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posted by responsible_dvlpmnt at Monday, July 03, 2006
9 Comments:
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Hot topics on FBT:
Another Wal-Mart for Mo-City-
New Shopping Center in Sienna Plantation (From FBN.com)-
Is Arcola Airport Being Sold?
Community: Who’s Running Your HOA (and why does it matter)??? --Part II--
SPMUD Annexations of Interest to Residents-
For JK and MDM (and associates):
Bob and Joe, a couple of personal injury lawyers, were discussing conditions in the legal profession. "How's business?" asked Bob.
"Absolutely rotten!" responded Joe. "How have you been doing?" "Even worse," Bob replied. "I just chased an ambulance twelve miles and found a LAWYER inside it."
. . . ;-)
See related:
WHO'S RUNNING YOUR HOA (and why does it matter)??? -Part II- CLICK ON TITLE LINK FOR MORE!
Ever ask yourself who our SPRAI (HOA) board is here in Sienna Plantation (Missouri City, TX --- Sienna Plantation Residents Association, Inc.)? The simple answer is 3 employees of Johnson Development Co. of Houston. Are these homeowners, taxpayers or even residents of this subdivision? No, of course not. Were they voted on by the 9-10K residents who pay almost $3 million a year into this association? No, of course not. Do they pass covenants without our approval or input? Yes, of course they do.
Why is any of this important to a homeowner who lives in this neighborhood or potential purchaser? Because this group of individuals decides who your community manager is and which attorneys represent the HOA (among just a few minor items). How can this impact you as a homeowner/taxpayer/resident?
Maybe some recent articles on HOA foreclosure abuse (by CAI affiliate & industry attorneys) will help:
Background-
http://www.hobb.org/index.php?option=com_content&task=view&id=299&Itemid=317 -- Major builder scam reported by HOBB.
http://www.ahrc.com/new/index.php/src/news/sub/legis/action/ShowMedia/id/371 -- related article.
http://pages.prodigy.net/hoadata/ -- Hard data on HOA foreclosure filings and the impact on owners/members of these associations (just in Harris county alone).
http://pages.prodigy.net/hoadata/attyrank.html -- see if your association lawyers are on this list of most active HOA foreclosure-related attorney filings.
http://pages.prodigy.net/hoadata/fee.html -- how do these high filings impact home value? Check this data out.
http://www.ahrc.com/new/index.php/src/news/sub/article/action/ShowMedia/id/2845 -- related article.
Is our resident manager involved with this industry and/or our HOA attorney? The SPRAI (Sienna HOA) manager, Sandy Denton, is soon to be past president of CAI (Community Associations Institute), which is listed prominently in the AHRC article above and on the affiliated Texas Homeowners Association site. What about our HOA attorney? As of last year Marc Markel (of Roberts, Markel & Guerry, P.C. of Houston, TX) became our association legal consultant and he is listed twice on the “Houston Area HOA Foreclosure-related Filings” all time list of lawyers involved with this type of work. See the hoadata link above for Harris County filings and search his work here in Fort Bend County through court connect at (or click the title link above):
*** http://courtcn.co.fort-bend.tx.us:80/pls/public/ck_public_qry_cpty.cp_personcase_details_idx?backto=P&soundex_ind=&partial_ind=&last_name=&first_name=&middle_name=&begin_date=&end_date=&case_type=&id_code=V12986850 ***
*** http://www.chron.com/disp/story.mpl/front/1297991.html ***
Ask yourself why is any of this important? Why should you have a real voice in your HOA, not just non-voting village reps? I think you will agree that the answer to these questions are contained in the multitude of sources above (please read carefully and consider).
