April 5, 2012

Review and Comment on Proposed Changes to HOA Addendum

The Texas Real Estate Commission has proposed several changes to the Addendum for Property Subject to Mandatory Membership in a Property Owners Association (TREC 36-7, TAR 1922). TLTA has worked with TREC for several months in order to secure the following key changes in the proposed form:

In Paragraph A, the form now reflects the recent statutory change that permits a buyer to obtain a resale certificate directly from a property owners association.
At the end of Paragraph A, language has been changed to make clear that a title company is authorized to obtain subdivision information from a property owners association only upon receipt of payment for the information from the party obligated to pay for the information under the contract. This additional change clarifies concerns about compensation to a title company in situations where the title company pays for the subdivision information on behalf of a party to the contract, is not reimbursed if the sale does not close, and is not authorized to obtain reimbursement from the earnest money before it is disbursed to a requesting party. TLTA supported this change in a Feb. 24 letter to TREC.
New Paragraph E allows the seller to authorize the property owners association to release information to the buyer, such as status of seller's dues and any violations by the seller, and a waiver of first refusal if requested by the buyer, the title company, or any broker to the sale.
It's worth noting that several approaches to the problem of reimbursement have been discussed among TLTA members and with the advisors who make up TREC's Broker Lawyer Committee. TLTA worked to change the Texas statutes with language designed to help this situation by giving the buyer the ability to order the resale certificate. 

Additionally, TLTA encouraged limiting the contract to allow only a single option for the buyer and seller, which would direct the seller to order and the buyer to reimburse upon closing. The TREC Broker Lawyer Committee and the Commission have instead opted to propose a form in which either the seller or buyer orders, with the requirement that either the buyer or seller pay the title company before the title company is allowed to order the information.

This is a compromise approach TLTA will monitor closely after adoption. After the form is adopted and operating in the market place, TLTA will rely on your feedback to determine if the form accomplishes the intended goal of keeping the title agent from having to unfairly absorb these costs.

You may view the currently proposed form here and submit your comments to TREC until April 15 by emailing general.counsel@trec.texas.gov. The Commission will possibly adopt the form at its May 7, 2012 meeting.

Supreme Court Affirms Ruling on Open Beaches Act

Chuck Lindell | Austin American-Statesman
A state law meant to preserve public access to the shoreline does not entitle state officials to seize private property that suddenly moves onto public beaches because of erosion from hurricanes or storms, the Texas Supreme Court ruled last week. The court came to the same conclusion in the same case in 2010 — prompting loud protests from state officials, Gulf of Mexico communities and beach advocates — but agreed last year to reconsider its ruling. Read More >

New FHA Mortgage Rules Take Effect

Jennifer Hiller | San Antonio Express-News
New Federal Housing Administration (FHA) rules will effect many first-time homebuyers as well as many current homeowners. One rule, which took effect Monday, disqualifies first-time homebuyers with more than $1,000 in medical or other collections from getting an FHA-backed loan. To qualify for the loan, the buyer must pay off the debt or show that three months of payments have been made. Meanwhile, all homeowners who have FHA loans will have to pay more in mortgage insurance starting next Monday. Read More >

Foreclosure Reforms to Widen

Brady Dennis | Washington Post
State and federal officials who recently completed a $25 billion settlement with five of the nation's largest banks over shoddy foreclosure practices have begun discussing how to apply some of the terms of that deal to a wider array of financial firms. The landmark agreement finalized in February in part forces the five major banks to overhaul flawed and fraudulent foreclosure practices that had become common in recent years. Those changes include forbidding "robo-signing" of documents and providing a single point of contact to homeowners, who in the past often faced foreclosure from the banks even as they were negotiating ways to remain in their homes. Read More >