the actual legal duties that they owe. 00:16:49:09 - 00:17:20:04 Unknown This distinction is more for me in court. Okay. If a homeowner files a lawsuit, and names all the individual board members and brings a breach of fiduciary duty claim, I get to make a legal argument that they don't know those fiduciary duties. Okay, so that's more for me in a litigation context. And not really for the board to try to figure out, well, where am I at in this standard of care, try to achieve the highest standard of care, act reasonable, do your very best, rely on professionals. 00:17:20:06 - 00:17:27:11 Unknown And, then if you do fall short as a single family HOA board member in Texas, you're probably going to satisfy that standard of care. 00:17:27:11 - 00:17:39:03 Unknown But if I'm a homeowner and I bring a lawsuit against individual board members and I say, you're in breach because you did not act in the best interest of the association or you had a conflict of interest. 00:17:39:05 - 00:17:42:13 Unknown I'm in good standing to be able to make that type of work. That could be a viable claim. 00:17:42:14 - 00:17:43:11 Unknown Yes. Yeah. 00:17:43:13 - 00:18:04:03 Unknown just to summarize this portion, a board member of any type of an association in Texas needs to constantly measure their decisions. Am I acting in the best interest of the association? Yes, yes. If they're counting their decisions through that filter, in striving to be as reasonable and fair as possible. 00:18:04:05 - 00:18:17:06 Unknown And doing things to show that and documenting things that show that they're going to be in good shape, in my opinion. So I want to use that as a springboard to talk about some other topics. And so in particular, 00:18:17:08 - 00:18:36:10 Unknown the idea of communication is a really important topic for all associations. And as we think about the standard that board members are held to are their obligations legally that board members have for how to communicate to their homeowners. 00:18:36:14 - 00:18:50:16 Unknown Great question. You know, I probably, I think would probably say for me, the biggest complaint homeowners routinely allege about a board or a management company is a lack of communication, a lack of transparency. 00:18:50:18 - 00:19:01:17 Unknown And, and there's a lot of misunderstanding about that. And in Texas, legally, what a board has to do to communicate with the community is, is very limited. 00:19:01:19 - 00:19:25:09 Unknown Obviously we got to communicate, provide notice of, of certain board meetings or the annual meetings. We got to communicate about assessment increases or kind of the more the legal things like covenant violations, if an owner wants to make a request for records, books and Reporters Association, we have to respond and communicate that. But there's no legal requirement that we have to do. 00:19:25:09 - 00:19:49:02 Unknown Oh, we got to update them about x, y, z thing or these contracts, you know, probably another example, some communities will have a legal obligation on their governing documents to provide advance notice of the budget. But communicating on things of, hey, what's the board doing? What's the board thinking? What's their priority of decisions or projects or whatever the case may be, there's a legal requirement there. 00:19:49:04 - 00:20:14:07 Unknown That being said, if you don't do it, you're going to hear from the owners and and you're going to be accused of not being a communicative and transparent. And, and that just kind of gets in the way of, of running the association as a volunteer, you know, that can be hurtful and time consuming. So to avoid that communication, even though you don't have a legal obligation, is huge. 00:20:14:09 - 00:20:39:14 Unknown Yeah. So this brings about, I think, some of the tension of being a board member. You're a board member of a corporation, and there are corporate obligations legal obligations you have, but you're also a leader of a neighborhood or of a community. And those are kind of some of the the soft elements that maybe there aren't legal obligations, but you still want to live in in a good community and a good neighborhood, and you have the opportunity to influence that. 00:20:39:14 - 00:20:43:08 Unknown And so there's some wisdom in how to how to operate in that way. 00:20:43:08 - 00:20:59:12 Unknown And I think never losing sight that you are a neighbor and that your, your fellow neighbors decided to elect you to this role is is important because I think when you think about that, it will encourage you to 00:20:59:12 - 00:21:03:09 Unknown communicate. And you know, hey, you put your trust in me. 00:21:03:11 - 00:21:30:19 Unknown I, I heard from you about what you guys high level think is important. Here's what we're doing. And and a perfect example, is is town halls. Over the years, I've encouraged boards to have just town halls informal, maybe once, twice a year meetings so that, they can update community on. He just want to let you know what we're doing, because a lot of times, it's not until the annual meeting that we go, hey, these are all the projects we did over the last year. 00:21:30:21 - 00:21:56:10 Unknown If you sprinkle in a town hall here and there is, hey, this is what we're doing and this is our priority, we're going to do this thing first and and allow owners to hear that, allow owners to ask questions and and allow owners to feel heard. That is communication at at its finest. That's transparency at its finest. And when I've seen clients do this and I've done this in my own neighborhood, we the relationships strengthen. 