Raising assessments in Texas

Texas puts the constraint in your dedicatory instruments rather than in the code. Some declarations cap the annual increase the board may adopt without a membership vote. Some require member approval for a special assessment over a threshold. Some are silent, which means the board's general power under § 82.102(a) to adopt budgets and collect assessments carries the day.

Find out which case you are in before the first workshop, not the week of the meeting. A board that proposes an increase it turns out to lack authority for has lost more than the increase.

Total budgeted expenses, less non-assessment revenue, gives the amount to be assessed. Allocate it by the declaration's allocated liability for common expenses. Under § 82.112(e), if allocated liabilities are reallocated, assessments and not-yet-due installments are recomputed.

Publish the monthly equivalent and the change in dollars as well as in percent. Model the following year too. If the reserve funding plan implies a further increase, saying so now costs less trust than saying it next year.

Break the change into drivers and put them in the notice: insurance, reserves, contracted escalations, utilities, and everything else. Owners argue with totals and engage with components.

A regular assessment increase funds recurring costs and stays in the base. A special assessment funds a discrete capital event and ends when it is paid. Using a special assessment for a recurring cost simply defers the same conversation.

Borrowing is the third instrument and the one Texas boards most often forget they have. Under § 82.102(f) the board may borrow money and assign future income and lien rights by resolution, and third parties may rely on the resolution. Under § 82.102(g) that power defers to any member-vote requirement in the dedicatory instruments, and absent a lower threshold in the documents, sixty-seven percent owner approval is required.

A loan converts a lump-sum capital cost into a level payment inside the operating budget, which can be far easier on owners with fixed incomes than a special assessment due in ninety days. It costs interest, and it uses up borrowing capacity. Model it alongside the special assessment and show owners both.

An increase raises billed revenue, not collected revenue. Look at three years of history: what fraction was collected within the year, and what was written off or is still outstanding. Budget that rate.

Texas gives associations substantial lien rights. Under § 82.113(a) the obligation is personal to the unit owner and secured by a continuing lien on the unit, its rents, and insurance proceeds, sweeping in dues, fees, interest, late fees, fines, costs, and attorney's fees where the declaration does not provide otherwise. Under § 82.113(b) and (c) the lien has priority with statutory exceptions, is subordinate to taxes and to a first deed of trust recorded before delinquency, and is created and perfected by recording the declaration.

The teeth take time. Under § 82.102(a) an association may suspend voting rights or common element use after thirty days of delinquency, which is fast. Foreclosure is not: for a property owners association, § 209.0092(a) requires a court order in an expedited foreclosure application before foreclosing, subject to the exceptions in subsections (c) through (e), and § 209.0091(a) requires notice to subordinate lienholders with an opportunity to cure before the sixty-first day after mailing.

There is also a category of debt you cannot foreclose on at all. Under § 209.009 an association may not foreclose where the lien debt consists solely of fines, attorney's fees solely associated with those fines, records production costs added under § 209.005(i), or recount costs under § 209.0057(b-4). Assessment debt is not on that list, which is precisely why the assessment line and the fine line should never be commingled in your ledger.

One page at the front of whatever you circulate. What is changing, by how much, in dollars per unit per month. Why, largest driver first. What the board considered and rejected, including doing nothing and what that would cost. When the new rate starts.

Hold a workshop before the meeting where the vote happens. Most of the heat in a budget meeting comes from owners hearing a number for the first time in a room where a decision is about to be made, and Texas boards have more scheduling freedom to avoid that than boards in states with fixed statutory calendars.