There are game changers here! "Texas Homeowners Association Law" copyright 2010, by Gregory S. Cagle, a legal expert on the subject in the state of Texas
There are game changers in this book! Don't be fooled by the directors saying the by-laws let them do it, and don't be fooled by the directors saying they're elected, so they can do anything they want, arguments ever again!
I received my copy of this book from a retired judge who knows about our LVPOA parks issues. I don't know if he wanted his name used, I was so excited I forgot to ask. It really doesn't matter, he was simply trying to help me understand we have rights, and the board has obligations, not act as a legal advisor, so all that really matters is we have leads now. He labeled sections for me to read, use, and share. Below, I'll post where he put the post it tags in my book. If you buy the book, your copy can be indexed the same as mine, so you have some leads on what to read. It seems to me, this book has been written in plain English at a level where laypeople should be able to understand and apply Texas law. We can learn what is, not argue what we think should be, or blindly accept what isn't.
The LVPOA board of directors have to follow these items, or they are PERSONALLY legally liable. That's important because if the organization were liable then we'd be suing ourselves. If we have to sue, it doesn't cost us, it costs them.
There is a hierarchy of legal constraints on the LVPOA Directors power. The Directors like to focus on the by-laws. They claim the by-laws define their powers. But, the by-laws are one of the lowest levels. Above that are the Articles of Incorporation, and the Declaration of Covenants and Restrictions, which are both organization specific. Above that are common law, state law, and federal law. The by-laws are the bottom and each level is constrained by ALL the ones above it. It's a legal thing, you don't get to choose.
The directors power is constrained. They have fiduciary duties to the shareholders as you will see below. If they should do something outside those constraints, if we fight and win court, once we do, whatever they did can be made null and void, it's like it never happened.
Lets look at just a few game changer quotes from "Texas Homeowners Association Law", subtitled "The essential legal guide for Texas Homeowners Associations and Homeowners" copyright 2010, by Gregory S. Cagle, a legal expert on the subject in the state of Texas. It's available on Amazon
- "The imposition of fiduciary duties upon Directors and Officers of Nonprofit Corporations arises under both Texas common law and Texas statutory law, and the scope of such duty and the application of the "Business Judgment Rule" will be determined by the source of such duty" Pages 124, 125.
- "under long established Texas common law, Directors and Officers of Nonprofit Corporation HOAs are considered fiduciaries of the corporation, who owe certain fiduciary duties to the Nonprofit Corporation HOA and its Member-Homeowners." Page 125
- "These duties are also commonly described as the duties of obedience, loyalty, and, due care. The duty of loyalty requires that Directors and Officers must act in good faith and must not allow their personal interest to prevail over the interest of the Nonprofit HOA". Page 125
- "Such duty of loyalty is often described as requiring an extreme measure of candor, unselfishness, and good faith on the part of Directors and Officers" Page 125.
- "Community Association" is a defined term under Chapter 206 of the Texas Property Code that refers to an incorporated association created to enforce Restrictive Covenants. Such term is used synonymously with the term "Homeowners Association" or "Property Owners Association". On page 471
A key concept for us is the word community is used in the LVPOA Articles of Incorporation. Dave Freeman and some others have interpreted it to mean we have in Dave's words a "community burden", but that is not an accurate interpretation under Texas law. The term community is a legal term of art when used in this context. We'd been arguing common sense, but now we have proof in the Texas Property Code.
You can google Chapter 206 of the Texas Property Code, to see it for yourself. It is a defined legal term in this context.
The lawyer who wrote it could have substituted "Homeowners Association" or "Property Owners Association" and the document would have been identical. Replace the word community with "Homeowners Association" or "Property Owners Association" and there is no way anyone could ever say the document applies to the community at large. That is not the lawyers fault, it is ours. These are legal documents. We didn't learn the legal definitions for the words in the documents we're reading.
With only what we know now from in this post alone, which came from a book by an expert, so our arguments will be legally valid, the shareholders are the principals, and the POA Board and Officers have a fiduciary duty toward us, not the city at large. The word community is used synonymously with the term "Homeowners Association" or "Property Owners Association". It is not there for a "community burden". There is a legal requirement to show an extreme measure of candor, unselfishness, and good faith on the part of Directors and Officers. They are personally liable if they don't follow that. If they do something that is not within their scope, we can obtain a ruling that renders whatever they did as null and void, such that legally, it never really happened.
There are many items of interest to us, the above was only a sample. Below, I've listed the places where my book was tabbed with Post-it Arrow Flags, all of which are important points. The list was never intended to be all inclusive, it was just a set of items that dealt with our situation at that point in time, a starter set of things we lot owners and homeowners should know. I'll list the phrase that's tabbed, but you need to read a page or two before and after in most cases.
- Page xx, table of contents item "11.11 Procedures for Amendment or Modification of Certain Limited Declarations ..."
- Page 125 "scope of such duty and the application of the "Business Judgment Rule" will be"
- Page 159 "Although not common, on occasion someone attending or participating in a Board Meeting"
- Page 163 "At a minimum, the minutes should contain the following information"
- Page 179 "Preparation of a Membership Voting List"
- Page 461 "Right of Lot Owners to Inspect Books and Records of a Subdivision Association under Chapter 209 of the Texas Property Code"
- Page 471 "Community Association is a defined term under Chapter 206 of the Texas Property Code that..."
- Page 489 "Statement of Authority to Transfer an Interest in Real Property is a term of art..."
I found all of the information from the book enlightening, so I wanted to share it. If you make the effort, I think you will find it enlightening too. Most importantly, we can learn what is, not argue what we think should be, or blindly accept what isn't.