00:21:56:15 - 00:22:09:06 Unknown There's a better understanding, even if there's a disagreement and things run a lot smoother. So to implementing tools like that with the mindset of I'm still the neighbor, that's key. Yeah, 00:22:09:08 - 00:22:19:09 Unknown I'm actually going to a town hall for a community tonight and then for another community tomorrow night. So, yeah, I agree, those are are great tools. 00:22:19:11 - 00:22:51:22 Unknown Yeah. I see board members making mistakes in this regard, and they can kind of fall to one extreme or the other. You have some of the board members that are are ultra regimented and care only about, their legal obligations and, dotting every eye, crossing every tee, and being super formalized and, and there's a certain value to that out of consistency and legal protection, but sometimes missing that, that there is this, this neighborhood component that can be softened 00:22:52:03 - 00:22:53:10 Unknown without compromising the side. 00:22:53:10 - 00:23:00:08 Unknown And then you have other other board members that are all about, let's just be a neighborhood, and who cares about our obligations legally. And, 00:23:00:10 - 00:23:00:21 Unknown 00:23:01:00 - 00:23:01:20 Unknown both sides 00:23:02:00 - 00:23:13:18 Unknown are, I think, dangerous and unfortunate sides to fall off on. And as as board members, I think it would be good to feel the tension between those and and embrace that, I think. 00:23:13:18 - 00:23:35:15 Unknown So you certainly, in my opinion, don't want to be a board member where you're hiding behind the curtain. Yeah, yeah. And you're the Wizard of Oz and nobody knows who you are, and you're mysterious and they see you just spending money. Yeah. But you certainly don't want to just be. Hey, you know, the politician and glad handing and just doing whatever he wants you. 00:23:35:15 - 00:23:43:17 Unknown You've got to try to marry that. So I agree with you, Matthew. Yeah, those are, those are both scenarios that contribute to this reality that 00:23:43:17 - 00:23:49:20 Unknown it seems like everybody hates their HOA. And, and a lot of that comes from the perspective of, 00:23:49:22 - 00:23:52:07 Unknown people don't feel like they're getting value from their HOA. 00:23:52:07 - 00:23:54:19 Unknown They're, they're sending all of this money every month. 00:23:54:21 - 00:24:10:09 Unknown And am I getting an appropriate return for what I am paying? And oftentimes I would argue they are. They just don't know because it's a lack of communication. It's a lack of communication. It's a lack of education. And and I'll give you a perfect example. 00:24:10:11 - 00:24:15:16 Unknown I grew up in small town in Oklahoma as a kid, and our next door neighbor. 00:24:15:16 - 00:24:16:22 Unknown We were one house off the corner, and 00:24:16:22 - 00:24:32:01 Unknown our next door neighbor routinely had car on blocks in the front yard. Dogs tied to the gas meter thing, property in disrepair. And my parents couldn't, had the house listed for five years and couldn't sell it. 00:24:32:03 - 00:24:34:18 Unknown And as a little kid, I don't 00:24:34:20 - 00:24:43:12 Unknown know that. But then you grow up and you kind of learn about things, and you realize what restrictive covenants on land and code enforcement and all these things are. 00:24:43:12 - 00:24:43:20 Unknown And 00:24:43:22 - 00:24:50:15 Unknown it it just always hit me like a ton of bricks. Oh, I see the value in an HOA 00:24:50:17 - 00:24:51:04 Unknown restrictive 00:24:51:04 - 00:24:52:07 Unknown covenants on the land. 00:24:52:09 - 00:24:58:21 Unknown If that neighborhood that I grew up in had, that there would be mechanisms to address those issues, 00:24:58:23 - 00:25:08:15 Unknown to increase the property values and to make the property more trackable. And I try to use that example to go, hey, that's where you're getting value. 00:25:08:17 - 00:25:32:00 Unknown In addition, you know, some of these larger scale communities, these HOA fees are in part created to own, manage and ensure these large swaths of common area that provide swimming pools or green spaces and so on and so forth. And sometimes owners need to be reminded of that. But that's what they they moved in this neighborhood because there's a pool, but there's a cost to that. 00:25:32:00 - 00:25:52:13 Unknown And, and it's there's that component. So there's the, the common area ownership maintenance and insurance component that they otherwise wouldn't have. And then there's this enforcement component to preserve what their investment, you know, and that I think is a big education piece to owners of why you're paying assessments. 