Texas HOA and COA Foreclosures

When you buy a single-family home, townhome, or condominium in a planned community with covenants, you'll most likely pay fees and assessments, often collectively called "assessments," to a homeowners' association (HOA) or condominium owners' association (COA).

If your home is part of an HOA or COA and you fall behind in assessments in Texas:

• The HOA or COA can usually get a lien on your home.
• The association typically can charge you for overdue assessments, late charges, interest, and attorneys' fees and costs.
• If the association chooses to foreclose the lien, the process might be judicial or nonjudicial
• An association can't foreclose a lien that consists solely of fines.
• You have the right to redeem the property after an HOA or COA forecloses.

If the HOA or COA initiates a foreclosure, you might have a defense to the action, or you might be able to negotiate a way to get caught up on the overdue amounts and save your home.

What Is the Difference Between an HOA and a COA in Texas?

Different sets of state laws often govern HOAs in subdivision communities and COAs.

• The Texas Residential Property Owners Protection Act (Title 11, Chapter 209 of the Texas Property Code) covers HOA activities in the state.
• The Uniform Condominium Act (Title 7, Chapter 82 of the Texas Property Code) governs condominiums created after January 1, 1994. The provisions of the Uniform Condominium Act discussed in this article also apply to condominiums created before 1994. (Tex. Prop. Code § 82.002 (2024).)

The two sets of laws are similar, with some differences.

What Happens If You Don't Pay Homeowners' Association Fees in Texas?

If you fall behind in the assessments, the association will likely first try to collect the debt using traditional methods. For instance, the association will probably call you and send letters.

But if those tactics don't get you to pay up, the association will probably try other ways to collect from you. The association might take away your privileges to use the common facilities or file a lawsuit to get a money judgment against you.

Can an HOA Put a Lien on Your House in Texas?

Based on the association's Covenants, Conditions, and Restrictions (CC&Rs) and state law, an HOA or COA can usually get a lien on your home if you're delinquent in paying the assessments. In some cases, the association will record its lien with the county recorder to provide public notice that the lien exists, regardless of whether state law requires recording. Not only will an assessments lien cloud the title to the property, which hinders your ability to sell or refinance the home, but the property can also be foreclosed to force a sale to a new owner, even if the property has a mortgage.

In Texas, an HOA gets the authority to collect assessments and place a lien on your home primarily from its governing documents, such as the CC&Rs. COAs, on the other hand, get this right from state law. (Tex. Prop. Code § 82.102(a)(2), § 82.113 (2024).) 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.

How Does an HOA or COA Get a Lien in Texas?

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 § 82.113(c) (2024).) This action constitutes record notice and perfection of the lien. (A lien claimant must perfect its lien by filing it with the appropriate agency or authority, such as in the county land records.) Unless the declaration provides otherwise, no other recordation of a lien or notice of lien is required.

Texas doesn't have a comparable law for HOAs. So, an HOA declaration will often state that a lien is automatically created when the declaration is recorded. Many HOAs record notices of assessments lien in the county records as well.

What Charges Can an HOA or COA Include in Its Lien in Texas?

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 the following:

• unpaid assessments
• late fees
• interest
• collection costs
• attorneys' fees
• other fees
• fines, and
• any other amount the homeowner owes the COA. (Tex. Prop. Code § 82.113(a) (2024).)

Review the association's governing documents to find out which charges an HOA may include in its lien.

HOA and COA Lien Foreclosures in Texas

State laws often place particular due process requirements on HOAs and COAs regarding how and when an association can foreclose an assessments lien. For instance, Texas law doesn't permit an HOA or COA to foreclose a lien that consists of just fines.

How a COA Can Force a Foreclosure in Texas

A COA may foreclose its lien judicially or nonjudicially, except that the association may not foreclose a lien that consists solely of fines. (Tex. Prop. Code § 82.113(e) (2024).)

Nonjudicial foreclosures are governed by Chapter 51 of the Texas Property Code. But the declaration might limit the association to judicial foreclosures only.

How an HOA Can Force a Foreclosure in Texas

An HOA in Texas may foreclose its assessments lien:

• judicially or
• nonjudicially if the governing documents expressly authorize it and if the HOA first obtains authorization from the court for an expedited foreclosure, unless the owner waives the expedited process. (Tex. Prop. Code § 209.0092(c) (2024).) This process is similar to home equity lien foreclosures in Texas. After the HOA gets a court order giving it authority to foreclose nonjudicially, it uses the same process that COAs use to nonjudicially foreclose under Chapter 51 of the Texas Property Code.

Also, the declaration might restrict the type of foreclosure process. And an HOA may not foreclose a lien for assessments that consists solely of:

• fines
• 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 § 209.009 (2024).)

What Is the Right of Redemption Following a Foreclosure?

Texas law provides homeowners a redemption period following an HOA or COA foreclosure. If you lose your home to an HOA or COA foreclosure in Texas, you can get it back through redemption.

What Is the Redemption Period for HOA Foreclosures in Texas?

If an HOA forecloses, the former owner may redeem the home within 180 days from the date the HOA mails the homeowner a post-foreclosure notice of redemption rights. (Tex. Prop. Code § 209.011(b) (2024).)

What Is the Redemption Period for COA Foreclosures in Texas?

If a COA forecloses, the former owner may redeem the unit within 90 days after the foreclosure sale date. (Tex. Prop. Code § 82.113(g) (2024).)

How Much Does it Cost to Redeem After an HOA or a COA Foreclosure in Texas?

To redeem the property if the HOA or COA purchases the property at the foreclosure sale, you must pay:

• all amounts due to the association at the time of the foreclosure sale
• interest
• reasonable attorneys' 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 § 209.011(d), § 82.113(g) (2024).)

HOA and COA Liens and Your Home Mortgage in Texas

A common misconception is that the association can't foreclose if you're current with your mortgage payments. But an association's right to foreclose isn't dependent on whether you're current on your mortgage payments.

Instead, lien priority determines what happens in a foreclosure.

What Is Lien Priority?

The priority of liens establishes who gets paid first following a foreclosure sale and often determines whether a lienholder will get paid at all. Liens generally follow the "first in time, first in right" rule, which says that whichever lien is recorded first in the land records has higher priority than later recorded liens.

A first lien has a higher priority than other liens and gets the first crack at the foreclosure sale proceeds. If any proceeds are left after the first lien is paid in full, the excess proceeds go to the second lienholder until that lien is paid off. And so on. A lien with a low priority might get nothing from a foreclosure sale.

But state law or an association's governing documents might adjust lien priority.

Lien Priority of HOA and COA Liens in Texas

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 § 82.113(b) (2024).)

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, like first mortgages, have priority over an assessments lien.

So, a foreclosure by an HOA or COA usually won't eliminate a first mortgage because the association's lien is normally lower in priority.

Get More Information on HOA and COA Laws in Texas

To learn more about HOA and COA assessments and foreclosure in Texas, visit the Texas State Law Library website.

Talk to a Lawyer If You're Facing an HOA or COA Foreclosure

Texas laws covering HOA and COA foreclosures are complicated. If you're facing an HOA or COA foreclosure in Texas, consider consulting with a foreclosure attorney to discuss all legal options available in your particular circumstances.