Can my HOA foreclose on my Texas home?

It’s estimated that there are as many as 300,000 homeowner’s associations. Unfortunately, one California lawyer has compared homeowner’s associations to mini-governments without restraints, with the power to not only levy dues and restrict the actions of homeowners, but also to initiate foreclosure proceedings on homeowners who fail to make timely payments.

The good news is several states; including Arizona, California, North Carolina, and Texas have initiated legislation to reign-in HOA’s strong-arm tactics.

Recently on our legal forum a user wrote, “We live in the state of Texas and we are behind on our homeowner’s association (HOA) fees. The HOA is threatening to foreclose on our house. Is this legal if we are not delinquent on our mortgage? If it is legal, what are our options?”

Home Owner’s Association Overview

No one disputes that a Homeowner’s Association must collect dues if they are expected to provide services to the community. Common services provided can include security personnel, landscaping of common areas, gate maintenance, and employment costs for the management company.

Unfortunately, it is also common for certain homeowners to fail to pay their levied assessments. Non-payment, however, puts the HOA in a difficult position. They can either become a debt collector, or they can shift the financial burden to the other homeowners who do pay their assessments.

Shifting the burden to other homeowners, however, could eventually lead to discontent within the community, and not collecting deliquent payments is likely to lead to more homeowners choosing not to pay. Clearly, the only option is for the HOA is to take steps to collect the debt.

What happens if I don’t pay my HOA dues?

So what happens if you do not pay your HOA due? Homeowners who fail to pay their HOA dues may face an assessment lien, which is a security interest against the property to ensure debt repayment.

The assessment lien can include late fees, interest, collection costs, attorney’s fees, fines, unpaid assessments, and any other amount due to the COA by the homeowner (Tex. Prop. Code Ann. § 82.113(a)).

Texas HOA Actions restricted by Legislation

Just because a lien may be assessed against your property this does not mean that you do not have rights.

In fact, HOA foreclosure of homes has attracted a great deal attention over the last ten to fifteen years, and certain states have passed legislation to protect homeowners. For example, the Texas legislature enacted the Texas Residential Property Owners Protection Act (which is generally referred to as Chapter 209 of the Texas Property Code).

This legislation clearly dictates the process a HOA must take to assess fines and file lawsuits. The law also outlines the requirements the HOA must follow before they can foreclose due to an Assessment Lien, and it establishes procedures for the redemption of the property by the owner following a foreclosure sale.

But with that said, if you have not paid your HOA fees, the HOA may have the legal right to foreclose on your property, regardless of whether or not you have mortgage in arrears. This is true in Texas as well as in many other states.

Steps to foreclosure on a home for HOA dues

In the state of Texas, if the HOA has the legal authority to foreclose for an assessment lien, they may choose a judicial or non-judicial foreclosure (restrictions apply).

For example, all Texas Homeowners Associations are authorized to foreclose their Assessment Lien by judicial foreclosure procedures (by filing a lawsuit). Non-judicial foreclosures, however, are only allowed if it is authorized under their Declaration and authorization is granted by the court (Tex. Prop. Code Ann. § 209.0092)

(Laws differ for the Texas Condominium Associations. For example, under the Texas Uniform Condominium Act they may use either the judicial or non-judicial procedures).

Judicial Foreclosure by an HOA

Under the judicial process the HOA will have to file a lawsuit against the homeowner and win a judgment from the court. The judgment must establish the each of the following.

• The specific amount assessed or secured by the Homeowners Association’s Assessment Lien.
• Orders the Homeowners Association’s Assessment Lien be foreclosed on such Homeowner’s property to satisfy the amount awarded to the Homeowners Association that is found to be secured by its Assessment Lien.

The HOA will only successfully win their lawsuit if they are able to prove the merits of their case (i.e., the Declaration authorizes the HOA to assess the levy, and the amount owed is verified, etc.). If successful, the court will issue a judgment for the HOA.

Non-Judicial Foreclosure by an HOA     

A non-judicial foreclosure results in the same outcome as the judicial foreclosure, but it occurs outside of court and is generally a much faster process. As mentioned above, a non-judicial HOA foreclosure is only allowed under specific conditions.

Bottom Line:

Homeowners Associations have a great deal of power, even in states like Texas where legislation outlines specific requirements for foreclosure. If you owe HOA dues the HOA may have the legal right to foreclose on your property, but they will have to follow the proper legal process.

You also have rights. For example, you may be able to defend yourself by proving the HOA overstated the charges, they did not comply with your state’s statutes, they assessed unreasonable charges, they failed to apply payments correctly, their governing documents do not authorize an assessment, or the lien was not properly recorded.

If you are facing a HOA or COA foreclosure and have questions how you can defend your case, it may be time to talk to an attorney to discuss your options.