Texas HOAs and Finances FAQ

Q: What Laws Empower Texas Homeowners Associations to Collect Assessments?

A: Texas's Property Code authorizes associations to collect regular and special assessments per the association's governing documents. Associations may impose interest, late fees, and returned check charges for late assessment payments.

The Texas Supreme Court has also held that, about an HOA with covenants requiring members to pay assessments, the association's right to demand that all property owners pay assessment fees is an inherent property right. That no owner has to pay more than a pro-rata share is an essential characteristic of the property interest.

Collection costs incurred in collecting delinquent assessments may be charged if allowed by the association's governing documents.

However, before adding collection costs to an owner's account balance, the association must provide written notice by certified mail. The notice must advise the member of the delinquent amount, the member's options for avoiding collections, and that the member may avoid collections by curing the delinquency within a cure period of at least 30 days.

Texas associations, including at least 14 homes, must adopt policies for alternate payment schedules for assessments, allowing members to pay assessments under a schedule that extends for between three and eighteen months. A member making payments on an alternate payment schedule does not incur additional monetary penalties other than any applicable interest and costs of administering the plan.

Q: Does an Association have Authority to Attach Rent or Evict Members' Tenants?

A: Texas's HOA laws contemplate neither an association's attaching rent owed to a member by the member's tenant nor eviction by an association.

Under the Uniform Condominium Act, a condo association can amend its declaration to permit the board to pursue an eviction action against a tenant who violates the association's governing documents – or if the unit's owner refuses to pay assessments.

A condo association may amend its declaration to allow the board to attach rent payments from a unit owner's tenant if the owner's assessments are at least 60 days delinquent. To pursue either remedy, the condo association must be expressly authorized by its declaration.

Q: Can a Texas Association Record a Lien for Unpaid Assessments and Fines?

A: Declarations usually provide associations with liens on lots within the community to secure payment of assessments and other charges from homeowners.

If member payments are delinquent, a Texas HOA can record a lien for unpaid assessments or other charges by recording a lien notice in the county land records.

The association's declaration controls how a lien operates and when a lien notice can be filed.

In Texas, both HOAs and condo associations are authorized to foreclose on a properly authorized and recorded lien.

Q: What are the Limitations of HOA Collection and Foreclosure Suits in Texas?

A: Texas associations are empowered to institute legal proceedings to collect unpaid assessments and enforce restrictive covenants.

Before filing a suit to enforce covenants, the association must provide advance written notice, including an opportunity to cure a violation. Still, notice is not required for suits to collect assessments or foreclose upon a lien.

Texas law allows non-judicial (i.e., outside of court) foreclosure. Still, only if the association holds a valid lien does the declaration expressly provide for a power of sale, and the association first obtains a county court order for expedited foreclosure under the Texas Supreme Court rules.

Before foreclosing on a lien, an association must provide notice to any lien-holders of record, who must be allowed to cure the delinquency.

An association may pursue a judicial foreclosure and order of sale by sheriff or constable as an alternative to the expedited foreclosure process.

An association may not pursue foreclosure if the underlying debt only includes fines, attorney's fees relating to the fines, or charges relating to copying or a recount requested by the member.

The attorneys' fees recovered through a foreclosure sale cannot exceed $2,500, though any excess fees owed may be pursued through a separate collection action if otherwise recoverable.

Within 30 days following a foreclosure sale, the foreclosing association must provide notice of the sale via certified mail to the lot owner and all lien-holders of record.

Within 180 days following the notice of sale, the owner has the right to redeem the property by paying all amounts owed at the time of the sale, with interest, foreclosure costs including attorneys' fees, taxes, and recording fees, any post-foreclosure assessments or costs incurred by the association or third-party purchaser relating to the property, and the purchase price after deducting amounts applied toward the lien.

The association must institute a forcible entry and detainer action to recover possession if a foreclosed property is occupied.

If ten percent of community members join a petition, Texas law expressly grants members the right to call a special meeting to remove or amend an association's foreclosure powers.

At the special meeting, amendment or restriction of foreclosure power requires approval by two-thirds of members. Texas's homestead protection law, embodied in Article XVI of the Texas Constitution, can protect a homeowner against foreclosure of a primary residence in some situations.

Concerning HOA foreclosures, the homestead law prevents foreclosure if the HOA's lien is attached to the property "simultaneously to or after the homeowners took title, but not if the lien is attached before the homeowner acquired title to the property.

Assessment liens are generally considered to be attached at the time of the declaration's filing if the lien is authorized in the declaration.