Related Pieces on this:
http://www.chron.com/disp/story.mpl/front/1297991.html
http://www.bizjournals.com/houston/stories/2005/04/25/story8.html
http://www.ahrc.com/new/index.php/src/news/sub/legis/action/ShowMedia/id/371
http://courtcn.co.fort-bend.tx.us:80/pls/public/ck_public_qry_cpty.cp_personcase_details_idx?backto=P&soundex_ind=&partial_ind=&last_name=&first_name=&middle_name=&begin_date=&end_date=&case_type=&id_code=@3129
If you have any questions about this opinion piece then feel free to contact responsible_dvlpmnt@yahoo.com or visit the related http://missouricitychatter.blogspot.com website or FortBendTalk.com.
Stay informed and keep in touch!
This comment has been removed by a blog administrator.
See this important TX government opinion handed down by the TX attorney general in 2004 on the rights of homeowners based on the Inwood decision. Many special interest groups (CAI, lawyers, etc) now directly benefit from this current praxis. Interesting enough the attorney general advised that the law be changed (or its interpretation). From http://www.ahrc.com/new/index.php/src/govt/sub/reports/action/ShowMedia/id/1864
A TX Govt. Report
Do one-party foreclosable contractual liens on the land by the developer that supersede the homestead rights created in Article XVI, Section 50 of the Texas Constitution violate[s] the Texas Homestead Act?
An opinion by the Texas Attorney General and his staff
December 09, 2004
By Amy McCorkle (View author info)
Austin, Texas -
The following is an opinion by the Texas Attorney General and his staff as to whether the placement of one-party foreclosable contractual liens on the land by the developer that supersede the homestead rights created in Article XVI, Section 50 of the Texas Constitution violate[s] the Texas Homestead Act.
December 9, 2004
The Honorable Fred Hill
Chair, Committee on Local Government
Ways and Means
Texas House of Representatives
Post Office Box 2910
Austin, Texas 78768-2910 Opinion No. GA-0279
Re: Whether the placement of one-party foreclosable contractual liens on land by a developer that supersede the homestead rights created in article XVI, section 50 of the Texas Constitution violates the Texas Homestead Act (RQ-0236-GA)
Dear Representative Hill:
You have asked a specific question: "Whether the placement of one-party foreclosable contractual liens on the land by the developer that supersede the homestead rights created in Article XVI, Section 50 of the Texas Constitution violate[s] the Texas Homestead Act." (1)
I. Homestead Protection in the Texas Constitution and Statutes
We begin by briefly reviewing Texas homestead protections from forced sale. Texas is credited with enacting the first homestead law in 1839. See Estate of Johnson v. Comm'r, 718 F.2d 1303, 1307 n.13 (5th Cir. 1983) (citing 1839 Laws of the Republic of Texas). Today, Texas' homestead protection from creditors' liens is found principally in article XVI, section 50 of the Texas Constitution and chapter 41 of the Property Code. See Tex. Const. art. XVI, § 50; Tex. Prop. Code Ann. §§ 41.001-.024 (Vernon 2000 & Supp. 2004-05); see also Tex. Const. art. XVI, §§ 51 (defining homestead), 52 (descent and distribution). Article XVI, section 50 not only protects a homestead from forced sale by creditors but provides that "[n]o mortgage, trust deed, or other lien on the homestead shall ever be valid unless it secures a debt described by this section." Tex. Const. art. XVI, § 50(c). Article XVI, section 50 expressly enumerates eight exceptions to homestead protection from forced sale: (1) purchase money security, (2) taxes due on the homestead, (3) certain owelty on partition, (4) refinancing of certain liens, (5) security for improvements, (6) certain circumscribed extensions of credit in the nature of an equity loan, (7) reverse mortgages, and (8) special financing concerning manufactured homes. Id. § 50(a)(1)-(8).
