New law won't prevent abuse

January 17, 2002

By MIKE SNYDER

Members of a Texas Senate subcommittee heard testimony Wednesday in preparation for a new legislative effort to protect people from abuses by homeowners associations.
Homeowners, lawyers and activists told the panel -- which convened at a hearing held at the University of Houston -- that a measure passed last year was not enough to prevent homeowners associations from foreclosing on homes because of small past-due fees or minor rules infractions.

Publicity about the case of 83-year-old Wenonah Blevins, who lost her $150,000 home last year over an $814.50 delinquency, could create momentum for more meaningful reforms next year, said state Sen. John Whitmire, D-Houston, a subcommittee member.

The Blevins case "has got all of us energized and excited," Whitmire said. "I don't think there's any question there will be additional legislation" in the 2003 session.

Blevins sued the association, eventually recovering her home and receiving a $300,000 settlement. But her lawyer, Marian Rosen, and other critics said such an outcome is rare for homeowners in legal disputes with associations.

The Property Owners' Associations subcommittee of the Intergovernmental Relations Committee is chaired by state Sen. Jon Lindsay, R-Houston.

In the waning hours of the legislative session last May, Lindsay filibustered for three hours to prevent action on a homeowners association bill authored by Sen. John Carona, R-Dallas, that Lindsay and others contended was too weak to be meaningful.

Lindsay stopped his filibuster and allowed a vote to be taken after receiving assurances that the Legislature would address the issue again in 2003. The measure passed the Senate 17-1 and was signed into law.

Carona's bill created some new protections, such as a 180-day window in which a homeowner could repurchase a home after foreclosure. Lindsay and other critics, however, said it did nothing to prevent associations from taking a person's home in the first place over an issue as minor as a few hundred dollars in unpaid maintenance fees.

Some of the proposals offered by speakers Wednesday were similar to provisions of amendments that state representatives attempted unsuccessfully to add to Carona's bill last year.

These include requiring a homeowners association board member to visit the homeowner before any foreclosure action is begun and stopping a foreclosure if a homeowner pays back dues or agrees to a payment plan.

A key issue in the debate has been the responsibility for legal fees when associations sue homeowners.

If the association wins a judgment in court, homeowners are liable for their own and the association's legal fees. If the association loses, however, it is responsible only for its own costs.

David Kahne, a lawyer who has represented clients sued by associations, said the fees can mount quickly.

Some lawyers charge $100 for the initial "demand letter" -- typically a form letter, Kahne said. They add another $250 when they file a lien against the property, he said, and charge an additional $350 when they send a letter to the mortgage company.

The mounting fees create strong pressure for the homeowners to pay, even if they disagree with the grounds for the action against them, Kahne said.