Texas Homeowner Wins Battle But Loses War re Validity of Board Elections & Subsequent Board Actions

Texas Appellate Court decision (August 8, 2014).

In this action, a homeowner was challenging an election of his homeowners’ association (“Association”) board of directors and the actions that were taken by the board following the challenged election. The homeowner disputed the validity of the election and took the position that the Association was thereafter conducting business without a valid board of directors.

The homeowner contended that the Association’s election of board members was invalid because the Association’s members who were not current on their dues were excluded from voting in violation of Section 209.0059(a) of the Texas Property Code. The section in question provides that “[a] provision in a dedicatory instrument that would disqualify a property owner from voting in a property owners’ association election of board members or on any matter concerning the rights or responsibilities of the owner is void.” The homeowner further contended that, because the Association failed to conduct a valid election in 2011 or 2012, and the terms of the Association’s two appointed board members’ terms expired on December 31, 2011, the board was taking action without quorum and as a result, the Association ceased to function with a valid board of directors on December 31, 2011.

The appellate court found that the Association’s dedicatory instrument subjects Association property to the Association bylaws which contained a provision that suspends a property owner’s voting rights when that owner’s assessments are unpaid. The appellate court then concluded that, because the bylaws were incorporated into the Association’s dedicatory instrument and, because the bylaws include a voting restriction that would be invalid if set out directly in the dedicatory instrument, the voting restriction contained in the Association’s bylaws was void. As a result, the election conducted by the Association was void because members that were behind in their dues had been excluded from voting and the required quorum was not established.

In addressing the issue of whether or not the Association’s board improperly conducted business after the invalid election, the appellate court found that, under the applicable law, appointed board members serve for the remainder of the unexpired term of the position. Based on the evidence that was presented to the appellate court, the court was unable to determine the length of the unexpired terms of the two appointed director positions. Thus, in the absence of evidence showing when the terms of the two appointed directors’ terms expired, the court could not conclude that the board of directors consisted of only two members at any given point in time. Therefore, the appellate court rejected the homeowner’s assertion that the Association ceased to function with a valid board of directors subsequent to the invalid election.

See Case Decision: Storck_v._Tres_Lagos_Prop._Owners_Ass’n_Inc._442_S.W.3d_730_(Tex._App._2014)1