Section 41.001 of the Property Code reiterates exceptions for homestead and burial plots. Tex. Prop. Code Ann. § 41.001(a)-(b) (Vernon Supp. 2004-05) (listing seven of the eight constitutional exceptions). The remainder of chapter 41 concerns homestead issues not pertinent to your inquiry. (2)
II. Inwood North Homeowners' Association, Inc. v. Harris
The Texas Supreme Court addressed in 1987 whether Texas homestead laws preclude foreclosure of a developer's lien for homeowners' association fees and assessments. See generally Inwood N. Homeowners' Ass'n, Inc. v. Harris, 736 S.W.2d 632 (Tex. 1987). In Inwood, a subdivision developer had filed a declaration of restrictions and covenants in local real property records reciting that all lots in the subdivision were impressed with a covenant to pay a maintenance fee or other assessment to a homeowners' association or similar entity, that such covenants run with the land, and that such covenants were secured by a lien. See Inwood, 736 S.W.2d at 633. Individuals who thereafter purchased property in the subdivision received a deed referencing the covenants to pay the fees and the lien against the property to secure payment. See id. The subdivision's homeowners' association sued to recover delinquent maintenance fees from homeowners and sought foreclosure of liens securing the fees. Id. at 634.
The court in Inwood acknowledged that security for homeowners' association fees was not a true vendor's lien, but was instead more in the nature of a contractual lien, not among the express constitutional exceptions to homestead protection. See id. The court observed that "[h]omestead rights, however, may not be construed so as to avoid or destroy pre-existing rights," and that "[i]t has long been held that an encumbrance existing against property cannot be affected by the subsequent impression of the homestead exception on the land." Id. at 635.
The court in Inwood held that an owner is free to impress property with a covenant running with the land, and that a "developer of the subdivision, as owner of all land subject to the [developer's] declaration, is entitled to create liens on his land to secure the payment of assessments." Id. at 634. The court further determined that subsequent purchasers were bound by references in their deeds to the covenants as well as by all instruments in a particular purchaser's chain of title. See id. at 635. Because the developer had placed the restrictions on the land before it became the homestead of the homeowners, the court concluded that "the homeowners were subject to the liens in question and an order of foreclosure would have been proper." Id. at 635-36.
The court in Inwood stated that its decision was reinforced by the legal principle that "[a] homestead right in real property cannot rise any higher than the right, title or interest acquired by the homestead claimant." Id. at 636. The court determined that the purchase of a lot in the subdivision carried with it "as an inherent part of the property interest, the obligation to pay association fees for maintenance and ownership of common facilities and services," along with the concomitant remedy of foreclosure for failure to pay those fees. Id. The court concluded that constitutional homestead rights "will not operate to circumvent an inherent characteristic of the property acquired" and that the homeowners' association was entitled to foreclose its contractual lien on the houses of delinquent homeowners. Id.
III. Post-Inwood Developments
In 2001, the 77th Legislature enacted the Texas Residential Property Owners Protection Act (the "Act"). See Act of May 27, 2001, 77th Leg., R.S., ch. 926, § 1, 2001 Tex. Gen. Laws 1857 (adding chapter 209 to the Property Code, codified at Tex. Prop. Code Ann. §§ 209.001- .011 (Vernon Supp. 2004-05)). The Act was added "to provide guidelines for the operations of [community] associations a well as specific protections for Texas homeowners living in association-managed communities." Senate Comm. on State Affairs, Bill Analysis, Tex. Comm. Substitute S.B. 507, 77th Leg., R.S. (2001) (enrolled version). The Act gives owners of property a number of procedural protections, including the right to redeem property following foreclosure. See Tex. Prop. Code Ann. §§ 209.006-.011 (Vernon Supp. 2004-05). The Act does not, however, change the essential holdings in Inwood that (1) a property owner such as a developer may impress the property with a covenant to pay association maintenance fees, enforceable by foreclosure, by filing a declaration of covenants and restrictions in the deed records, (2) a subsequent purchaser with notice of the declaration in the purchaser's deed and chain of title is bound by the declaration, and (3) the subsequent purchaser's rights that arise upon purchase do not circumvent the remedy of enforcing the covenants by foreclosure.
