Ask the Expert: ACC Board Hearings

As of September 1, 2021, the new Texas legislation in SB 1588 is in effect. In today’s episode of “Ask the Expert,” we sit down with Buck Benson, Partner with Barton Benson Jones PLLC, as he goes over what to expect regarding the new changes to Texas law and the right of owners to appeal their ACC denial to the Board.

In this session, you’ll learn some key points that your association should know and consider when deciding how to prepare for ACC board hearings.  First, here's a quick summary of the new ACC law.

A summary of the new legislation (section 18 of SB 1588):

1. Directors may no longer serve on architectural review committees. Spouses of directors and members of a director’s household are also disqualified.
2. An architectural denial must: (1) be provided in writing (email is fine); (2) describe the basis for the denial; and (3) outline an owner’s right to appeal to the board.
3. An owner has 30 days to appeal the decision, and the board has 30 days to hold the hearing. The hearing notice must be provided at least ten days before the hearing, and either side is entitled to one continuance.
4. Audio recording is permitted, and the board may affirm or reverse the architectural reviewer’s decision.

      Exemption: HOAs with 40 or fewer lots or under declarant control are exempt.

As always, FirstService Residential encourages all boards to contact their general counsel for additional legal guidance before enacting any new policy.


Get answers on how to conduct ACC Board hearings in this video:

 

What are the new requirements for ACC Board hearings, and what was the intent in enacting these changes? 

Lawmakers wanted more transparency in associations' decisions. They wanted homeowners who felt like they had been denied by potentially a rogue ACC or ARC to have the ability to appeal those decisions to the board. With this new process, if a homeowner is denied their ACC request, the association must notify them of the denial via certified mail or email saying why they were denied, giving homeowners the right to appeal that decision before a Board.

 
What information should be included in the notice of denial to the owner? 

1. It should say why the application was denied.
2. What, if anything, can the homeowner do to have it approved?
3. It should state that the owner has the right to appeal the decision.
4. The notice should be sent by certified mail, hand delivery or email, along with confirmation that it has been received.
5. There should be a notation that if a homeowner is going to bring their attorney to the hearing, the association should know in advance to have their counsel present. This avoids a situation where the association must postpone the hearing due to legal counsel not being in attendance.

 

How should boards and their management company set up the procedure for an ACC board hearing?

This process may feel a little intimidating, so it’s encouraged that boards and associations starting this process first seek out management company professionals and attorneys experienced in 209 hearings. It’s important that those experts be present and provide some guidance on the overall process to the board.

Additionally, it’s important to note that when you start the process to the actual hearing, the statute is clear that homeowners are given the opportunity to present their case fully. Once the board has heard that information, they can close the hearing and move into a settlement conference if the board sees fit.
The minutes should accurately reflect that specific point and time this happens because anything going forward after that shouldn’t be admissible if the situation ends up in litigation.

It’s also important to notate that the board realizes they aren’t obligated to make a decision at that first meeting. They can convene into an executive session after the hearing, discuss it, and make a decision days later. Once a decision is made, that decision should be communicated to the homeowner in writing along with confirmation it was received.

It will be equally important that the association has a firm template of what will happen at the hearing and be very consistent with documenting the process as they move forward with the process.

 

What key points should board members consider as they implement the new ACC hearing process?

• In terms of process, remember that everything said can and will be recorded by a homeowner. So, consistency is key.
• As homeowners understand this process exists, you may see an uptick in owners who the ARC has previously denied because now they have an opportunity to get this decision appealed. With that, it will be important for the board and management companies to have a consistent process to create some efficiency as they go forward. 
• A full board doesn’t necessarily have to preside over all hearings; you could have a quorum of the board hear the appeals and render a decision later.
• The statute creates times lines that the boards must comply with regarding giving notice to the homeowners or when setting hearings.
• Remember, hearings are meant between the board and the homeowner and are not open to other members of the association.

We'd like to thank our expert:

Buck Benson Partner, Barton Benson Jones, PLLC

FirstService Residential's Ask the Expert webinar miniseries aims to answer the most frequently asked questions of associations throughout Texas on a variety of key topics. To get more information or submit a topic for our next Ask the Expert video, contact us at [email protected].