00:25:52:15 - 00:26:00:03 Unknown Yeah. I think you raised some, some great points on this, and, and it all comes back to this idea of communication. And there are so many, 00:26:00:08 - 00:26:14:08 Unknown tools these days that board members and managers have for communicating. It's not just about sudden. When I started, I've been doing this a while now. Literally all communication was in one of two formats. 00:26:14:08 - 00:26:41:14 Unknown It was either send something out in the mail, yeah, or post something in the common area. Sure, those are my only options. And then email comes along. Which different topic. But a little bit of my soapbox is I can't believe the lack of, information that most associations have with capturing their residents email addresses. It shocks me. 00:26:41:16 - 00:26:59:23 Unknown You can do better about that. And we we we make a point to really collect that information and not only email, but we now can text homeowners and call them and, and, but then this brings about, the way that most people are consuming information these days, and that's through some form of social media. 00:27:00:00 - 00:27:32:07 Unknown Yes. Putting my cards on the table. In the past, I was very wary about associations engaging in social media. I have now shifted to where I think it's not only, something that associations could do, but even should do. And I could articulate that. But why don't we start off with what are the concerns about an association getting involved in social media for communication, and then maybe we can get into what are some positive things? 00:27:32:07 - 00:27:42:00 Unknown Well, you know, my I would have answered probably similar to you. I've got a ton of concerns. And to sum it up, it would be to stay away from it. 00:27:42:03 - 00:27:54:18 Unknown But I've softened it to in large part because it's the way owners, it's the way the world communicates. It's the way people consume, information, text messaging and email is as well. 00:27:54:18 - 00:28:18:05 Unknown And, you know, I'll give you an example. It's, it's routine that I hear from an owner or sometimes even owners in litigation. Well, you should have just emailed me. Or why couldn't you just call me or text me? So that's just what they're used to. So you kind of have to embrace it. The concerns are, you know, okay, what is going to get posted on social media? 00:28:18:07 - 00:28:44:00 Unknown You know, we got to make sure it's factual. We certainly don't want to defame anybody. We certainly don't want to give out, inaccurate information or to be kind of viewed as the official means and in large part because if it's, a legal notice, we can't post it typically on, on social media. So that's key, I think responding and what owners can do on social media in response. 00:28:44:00 - 00:28:56:02 Unknown And, you know, some of the responses can be in discussions, can be, attacking, hurtful, and and sometimes board members 00:28:56:08 - 00:29:07:09 Unknown officers have a tendency to. Oh, well, we need to leave that comment. And the concern there is, are we trying to to chill communication or squelch freedom of speech and so on and so forth. 00:29:07:09 - 00:29:14:18 Unknown So there are those concerns, but I've gotten to the point where I think, those concerns can be managed 00:29:14:18 - 00:29:25:15 Unknown yeah, I would advocate and you can respond to this, but I would advocate that, social media should not be used to communicate legal obligations. 00:29:25:20 - 00:29:56:11 Unknown Anything that us, an association is communicating about, that they have a legal obligation to communicate to the community or, that has potential legal consequences should it be used for social media. But I think that there is a great place for social media to be used to highlight the value of the association and to keep people informed and educated, and to celebrate even the positive things. 00:29:56:11 - 00:29:58:07 Unknown Yeah. In an association, 00:29:58:09 - 00:30:08:23 Unknown there is something about, the, the use of video and images and even music and words to highlight positive things in a community. 00:30:09:01 - 00:30:13:03 Unknown people don't read their emails and they might not even pay attention to their texts. 00:30:13:03 - 00:30:36:11 Unknown And, they're certainly not going to pay attention to something that you email them. Or if you say, I've been a posted on the association's website, they're not going to go to the website, but they're going to be sitting in bed late at night, scrolling through their Instagram reels. They are. And if a 62nd reel pops up with the manager or the board member standing at the pool saying, hey, we're replaced during the pool this week, here's what we're doing. 00:30:36:11 - 00:30:57:22 Unknown And you spend 30 or 60s, explaining and highlighting that you've got your message to your homeowners in a way that maybe they they wouldn't have otherwise consumed it. Yes. And and I agree, I think that probably is shifting to where that's going to be the best way to get that information to older homeowners. And so many times homeowners reactive. 00:30:58:02 - 00:31:17:17 Unknown Well, we didn't know that was going on or what's that going to cost. And all these questions that stemmed from whatever that is. If you can use social media like an Instagram reel to highlight we are accomplishing these tasks. I think that's going to get there because part of it is just getting the basic information out there. 