Recently, the Texas Supreme Court reiterated Inwood's holding:
In Inwood, we considered whether the homestead laws of Texas protect a homeowner against foreclosure for failure to pay homeowners association assessments. As a general rule, a homestead is protected against the debts of those who live in the homestead. However, the deed restrictions for the subdivision included a vendor's lien permitting foreclosure on the homestead for failure to pay the fee assessment. Because the property owner had notice when purchasing the property that a lien attached to the land, we held that foreclosure was permissible.
Brooks v. Northglen Ass'n, 141 S.W.3d 158, 170 (Tex. 2004) (citations omitted). The court applied the holding in Inwood to particular deed restrictions and concluded that because they did not give notice that late fees might be imposed on assessments, such fees were not enforceable by foreclosure. Id. at 170-71.
IV. Discussion
The question, as specifically phrased, is "[w]hether the placement of one-party foreclosable contractual liens on the land by the developer that supersede the homestead rights created in Article XVI, Section 50 of the Texas Constitution violate[s] the Texas Homestead Act." Supplemental Letter, supra note 1, at 1. Although we did not locate the phrase "one-party foreclosable contractual liens" in the constitution, statutes, or case law, we assume you refer to a developer's unilateral action, as in Inwood, of encumbering property by filing a declaration of restrictions and covenants, enforceable by foreclosure. Likewise, by "Texas Homestead Act," we assume you mean homestead protection from forced sale by creditors in the Texas Constitution and the Property Code. See Inwood N. Homeowners' Ass'n, Inc. v. Harris, 707 S.W.2d 127, 129 (Tex. App.-Houston [1st Dist.] 1986) (referring to article XVI, section 50 of the Texas Constitution as the "Homestead Act"), rev'd on other grounds, 736 S.W.2d 632 (Tex. 1987); United States v. West, 22 F.3d 586, 598 n.33 (5th Cir. 1994) (equating the protections in section 41.001 of the Texas Property Code with the "Texas Homestead Act"). Consequently, we address whether a property owner who unilaterally files a declaration of covenants and restrictions, enforceable by foreclosure, violates subsequent purchasers' homestead rights under article XVI, section 50 of the Texas Constitution and section 41.001 of the Property Code.
The Texas Supreme Court in Inwood determined that a developer may encumber real property with a secured covenant running with the land by filing a declaration of restrictions and covenants and that such covenants bind subsequent purchasers with notice. See Inwood, 736 S.W.2d at 635-36. Because the developer's encumbrance came into being before the purchasers acquired constitutional and statutory homestead rights in the property, the lien could be enforced by foreclosure. See id. The court's holding in Inwood, that "[h]omestead rights . . . may not be construed so as to avoid or destroy pre-existing rights," applied to homestead rights whether under the Texas Constitution or chapter 41 of the Property Code. See id. at 635; see also id. at 637 (Mauzy, J., dissenting, noting that "the legislature has tracked the Constitution" in section 41.001(a)-(b) of the Property Code). To answer your question, under Inwood and its progeny, a developer may unilaterally encumber real property with a covenant running with the land, enforceable through foreclosure, without violating the constitutional and statutory homestead rights of subsequent purchasers with notice. Of course, whether particular covenants are enforceable by foreclosure depends on the particular instruments and circumstances involved. See, e.g., Brooks, 141 S.W.3d at 170-71 (holding that because particular deed restrictions did not give notice of certain late fees,foreclosure was an inappropriate remedy for collecting them); Tex. Att'y Gen. Op. No. GA-0237 (2004) at 6-8 (determining that an assessment within the scope of a statutory lien could be enforced by foreclosure only if the lien predated the attachment of a homestead interest); Tex. Att'y Gen. LO-97-019, at 3-4 (determining that a property owners association's right to foreclose on homestead property for certain costs depends on whether the lien for such costs (1) attached to the property prior to the homestead right and (2) resulted from a restriction that runs with the land).
