Too often property owners in Texas are surprised to learn that they have purchased real estate subject to membership in a homeowners’ association, including mandatory assessments, use restrictions and building approval requirements. “No one told me that” is a remark frequently heard by those dealing with new home buyers. By the time you buy, you should know about these things from a number of different sources.

Texas law requires that buyers be told about association membership requirements and deed restrictions. Most of the time the disclosures have been made but not understood. This article explains the basics of what is required to be disclosed about associations and restrictive covenants, focusing on single family residential dwellings.

There are at least three laws that address disclosures during the sale of a house or a lot. The first is the “Seller’s Disclosure of Property Condition”. It is required by Section 5.008, Texas Property Code and must be given by the seller before the effective date of a contract of sale (also known as an “earnest money contract”). If it is not given to the buyer before the contract becomes effective, the buyer can terminate the contract within seven days after getting the late notice. Every seller of land is required to give this notice.

Besides membership in an association, the Seller’s Disclosure lists several things about the property, such as repair needs. This form is the first written notice that the land the buyers are interested in may be subject to membership, assessment and usage restriction. This notice is to be supplied by the seller at the seller’s cost.

A second legally-required disclosure is the “Notice of Membership in Property Owners’ Association” described in Section 5.012, Texas Property Code. This statute is also required to be given before the contract is signed. It may be given separately, or as part of contract.

It forces the seller to tell the buyer: As a purchaser of property in the residential community in which this property is located, you are obligated to be a member of a property owners' association. Restrictive covenants governing the use and occupancy of the property and a dedicatory instrument governing the establishment, maintenance, and operation of this residential community have been or will be recorded in the Real Property Records of the county in which the property is located. Copies of the restrictive covenants and dedicatory instrument may be obtained from the county clerk. You are obligated to pay assessments to the property owners' association. The amount of the assessments is subject to change. Your failure to pay the assessments is subject to change. Your failure to pay the assessments could result in a lien on and the foreclosure of your property.

Like the Seller’s Disclosure, the Notice of Membership in Property Owners’ Association is automatically required. Failure to disclose that information gives the purchaser a right to terminate the contract and reject the property.

Unlike the first two, the third disclosure is NOT automatically required. It is only required if requested by the seller, their agent, representative or title company. This law is the “Disclosure of Information by Property Owners' Associations” and is found in Chapter 207 of the Texas Property Code.

This request is to be made to the association and must state to whom a response is required, The association has ten days after the request was received to provide information including:
(1) a current copy of the restrictions applying to the subdivision;
(2) a current copy of the bylaws and rules of the property owners' association; and
(3) a resale certificate that complies with Subsection (b) [of Section 207.003, Texas Property Code]. The resale certificate must include several items of information, such as amounts owed and to be assessed, financial and lawsuit data, and several other things.
The association is permitted to charge “a reasonable fee” to assemble, copy and deliver both the information and the certificate. The amount of the charge is not specified. Since the disclosure is the option of the seller, the seller is free to supply the information at his expense or not. The association is NOT responsible for the expense.

These disclosures are only some of the ways buyers are told what they are buying. Others include title insurance commitments and publicly-available documents on file with the county clerk. Together, these methods are designed to prevent the refrain “No one told me that.”

Tom Newton, NRC Board Member