00:31:17:19 - 00:31:35:15 Unknown Hey, yeah, you knew about it. And if you have follow up questions, ask them, we're here. We'll we'll answer them. Yeah. So I think that's key. As opposed to oh we spent money on the pool and get accused of we didn't know about that or whatever the case may be. Yeah. Yeah. Whatever we can do to get that general information out I think is a good thing. 00:31:35:21 - 00:32:01:16 Unknown Yeah. One other, aspect of communication that, is maybe a little less fun, relates to compliance. Associations, and board members have an obligation to enforce the declaration, to enforce the carriers and the rules and regulations. And, it's probably one of the things that homeowners dislike the most about the association. Just ask my wife. 00:32:01:17 - 00:32:42:06 Unknown Yeah. I don't know. I don't know anybody who enjoys that. What are some of the, the legal considerations that an association has about going about enforcing the rules? Sure. You need to enforce them reasonably and fairly across the board as best you can. Specifically legally here in Texas, both for condos and single family homes, but for an association that has the ability to fine and condos have a statutory right to to find an owner in violation, for most cases, the default is they have the association has to send a formal written notice. 00:32:42:06 - 00:32:46:14 Unknown And in speaking of mail, it's got to be mailed in certified mail. And, 00:32:46:16 - 00:32:48:17 Unknown the first notice has to be certified mail. 00:32:48:19 - 00:33:02:21 Unknown The, the notice that you have to send, that you have to send before a fine is like, okay, you got to be certified that in and so this this notice has to inform the owner of the violation, give them an opportunity to cure the violation. 00:33:02:21 - 00:33:27:21 Unknown And, and, amongst other statutory disclosures. And it's not until that notice is sent in the time period in that notice expires, that by default we can levy a fine there, there are exceptions, in Texas for single family homes. We have an exception to that for incurable or incurable, whichever way you want to say it. But legislature used interesting words, where you can fine for certain violations. 00:33:27:21 - 00:33:51:04 Unknown Say, if somebody is letting off fireworks, you can't put fireworks back in the box, can't cure it. You can immediately levy fine for something like that. So there's those statutory requirements that a community has to know about for sending violations and fines. And I bring up fines because fines are a fairly effective tool to compel an owner to comply. 00:33:51:04 - 00:34:13:16 Unknown And what I mean by that is, is to get the owner to, to stop the violations, to stop doing what they're what they're doing that's against the covenants. And then or do something, for instance, maintain their, their, their front yard. So there's that thing. And one of the things that is been pretty clear in Texas, you know, we like our our property and we like it to be free of restrictions. 00:34:13:16 - 00:34:40:20 Unknown So there's, there's there's that tug of, tug of war there for any decision or anything that an owner you think is doing wrong or against the HOA covenants. You need to be able to point to something expressed in the declaration, you don't get to make some liberal interpretation. So you want to be able to go, hey, here's a covenant that pretty clearly and plainly says you can't do what you're doing. 00:34:40:22 - 00:35:08:05 Unknown And then from there, gather your evidence to support that. That's a violation. So that's kind of key. And you can flesh out those covenants in your rules and regulations to add more specificity. Only in good question for single family homes here in Texas, only if the declaration, or presumably the bylaws, gives the board the express authority to adopt rules and regulations to kind of gap fill those. 00:35:08:05 - 00:35:40:02 Unknown If you don't have that, no. You're okay. Now for condos. The Uniform Condominium Act allows the board to adopt rules and regulations that that authority is fairly broad. The limitation or exception there, the if the rule and regulation it can't conflict with the declaration. So the Congress condos. Yes. But if you don't have that authority for a single family HOA Matthew Wade, it puts the board in spot to where they can't provide necessary clarification for a letter, like a better way of putting it. 00:35:40:03 - 00:36:01:16 Unknown You're left with interpreting those those covenants and taking a more risk averse approach. You want to be able to interpret those, you know, you're looking for something that is that is clean and direct on, on point, not, hey, can we make an argument? Yeah. Making an argument that the covenant says you can't do what the owner is doing. 