We have received extensive briefing that takes issue with the Texas Supreme Court's analysis and reasoning in Inwood and recommends "'repeal' of the Inwood law." (3) That may be good policy and, as such, would be appropriate for the legislature to address or for the Texas Supreme Court to consider. The attorney general's constitutional duty to render legal advice, however, does not include the authority to legislate or to establish binding judicial precedent. See Tex. Const. art. IV, § 22; Tex. Gov't Code Ann. § 402.042 (Vernon 1998); see also Bullock v. Enserch Exploration, Inc., 614 S.W.2d 215, 218, 220 (Tex. Civ. App.-Austin 1981, writ ref'd n.r.e.) (an attorney general opinion does not have the authority of a statute), cert. denied, 455 U.S. 946 (1982); Bass v. Aransas County Indep. Sch. Dist., 389 S.W.2d 165, 176 (Tex. Civ. App.-Corpus Christi 1965, writ ref'd n.r.e.) (attorney general opinion is not binding judicial precedent). See also Holmes v. Morales, 924 S.W.2d 920, 924 (Tex. 1996) (attorney general opinion is not binding on the courts). Consequently, we may advise only about the current status of the law, which is that the Texas Supreme Court's opinion in Inwood, as recently reaffirmed in Brooks, is dispositive of your question. See Brooks,141 S.W.3d at 170; Inwood, 736 S.W.2d at 634-36.
S U M M A R Y
A property owner may encumber real property with a covenant running with the land, which, depending on the particular instruments and circumstances involved, may be enforced by foreclosure without violating subsequent purchasers' constitutional and statutory homestead rights.
Very truly yours,
GREG ABBOTT
Attorney General of Texas
BARRY MCBEE
First Assistant Attorney General
DON R. WILLETT
Deputy Attorney General for Legal Counsel
NANCY S. FULLER
Chair, Opinion Committee
William A. Hill
Assistant Attorney General, Opinion Committee
Footnotes
1. Letter from Honorable Fred Hill, Chair, Committee on Local Government Ways and Means, Texas House of Representatives, to Honorable Greg Abbott, Texas Attorney General (June 9, 2004)[hereinafter Request Letter]; Letter from Honorable Fred Hill, Chair, Committee on Local Government Ways and Means, Texas House of Representatives, to Nancy Fuller, Chair, Opinion Committee, Office of Attorney General (July 19, 2004) [hereinafter Supplemental Letter] (both letters on file with Opinion Committee, also available at http://www.oag.state.tx.us).
2. See Tex. Prop. Code Ann. §§ 41.002 (Vernon 2000) (defining the extent of urban and rural homesteads), 41.003 (effect of temporary renting), 41.004 (abandonment), 41.005 (designation of homestead), 41.0051 (advertising regarding tax refunds), 41.006 (limitations on certain sales), 41.007 ( home improvement contract requirements), 41.008 (federal law conflicts), 41.021 (designation of homestead in aid of judgment), 41.022 (designation procedures), 41.023 (designation by court appointed commissioner), 41.024 (sale of excess).
3. See Brief from Harvella Jones, Texas Homeowners' Advocate Group, to Nancy Fuller, Chair, Opinion Committee, Office of Attorney General, at 6 (July 20, 2004) (on file with Opinion Committee).
Office of Attorney General - State of Texas
Post Office Box 12548, Auston, Texas 78711-2548
TEL: (512) 463-2100
Comments:
1. "Its a racket racket racket!" said Geneva Brooks to the Nevada senate regarding HOA's and CAI.
Could somebody please interpret that legal gobbledygook!! Does it or does it not violate the Texas Homestead Act? A simple yes or no would have been just fine, sir Attorney General. or maybe you did answer it direct and we just didn't catch on?
This is so much like those damn CCR's written in legalese. even some legal beagles have trouble understanding 'em.
How in God's name is the average Joe supposed to understand those 'covenants that run with the land'. where they goin'?
We sure do Miss Geneva Brooks. How can anybody forget her spirited speech before the Nevada Senate and how she spoke out against the Community Associations Institute and everything they represent - or should we say misrepresent?
