An HOA management certificate is a crucial piece of documentation that homeowners associations must file with their county in Texas. Unfortunately, many associations don’t know the first thing about filing this document and how to amend it if there are any changes.
What is an HOA Management Certificate?
First, it is important to define a homeowners association. Simply put, a homeowners association is an organization responsible for the maintenance and management of a planned community. This organization consists of homeowners who become members upon purchasing their homes within the neighborhood.
In Texas, one of the requirements for HOAs outlined in the Texas Property Code is to file a management certificate. What is an HOA certificate?
An HOA management certificate is a document that an association files with the county, supplying information about the management of the HOA. Section 209.004 outlines the requirement for filing this management certificate.
According to Texas law, the HOA management certificate should consist of the following:
- Name of the subdivision
- Name of the homeowners association
- Recording details for the subdivision plat
- Reference information for the declaration and any amendments
- Mailing address where the association can be contacted
- Contact information for the person managing the association or its official representative, including name, address, phone number, and email
- Website URL where governing documents are published in compliance with Section 207.006
- Description and amount of any fees related to property transfers within the subdivision
- Any additional details the association chooses to disclose
It is worth noting that Texas law also refers to HOAs as property owners’ associations.
The Importance of an HOA Management Certificate
An HOA management certificate is essential for many reasons. For one thing, it promotes transparency, as this document outlines all pertinent information regarding the association. It serves as a way for the county and the Texas Real Estate Commission to keep track of the HOAs in the state.
Second, the management certificate helps protect the interests of homeowners and buyers. For example, if the HOA fails to file the certificate, a purchaser or lender may not be liable for unpaid dues. It ultimately safeguards buyers and lenders from unforeseen financial obligations.
Third, the HOA management certificate helps facilitate real estate transactions. This certificate clarifies the HOA’s rules, fees, and contact information. These details are vital during the due diligence portion of the purchase transaction. By reviewing this information, buyers can make more informed decisions.
Fourth, HOAs have an obligation to keep their certificates up-to-date. If any changes are made to the recorded information, association boards must amend their management certificate with the county. This ensures that all buyers, homeowners, and other stakeholders have access to the association’s most current information.
If nothing else, getting certified HOA management is a legal requirement. The Texas Property Code mandates associations file a management certificate, and an HOA that refuses to file one could face legal consequences.
How to File a Texas HOA Management Certificate
An HOA must file a management certificate in each county where any part of the residential subdivision is located. Here is the process for an HOA to file a management certificate.
1. Record With the County Clerk
An officer or managing agent of the HOA must sign and acknowledge the management certificate. This certificate must include the following information:
- Subdivision name
- Association name
- Recording data for the subdivision
- Recording data for the declaration and any amendments
- Association’s name and mailing address
- Contact details (name, mailing address, phone, email) of the person managing the association or its designated representative
- Website address where governing documents are available
- Fees charged by the association for property transfers
- Any additional information the association chooses to provide
The county clerk must then record it in the county’s real property records and index it as a “Property Owners’ Association Management Certificate.”
2. Electronically File With the Texas Real Estate Commission (TREC)
Within seven (7) days of recording the certificate with the county, the HOA must also electronically file the same certificate with the Texas Real Estate Commission (TREC). The TREC will then publish the certificate online to make the information available to the public.
How to Amend an HOA Management Certificate in Texas
Homeowners associations are no strangers to change. If any change is made to the recorded information, such as an increase in property transfer fees or the contact details of the person managing the HOA, the board must take the necessary steps to amend the management certificate.
To update the certificate after changes occur, the HOA must record an amended management certificate in every county where the original certificate was filed. This must be accomplished no later than 30 days after the HOA becomes aware of any change to the required information.
Again, an officer or managing agent must sign and acknowledge the updated certificate. After recording the amendment with the county clerk, the HOA must electronically file the amended certificate with TREC within seven (7) days of the county filing.
What Happens if an HOA Fails to File or Update a Management Certificate?
There are several legal consequences that an HOA might encounter if it fails to file or amend its HOA management certificate. These include the following:
- Loss of Claim Enforcement Against Purchasers. If the HOA does not file the certificate, a bona fide purchaser, lender, or title insurer in a property transaction is not liable to the HOA for any dues owed at the time of transfer. They are also not responsible for any past claims the HOA might have had before the sale date.
- Limits on Lien Enforcement. The HOA’s lien is only enforceable for debts that arise after the property sale. This means the association can’t use the lien to recover past-due amounts, attorney’s fees, and/or interest accrued when the certificate was not properly filed.
- Limited Legal Protection for the HOA. The HOA and its officers, directors, employees, and agents are not liable for delay or failure to file unless the failure is willful or caused by gross negligence.
The Final Word
Texas law requires associations to file an HOA management certificate with their county. This management certificate plays a crucial role in the home sale process, promoting transparency and ensuring more informed decisions for buyers.
Preferred Association Management Company offers exceptional HOA management services to communities in Central Texas. Call us today at 512-918-8100 or contact us online to learn more!
RELATED ARTICLES:
