Real Estate & Property Law

Generally, a property owners' association is charged with the governance and administration of the subdivision and its common areas for and on behalf of the residents and lot owners for that subdivision. Typically, the powers and duties prescribed to each association are enumerated in the deed restrictions and by-laws for that association, and if there are any "gaps" in these governing powers, then the association can look to provisions in the Texas Property Code and the Texas Non-Profit Corporation Act to supplement them.

Each association's "sphere of influence" is dictated by the subdivision boundaries platted and recorded in the real property records of the county where it resides. As such, this plat determines where the association can and cannot assert its powers to enforce the deed restrictions for which it is held accountable by its members to uphold. Simply stated, if a matter (nuisance or other challenged conduct) materializes within the platted subdivision that runs afoul of the deed restrictions governing that community -- whether it be in the common areas of the subdivision or on an individual lot -- then the association most likely has the ability to enforce the deed restrictions to resolve the matter.

Now, if that perceived nuisance or other challenged conduct occurs outside the platted boundaries of the subdivision, then the association is generally not required to act, and, in some cases, cannot act or suffer potential tort liability for its meddling in third-party transactions, business or otherwise, where it lacked the requisite authority to do so. For instance, if the association interferes with a proposed building or other corporate enterprise that its members object to as a perceived nuisance (and the association lacks the apparent authority to act as such), then the entities affected by the association's interference can sue the association for damages relating to the business loss resulting from that interference (delay in construction, increased costs, damage to business contracts relating to the building, etc. - in other words, any foreseeable consequences of the association's conduct would be fair game in a lawsuit).

In one Texas Court of Appeals case decided earlier this year, the Court ruled that the association did not breach its fiduciary duty to its members by allowing a cell phone tower to be built next to the subdivision. In this particular case, the association learned that the cell phone tower was slated to be installed within the boundaries of the subdivision. The association complained to the local municipality which prompted the cell phone company to relocate the tower outside of, but near, the subdivision. This concession also included lump-sum and monthly payments by the cell phone company to the association for the entire term of the tower lease as compensation for the tower's presence nearby (presumably to mitigate any perceived nuisance damage). Homeowners then sued the association for breach of fiduciary duty for (1) the association's acquiescence to the tower's final location and (2) application of the payments tendered under the settlement agreement between the association and the cell phone company.

The Court ruled in favor of the association citing that the homeowners could prove no damages from the tower's presence and, implicit in its ruling, that the association held no affirmative duty to thwart the cell phone tower's installation since it fell outside the boundaries of the subdivision. Now this ruling does not mean that the association does not have to act or cannot act for all situations and scenarios. In fact, we will look at one scenario in part-2 of this article where the association has the absolute right to enforce the deed restrictions outside the boundaries of the subdivision.

Associations have to be careful when faced with their residents' challenge of a perceived nuisance or other unwanted incident that is located outside the geographic boundaries of the subdivision. Blindly following the residents' charge to remove the alleged nuisance can lead to legal headaches for the association if the authority to halt or otherwise impede that conduct is absent.