Letter From Austin: TWIA And HOA Reform

by Julie Drenner on June 16, 2011

Several HOA reform bills await the Governor’s signature this week.

One restricts the homeowner associations’ power to prohibit the display of the American flag, small religious symbols, or the installation of solar panels. Another assures payments made by delinquent owners are applied to past amounts due first, thus assisting homeowners in avoiding foreclosure. Other bills address transparency issues and strengthen owners’ voting rights.

It is yet to be seen if these reforms will result in the dismissal of the lawsuit brought by Lakeland Village Community Association against Marine corps veteran Mike Merola for flying an American flag on the 20-foot flagpole in his backyard. His case and other similar stories prompted Rep. Dwayne Bohac R- Houston, and Sen. Royce West, D-Dallas to initially file the legislation.


The Texas House, once again, took up the issue of reforming its state windpool insurance, called TWIA.

Chairman Smithee reminded members at the beginning of the debate that the association only had $100 million in the bank and currently covers $70 billion properties.  In other words, its finances are woefully unsound.  Unfortunately, the bill does not address funding or rates in any manner.

The Chairman also explained that damages awarded in lawsuits against TWIA ultimately are paid by other coastal residents since the association is a non-profit. He successfully argued that TWIA should not be subject to treble damages since such punitive damages are not allowed against the National Flood Insurance program due to the residual nature of that market.
Rep. Larry Taylor amended the bill to add discounts to premiums of property holders that engage in mitigation to reduce the risk of damage and incentive for private carriers to re-enter the coastal market.

Rep. Kenneth Sheets lowered the residential liability coverage to $1.5 million, thus reducing the exposure to both policyholders and, ultimately, taxpayers.

The Senate had a hearing on the issue, as well, this week. And it is expected to pass its version out of committee later in the week.

Read Heartland’s fact sheet about the reduction in residential liability coverage here.

Until next week,

Julie Drenner, Texas Director

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