This case involved a dispute between two association members (jointly referred to as Owner) and their property owners association (Association) over the validity of an association’s extension of declaration that purported to extend the term of the declaration to 2024.
Owner contended the procedure followed by Association for the adoption of the amendment did not comply with the requirements for amendments set forth in the declaration and therefore, was invalid and did not extend the term of the original declaration. Accordingly, Owner refused to pay annual assessments in 2014-2018 and then filed suit against Association in 2018 seeking a declaratory judgment that: (i) the original declaration had not been validly extended; (ii) the amended declaration was not valid and binding on Owner or their property; and (iii) that Association no longer had a right to charge Owner for assessments or to put a lien on their property for unpaid charges. In response, Association contended the amendment to the declaration was valid and enforceable and Association had the right to recover the unpaid assessments plus attorneys fees from Owner.
The language contained in Section 7.3 of Associations declaration set forth the requirements for amending the declaration and stated, in part:
This declaration may be amended during the first twenty (20) year period by an instrument signed by not less than ninety percent (90%) of each class of members,and thereafter by an instrument signed by not less than seventy-five percent (75%) of each class of members. Any amendment must be recorded in the Deed Records of Kendall County, Texas.
Owner contended that the above provision required the amendment document to be signed by the requisite number of association members (at least 90%), and then the same document had to be recorded.
In adopting the amendment, Association sent letters to each of the members asking them to sign proxy vote forms indicating whether or not they agreed to amend the original declaration by extending it for an additional 20 years. Eighty-one percent of the members signed and returned the proxy forms indicating their agreement to extend the term of the declaration. Association then prepared the amended declaration and it was signed by Associations president as a representative of Association and then recorded. Because the actual amended declaration was not signed by the eighty-one members that purportedly approved the amendment, Owner contended the required procedure for adopting the amendment was not followed and the purported amendment was invalid.
The trial court construed Section 7.3 of the declaration as requiring the requisite members to sign a formal legal document expressing approval of the amendment, and that it did not require the recording of the same document that was signed by the members. Accordingly, the trial court granted summary judgment in favor of Association after finding the amendment to the declaration was properly adopted by Associations members and awarded Association attorneys fees. Owner then filed an appeal of the trial courts judgment.
The appellate court ruled that the evidence presented to the trial court conclusively established that Association complied with the original declarations amendment requirements because at least 75% of the members signed an instrument authorizing the amendment, and then an amended declaration was recorded. Thus, the appellate court affirmed the trial courts judgment in favor of Association. The appellate court did however, also find that there was a triable issue of material fact as to the reasonableness and necessity of the attorney fees that the trial court awarded to Association so that portion of the judgment was remanded back to the trial court for further proceedings.
Texas Appellate Court Decision (February 26, 2020).
See case decision: Haby_v._River_Trail_Prop._Owners_Ass’n