As the Garden Oaks Maintenance Organization (GOMO) revamps its deed restrictions to comply with a Chapter 11 restructuring plan, those involved in the work are finding restrictions that aren’t in sync with today’s neighborhood.
Those working on the project say they will eliminate language in the restrictions dating back to the 1930s that restricts the race of homeowners. At the top of Article II in Garden Oaks’ deed restrictions is this: “None of the lots shown on said plat shall be conveyed, leased, given to, or placed in the care of, and no building erected thereon shall be used, owned, or occupied by any person other than of the Caucasian Race. This prohibition, however, is not intended to include the occupancy or use by persons other than of the Caucasian Race while employed as servants on the premises.”
The race restriction has had lines drawn through it and not been enforced for decades. Such restrictions have been illegal to enforce since the Federal Fair Housing Act was passed in 1968.
“You’re having to do something, and in this there are many, many possible happy outcomes,” GOMO office manager Pam Parks said. “Getting rid of that (racist) language is something that all of us are going to be like, ‘Oh, thank God that’s gone. We’re so happy that’s happening.’”
The amendment is one of several being made by GOMO, which has enforced deed restrictions in the affluent northwest Houston neighborhood since forming in the early 2000s. Revamped restrictions are part of the organization’s restructuring plan, which it must soon submit to a federal bankruptcy court.
The Leader reviewed deed restrictions in Oak Forest and found the same language regarding racial restrictions. No such language was found in the Heights restrictions.
That it’s taken so long to make such a change speaks to how GOMO ended up in a precarious position.
Bankruptcy court judge David Jones initially instructed GOMO to present its plan Dec. 14, ahead of a hearing scheduled for Dec. 20. Parks said Tuesday that the hearing has been rescheduled for Jan. 8.
Jones asked GOMO to devise a plan that does not include a transfer fee, which has been the primary revenue source for the homeowners association and a point of contention for its counterpart in bankruptcy court. The court-appointed Official Committee of Unsecured Creditors, comprising five Garden Oaks homeowners, represents hundreds of other creditors, including current and former homeowners, who have filed claims seeking the return of the .75-percent transfer fee collected upon the closing of their home purchases.
A 2016 state district court ruling in favor of Garden Oaks resident Peter Chang, a member of the creditors committee, revealed that GOMO had no authority to collect transfer fees because it violated the Texas Property Code while petitioning residents to include them in the deed restrictions. Parks said GOMO plans to replace the transfer fee with a mandatory annual fee, which according to the latest proposal draft would be $80, enough to cover the cost of outscoring management and enforcement of the neighborhood’s deed restrictions.
“In order to change the fee, we have to amend the deed restrictions,” Parks said. “If we’re going to amend the deed restrictions, let’s get rid of this racial language. Let’s go fix some things.”
While amending the deed restrictions is a necessary part of GOMO’s restructuring plan, it is not necessarily a concern of the creditors committee. Its attorney, Charles Rubio, said his client is more concerned with Garden Oaks homeowners recovering the transfer fees they presumed they had to pay.
Jones ordered GOMO to stop collecting transfer fees in an August ruling.
“How the creditors are treated and what they’re getting under the plan,” Rubio cited as his client’s chief concern. “Overall, I can’t say that every aspect of the deed restrictions is really relevant to the creditors committee.”
Parks said GOMO had more than $720,000 in assets as of Oct. 31, the end of the fiscal year. What to do with that money could be a sticking point between the homeowners association and creditors committee – if any remains after the bankruptcy court proceedings being funded by GOMO.
Rubio submitted an allowance for compensation to the court in November, seeking more than $100,000 for nearly four months of work. The attorneys for GOMO, Johnie Patterson and recently enlisted Sipra Boyd, have yet to submit compensation requests to the court.
Parks said Patterson has argued the statute of limitations for claims related to GOMO’s improper petitioning in the early 2000s long ago expired. Parks said GOMO wants its assets to be used for the restructuring of the homeowners association, with the expectation that it would go by a different name, be based in a new office and have a new group of officers and directors.
Rubio said the members of the creditors committee, who are part of the Garden Oaks neighborhood, also have an interest in “the viability of the organization going forward in which it can collect revenue and survive.” Along those lines, Rubio said the notion that the creditors committee wants to dissolve the homeowners association and restart the process of forming a new one is “not accurate.”
Parks said such a process, which would require the solicitation and approval of a majority of Garden Oaks homeowners, would be tedious and much more easily accomplished through the bankruptcy proceedings. The same goes for amending the deed restrictions, which she said had gone unchanged because doing so was “too hard.”
Now, for the sake of its existence, GOMO is being forced to redo them. Parks conceded that putting off that process contributed to the organization’s losing its lawsuit against Chang – who was sued by GOMO for constructing a third garage – and subsequently having to file for bankruptcy.
It’s an opportunity for progress nonetheless.
Along with removing the racist language and other antiquated restrictions, such as the one that says “no swine shall be kept on said premises,” Parks said GOMO plans to add language that will give the homeowners association waiver authority and allow for an easier amendment process.
“Through this, there will be more clarity and homeowners are going to have a greater use of their property.”
Even if Jones and the creditors committee approve GOMO’s proposal, though, the restructuring process would not be complete. Parks said Garden Oaks homeowners, through by-mail balloting conducted by the bankruptcy court, would still need to sign off on any changes to the deed restrictions.
“There’s multiple milestones that have to be achieved in connection with the confirmation process,” Rubio said. “It’s oftentimes a several-week process if not longer.”