00:36:01:18 - 00:36:36:05 Unknown There's some risk there. Yeah. So I think, a couple of key points that you're bringing out. One, you have to tie any violation back to your documents. Yes. And it needs to be a clear link. We did another episode, diving into this a little bit further and highlighted that, for, I think the example that we used was, a homeowner complained about their neighbor running through the, the common area unclothed, and wanted the association to send a violation notice about that. 00:36:36:05 - 00:37:06:20 Unknown And the question came back, what's that in violation of? Yeah. For the association. Yes. That's that's not appropriate, maybe even illegal, but not part of the jurisdiction of the of the HOA or the condo association. You can take that to appropriate law enforcement authorities. Yes, but we need to be clear. What is the association's jurisdiction. So essentially and, you know, how I look at restrictive covenants, there's, there's objective ones and, and subjective ones. 00:37:06:22 - 00:37:10:07 Unknown And you have to think about what our jurisdiction is. And so 00:37:10:09 - 00:37:29:15 Unknown objective covenant would be something like no parking on a street or photo of a car on the street definitively proves that the subjective ones, which is what you're kind of talking about, was kind of falls in that, that catchall bucket a nuisance. What is that nuisance as just a standalone, tour? 00:37:29:15 - 00:37:38:18 Unknown Cause action here in Texas is pretty high standard. So what can be a nuisance to me? My being a nuisance to somebody else? Yeah. So that's a 00:37:38:20 - 00:37:49:18 Unknown that's a very touchy subject. And to kind of highlight this idea of something clear that the Tavi timber wood case here in Texas, that came out a couple of years ago, this was on short term rentals. 00:37:49:18 - 00:38:17:11 Unknown And basically the question in that case to the court was, does the residential purpose or residential use only clause that we commonly see in, declarations? Does that bar short term rentals and any unanimous Supreme Court said, no. They just said it's just not clear enough to say that to a plain reader that that is that that that clause is applying to that behavior. 00:38:17:13 - 00:38:41:04 Unknown And that's kind of a good litmus test for me to go, you know, residential purpose in the court, examine this could have a bunch of different meanings, but you can't read it so far and expanded so far to say short term rentals is barred by that clause. And that's why I kind of go back to I'm really looking for something more specific on the 00:38:41:07 - 00:38:42:12 Unknown next guy running through the county. 00:38:42:12 - 00:39:08:03 Unknown Yeah, and tying that to your documents. Specific to your documents, not just. Oh, well, we don't like it, right. We're just going to call it a nuisance. Yeah, yeah. Going back, a few minutes, you talked about sending that notice that has to be certified and. Yeah. Prior to a fine. Are there any is there any communication required from the Association before you send that notice? 00:39:08:03 - 00:39:25:05 Unknown So if somebody is not maintaining their front yard, can you just go straight to that notice or do you send them any warning notices. Is that just good practice or is there an obligation their statutorily in Texas for condos and single family homes. No. Meaning you could go straight. It goes straight to a fine two days straight to the notice before or fine. 00:39:25:05 - 00:40:05:12 Unknown Right. The exception would be if a particular community's governing documents establish that. I think for me, what the law says, you can or cannot do, needs to be ran through a filter of practicality. So I am all for practically. Hey, let's send a couple notices before we jump to the more formal notice. And a fine. So I think it's common practice here in Texas that an HOA or a management company is going to send some sort of friendly reminder, a courtesy notice, maybe a more, formal notice before you get to that covered, a violation notice that is warning of a fine and and then so the and then going back to 00:40:05:12 - 00:40:32:17 Unknown this warning of the fine, if it's curable, you send that notice and the homeowner cures within that time period, then the association can't. Fine. Correct. In Texas, is there a requirement to have any type of a hearing prior to imposing a fine? Yes. So that will be this. Notice that we've talked about that. You have to send out, has to disclose that the owner has an opportunity to request a hearing. 00:40:32:19 - 00:40:52:00 Unknown And, and if the owner timely makes that request, depending on if this is a condo or a single family HOA, there's there's things that have to be done, but the owner would have an opportunity to request a hearing. So this would be a distinction from other states like California, where the association has the obligation first to have the hearing. 00:40:52:05 - 00:41:07:01 Unknown Okay. And here in Texas, it sounds like the association has the obligation to give the homeowner the right to request a hearing. But now the burden is on the homeowner to make the request. Yes, yes. So you're absolutely right. So I'll give you an example of how this is evolved. 00:41:07:02 - 00:41:11:13 Unknown used to be no right to a hearing because the statute wasn't in place for single family. 