Her colorful hat and dress, fancy shoes, and perfectly coiffed and manicured look was in strange contrast to her clenched fist as it came banging down on the table as she proclaimed loudly "Its a racket, racket, racket!".
She spoke with true passion. a pioneer before her time!!
Posted Dec 9 2004 11:45PM EST
Username withheld
, ot
2. Texas Attoeney General opinion says Inwood is the law on HOA foreclosures
First, I met Geneva Brooks in Nevada a few years ago, myself.
The Attorney General's opinion is not law, nor does it set any legal precedent. It's an explanation of the law. He recommends that the laws be changed, which he is not authorized to do. In short he discusses Inwwod and Brook (our Miss Brooks) case as supporting Inwood.
Having read the Inwood and Brooks cases, although I'm not an attorney, what Texans are up against is a decision in the Inwood case that says a person, the developer, can create restrictions on the use of the land, covenants, that can legally bind all subsequent purchasers of the land, homeowners, as they "run with the land". I repeat, all subsequent owners are bound by these restrictions,including the oligation to pay assessments and the lien given to the HOA.
The homestead protection becomes effective when the homeowner buys the lot subject to these covenants because they already exist. The Inwood decision said the Texas Constitution's homestead protections cannot overturn prior obligations, like not allowing ex post facto laws. In effect, the constitutional execeptions didn't apply here.
THe best way of "repealing" (can't really repeal)is to create laws to get around this particular circumstance. This is really simple. Just add another clause to the statutes that specifically declares homeowner association liens subject to the Homestead laws and that the HOA lien is not exempt. Problem is, as we face all over the country, to get a bill sponsor and enough votes to pass the bill to make it law.
Posted Dec 12 2004 10:23AM EST
George Staropoli (View Profile)
FBN comments on 2 Wal-Mart Super Stores in Mo-City (Thanks again Owen--isn't Wong another one of your big campaign supporters?)-
Missouri City Gets Its Second Wal-Mart Super Center
by FortBendNow Staff, Jun 30, 2006, 11 09 am
. . .
“They came and talked with us about six to eight months ago,” Graf said. “It takes them a long time to build one of their stores.”
Wal-Mart purchased the land from developer Clinton Wong.
This will be Wal-Mart’s second super center in Missouri City – the first is at 5501 State Highway 6, near Riverstone Blvd. In Fort Bend County, Wal-Mart also has stores in Sugar Land, Richmond and Stafford.
1 FBC Resident - Jun 30, 09:11 pm
Wow, just what we needed – more shopping. I’ve been wondering where I was going to go to do all of my shopping, since there doesn’t seem to be very many retailers along Highway 6 through Sugar Land and Missouri City. Isn’t there a Walgreen’s at this same location that’s been ready for nearly a year but can’t open until there’s a traffic light installed at the entrance to Lake Shore Harbor? I just wonder how much retail busness our economy can support…
2 fourthwheel - Jul 4, 09:57 am
Another one? How unfortunate.
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MCC Comment: It only took Graff and the city 6-8 months to announce this sale. I sure hope it doesn't take that long to get emergency info out boys!
More FBN comments on Wal-Mart Super store:
3 Sienna Resident - Jul 5, 10:16 am
Want to stop Wal-mart from their obnoxious expansion? Shop at Target!!!!!!!
More FBN comments on 2 Super Wal-Marts in Mo-City (within 3+ miles of each other):
3 Sienna Resident - Jul 5, 10:16 am
Want to stop Wal-mart from their obnoxious expansion? Shop at Target!!!!!!!
4 fourthwheel - Jul 5, 10:12 pm
Good point, Sienna Resident. I agree completely. Some will undoubtedly say that WM is cheaper, but there’s better service elsewhere for only slightly more money.
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Comment: I wonder if anyone is considering the negative impact this will have on smaller retail businesses in the nearby community or the fact that Mayor Owen's number 1 campaign contributor was involved with the land deal in that location.
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