Texas HOA and COA Foreclosures
If you default on HOA or COA dues and assessments in Texas, the homeowners association can foreclosure on your condo, townhome, or house.
If you live in a house, condominium, or townhome that is part of a common interest community in Texas, you are most likely responsible for paying dues and assessments to the homeowners’ association (HOA) or condominium association (COA). If you don’t pay, in most cases the HOA or COA can get a lien on your property that could lead to a foreclosure.
Read on to learn about the particular requirements for HOA and COA foreclosures in Texas.
Texas HOA and COA Lien Laws
The Texas Residential Property Owners Protection Act (Title 11, Chapter 209 of the Texas Property Code) governs HOA activities in the state, while the Uniform Condominium Act (Title 7, Chapter 82 of the Texas Property Code) governs condominiums created after January 1, 1994, as well as condos created before this date if the governing documents state that the provisions of the Condominium Act will apply to the development.
How HOA and COA Liens Work
Most HOAs and COAs have the power to place a lien on your home if you become delinquent in paying the monthly dues and/or any special assessments (collectively referred to as “assessments”). Once you fall behind in the payments, typically the lien will automatically attach to the property.
In Texas, an HOA gets the authority to collect assessments and place an assessments lien on your home primarily from its governing documents, such as such as the Declaration of Covenants, Conditions, and Restrictions (CC&Rs). COAs, on the other hand, get this right from state law (Tex. Prop. Code Ann. § 82.102(a)(2), § 82.113). (A COA will also often include a provision in its governing documents about its right to collect assessments and place a lien on the condo if the owner falls behind in payments just to cover all bases.)
Perfection of the Lien
State law provides that a COA lien is automatically created when the condominium declaration (the instrument that created the condominium) is recorded (Tex. Prop. Code Ann. § 82.113(c)). This constitutes record notice and perfection of the lien. Unless the declaration provides otherwise, no other recordation of a lien or notice of lien is required.
There is no comparable law in Texas for HOAs. So, in most cases, an HOA declaration will state that a lien is automatically created when the declaration is recorded. Many HOAs will record a notice of assessments lien in the county records as well.
Lien Priority in Texas
Lien priority determines what happens to other liens, mortgages, and lines of credit if your HOA or COA lien is foreclosed. (To learn more about lien priority and its importance in HOA foreclosures, see What happens to my mortgages if the HOA forecloses on its lien?)
A COA lien for unpaid assessments has priority over all other liens except:
- a lien for real property taxes (and other governmental assessments)
- a lien or encumbrance recorded before the declaration is recorded
- a lien for the construction of improvements or an assignment of the right to insurance proceeds recorded before the date the assessment becomes delinquent (unless the declaration provides otherwise), and
- a first mortgage or deed of trust recorded before the date on which the assessment becomes delinquent (Tex. Prop. Code Ann. § 82.113(b)).
To find out the priority of an HOA lien, check the association’s governing documents. (Most Texas HOA documents state that state tax liens and certain mortgages have priority over the assessments lien.)
Charges the HOA or COA May Include in the Lien
Texas law sets out the types of charges that a COA may include in the assessments lien. Unless the association’s governing documents provide otherwise, the lien may consist of:
- unpaid assessments
- late fees
- collection costs
- attorney’s fees
- other fees
- fines, and
- any other amount due to the COA by the homeowner (Tex. Prop. Code Ann. § 82.113(a)).
To find out which charges an HOA may include in its lien, review the association’s governing documents.
HOA and COA Foreclosures in Texas
If you default on the assessments, the HOA or COA can foreclose. A common misconception is that the association cannot foreclose if you are current with your mortgage payments. However, the association’s right to foreclose has nothing to do with whether you are current on your mortgage payments. (Learn more about HOA liens and foreclosure.)
An HOA in Texas may foreclose its assessments lien:
- judicially (by filing a lawsuit), or
- nonjudicially (outside of court), if the governing documents expressly authorize it and if the HOA first obtains authorization from the court through an expedited judicial procedure (Tex. Prop. Code Ann. § 209.0092).
However, the HOA may not foreclose a lien for assessments that consists solely of:
- attorney's fees that are solely associated with fines, or
- amounts due to the HOA for compiling, producing, and reproducing its records (Tex. Prop. Code Ann. § 209.009).
A COA may foreclose its lien judicially (by filing a lawsuit) or nonjudicially (without court supervision), except that the association may not foreclose a lien that consists solely of fines (Tex. Prop. Code Ann. § 82.113(e)).
Right of Redemption Following Foreclosure
Texas law provides homeowners with a redemption period following an HOA or COA foreclosure in certain circumstances. (Learn more about redemption periods in Nolo’s article The Right of Redemption Following an HOA Foreclosure.)
If an HOA forecloses, the former owner may redeem (reacquire) the home within 180 days from the date the HOA mails the homeowner a post-foreclosure notice of redemption rights (Tex. Prop. Code Ann. § 209.011(b)).
If a COA forecloses, the former owner may redeem the unit within 90 days after the date of the foreclosure sale, if the COA is the purchaser at the foreclosure sale (Tex. Prop. Code Ann. § 82.113(g)). (If a person or entity other than the COA purchases the unit at the foreclosure sale, there is no right of redemption.)
Cost to Redeem
To redeem the property if the HOA or COA purchases the property at the foreclosure sale, you must repay all amounts due to the association at the time of the foreclosure sale, plus interest, reasonable attorney's fees and costs, any assessments levied after the foreclosure sale, and any reasonable costs incurred by the association, including maintenance and leasing costs (Tex. Prop. Code Ann. § 209.011(d), § 82.113(g)).
What to Do if You Are Facing Foreclosure by an HOA or COA in Texas
Texas laws pertaining to HOA and COA foreclosures are complicated and extensive. If you are facing an HOA or COA foreclosure, you should consult with an attorney licensed in Texas to discuss all legal options and defenses available in your particular circumstances. (See our HOA Foreclosure topic page for articles on HOAs, possible options to catch up if you are delinquent in payments, how bankruptcy can help discharge dues, HOA super liens, and more.)