00:41:11:13 - 00:41:28:03 Unknown It was when the statute came in play, the owner had a right to request a hearing. We had to give the hearing, but it was really the owner would come in and meet with the board, and the board would literally hear the owner out. There didn't need to be any other discussion or anything like that. There was no other legal requirements about that hearing. 00:41:28:05 - 00:41:46:07 Unknown And then the board could come back, you know, shortly thereafter and render its decisions. A couple of years ago, the legislature changed the hearing requirement, and instead of the owner just getting a chance to request a hearing and come in and say their piece, there's now requirements on a single family HOA here in Texas, where we've got to set a date. 00:41:46:07 - 00:42:14:20 Unknown We have to provide a packet of evidence to support the violation. And then the association at that hearing has to present its case first. So there's kind of been a little bit of a land shift there. And so I say that to say the law has changed a lot of requirements has changed, and it's changed, good or bad, it it's any individual's opinion, but it's required more work. 00:42:14:20 - 00:42:36:19 Unknown And it's more onerous on the association. Does that whole process that you just described, you said that applies to an HOA. Is that different for a condo association, condo association kind of association right now does not have this now new formal process. It's more like what I described before, where it's more of a more of an informal sit down hearing and let's hear the owner 00:42:37:00 - 00:42:39:18 Unknown so the homeowner could request the hearing. 00:42:39:18 - 00:42:46:21 Unknown They, they come to the hearing and the board can just say, make their pitch. They listen and then they say, okay, you're still find. Yes. 00:42:46:23 - 00:43:02:02 Unknown does that request from the homeowner for the hearing, come before or after the the fine is actually imposed. Good question. The request for a hearing can you can come both. 00:43:02:04 - 00:43:28:06 Unknown Okay. Really. And and I'll give you an example for a single family hoa the association has to give the owner a reasonable opportunity to cure the violation. We have to give 30 days to request. There's no cure obligation for a condo. It's basically the same thing. Okay? You are just using it. The the. There's no definitive, statutory time period to give somebody the cure. 00:43:28:12 - 00:43:54:02 Unknown Okay. So the point I'm making is you can you could have a shorter cure, period, that the owner could blow through, and the the fine could be technically levied before the owner requests and holds a hearing, if that makes sense. Yeah. Now, I think that's a little bit form over substance. If the owner requests a hearing, obviously they're contesting the fine, the fine amount, the violation, so on and so forth. 00:43:54:02 - 00:44:14:20 Unknown So ultimately, that timing sequence is going to be moot. We're going to go to a hearing in this example, and we're going to have to we're going to hear the owner out. We're going to examine things. Do we have good legal and factual footing to support a violation and to support a fine? And then the decision is going to possibly get made by the board. 00:44:15:02 - 00:44:43:05 Unknown Anything else on, the compliance enforcement that, we should highlight? You know, I think, again, you know, board members need to read their governing documents and they need to understand the rules that they are going to try to enforce, and then they need to understand the evidence that they have to support a violation. And I bring that up because so many times, I'll get contacted by a client and, hey, we've got this owner over there. 00:44:43:06 - 00:45:02:21 Unknown They're doing X, Y, and Z, and we don't either have the evidence or they haven't really given any thought to, what are we going to tie this bat this behavior to and the governing documents? And then I have to say, hey, we might not have jurisdiction to address that. Kind of like the, the nuisance, example that, that you gave. 00:45:02:21 - 00:45:24:08 Unknown So having that understanding and having board members read their governing documents and know that, that it's more than just, hey, we just don't like it. We need to be able to point to things expressly that clearly to address that issue, I think is really key from an educational standpoint. Yeah. Well, that's really helpful, Grant. And, really appreciate your, your insight and expertise. 00:45:24:08 - 00:45:30:20 Unknown And, I think board members and managers will find this to be really helpful. So thank you. Pleasure I appreciate it. It's great talking. 00:45:30:22 - 00:45:53:03 Unknown I hope that episode was helpful for you, and I really appreciate Grant and his expertise and input for board members. For associations. I think that Grant's, combination of practical experience along with legal perspective, is really, really helpful. And, if you did find that to be a beneficial episode, we would really appreciate it. 00:45:53:03 - 00:45:58:11 Unknown If you would like and subscribe to this podcast and tell other people about the uncommon area.