Can Your HOA Put A Lien On Your House In Texas And What Homeowners Need To Know

Your homeowners association (HOA) can take legal action to enforce payment of HOA dues, and this might make you wonder if an association can place a lien on a house in Texas. An HOA can place a lien for dues and assessments that are not paid in Texas. It is critical that you know HOA liens, what will trigger an HOA lien, and what the law allows as a homeowner in this situation to give you time to fix the problem and hopefully resolve it before it gets worse. If selling becomes the best option, House Buying Girls is ready to help you move forward.

What Is an HOA Lien and How Does It Work in Texas?

An HOA lien is when a homeowner receives a legal by an HOA for unpaid dues. After the HOA communicates the lien to the county clerk, it becomes a claim on the property, and the HOA gets a secured interest in the homeowner’s property. The HOA can eventually force a sale, like with a mortgage. In Texas, the ability to force a sale is a function of the HOA’s governing documents, which are typically the CC&Rs, and are the documents the homeowner agrees to when they purchase the property. Most HOA governing documents give the HOA this ability, so reviewing the governing documents will give the homeowner an understanding of what the HOA is entitled to do for unpaid dues.

The governing documents typically give the HOA the right to do more than just place a lien for the unpaid dues. Additional costs accumulate beyond the original balance, besides the past due assessments alone, including late fees, interest, and attorney’s fees. The past due assessments can grow to thousands of dollars because of the costs associated with filing the lien. Once a lien is placed, it becomes a matter of public record and is placed on the homeowner’s credit record, which negatively impacts the homeowner’s credit rating. A lien is the least cost-beneficial option for the homeowner, so it is best to pay the HOA dues to avoid a lien.

HOA Assessment Liens vs Other Types of Property Liens

HOA assessment liens are unique. They are misunderstood as they occupy a particular place in the lien hierarchy. Tax liens clearly grant the government priority over the rest, followed by mortgage lenders, and the other creditors are paid afterward. In this hierarchy, HOA liens rank lower. However, their exact priority can depend on the timing and the homestead laws. In Texas, in order to circumvent the protections of the homestead, an HOA lien must attach on or before the date the homeowner took title to the property. This is typically the date the lien declaration is recorded in the county records. Since HOA liens that are properly filed before the property is purchased may be able to circumvent homestead protections, Texas provides the homeowner with some protections regarding creditors.

Mortgage liens are attached through lengthy processes of default and foreclosure. In contrast, HOA liens can easily attach once the assessments are not paid. The homeowner in Texas has only 20 days to respond upon receiving a default notice. This does not allow much time to dispute or pay prior to the formal recording of the lien. Once filed, the title is encumbered, and future sales or refinancing will be impacted. Prior to such a sale under financial distress, knowing your HOA lien in relation to your mortgage and taxes is vital.

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

In Texas, it is possible for a homeowners’ association (HOA) to place a lien on a house. However, there are some conditions to meet. For example, there are processes that, if not followed, will void the lien. State law does not give associations this ability on its own. It must be documented in the HOA’s governing documents, which are typically declared in the County. Most housing community planned associations give their HOA this power. However, state law gives power to the condominium association to foreclose. Before the lien is filed, the HOA must provide first notice via first-class mail or email, then provide a second notice via certified mail 30 days later. The lien may not be filed until at least 90 days after the second notice. Therefore, a minimum of 120 days must occur for this notice process to be completed.

There are significant restrictions on what an HOA may lien on your home. Texas law states an HOA may not foreclose a lien that is solely comprised of fines. Therefore, parking violations, architectural violations, or other fees of a punitive nature that are not paid may not be the sole basis of a lien or a foreclosure. Texas law governs the fee structure for unpaid assessments within this process. A lien that is filed without proper compliance with the notice structure may be challenged in Texas through this process — and if challenging the lien clears the way for a sale, a company that buys homes in Arlington or nearby cities can help you close quickly and move forward with confidence.

Does an HOA Lien Affect Your Credit Score in Texas?

HOA liens impact credit scores because once an HOA lien is filed, credit reporting agencies monitor public records for such filings. Even though your HOA may not report the delinquency, liens, and foreclosures create a paper trail that credit reporting agencies watch for in public and court records. Some HOAs use third-party reporting services to report HOA payment delinquencies to credit reporting agencies. This makes delinquent HOA payments reportable to credit reporting agencies like a mortgage delinquency, even before a formal lien is filed.

The impact is more serious than just a reduced credit score. A foreclosure listing on your credit report means your finances are in serious financial distress. As a result, lenders will impose higher interest rates and are more likely to deny lending. Even the ability to rent an apartment may be more difficult. The impact on your credit report may be for a seven-year period, while the unpaid HOA lien may seem like a short-term issue, its financial consequences can be long-lasting. Homeowners who receive an HOA default notice should treat it with the same urgency as a mortgage default notice, because the credit and financial consequences of permitting an HOA lien to be filed are equally serious.

Judicial Foreclosure Process for HOA Liens in Texas

Judicial foreclosure is one of the methods an HOA can use to foreclose on a lien. It involves the HOA bringing a civil lawsuit against the homeowner in the district or county court where the property is located. The HOA can sell the property at a public auction only after it has obtained a court order permitting the foreclosure. The HOA must hire a constable or a sheriff to seize the property. The process can take a long time because the Texas courts want to ensure that an HOA has complied with the Texas Property Code. The process can easily result in the HOA incurring thousands of dollars in legal fees, which can significantly exceed the unpaid assessments owed to the association.

Judicial foreclosures allow homeowners to retain some rights and protections. For example, they will receive a notice of the lawsuit with enough time to respond and can actually present a defense in court. Some valid defenses are that the HOA did not follow the correct process to file a lien, or that the HOA failed to send a required notice, or that the lien was filed incorrectly, or that the amount claimed is incorrect. Homeowners who retain attorneys when they are first aware of the HOA’s intentions to foreclose usually increase their chances of a successful defense, and can often identify procedural errors made by the HOA to prevent the foreclosure, or at the very least delay it.

Nonjudicial Foreclosure Process for HOA Liens in Texas

Texas law allows a homeowners association (HOA) to conduct a nonjudicial foreclosure for unpaid HOA liens only if its governing documents authorize it, and may petition the court for an expedited foreclosure order, unless the homeowner has waived this requirement in writing. Other requirements include notifying the homeowner and all known occupancy residents that the HOA will have a court grant an expedited foreclosure.

Texas law allows a homeowner and or owners the right to contest the expedited foreclosure order by filing a response with the court and/or scheduling a court hearing, and the HOA will have an expedited foreclosure order granted without a hearing if the response is not filed. Upon receiving court approval to proceed, an HOA nonjudicial foreclosure is conducted under Chapter 51 of the Texas Property Code and is subject to the same requirements as foreclosure by condominium associations. Section 82.113 of the Texas Property Code allows condominium associations to conduct nonjudicial foreclosure for unpaid assessments.

Legal Rights and Options for Texas Homeowners Facing HOA Liens

What surprises many Texas homeowners is that HOA liens may lead to foreclosures even if the debts are small. Foreclosures also do not happen immediately and provide legal protections to homeowners. An HOA can only foreclose after they issue required notices and offer a payment plan. Otherwise, homeowners are permitted to challenge the lien. This can be argued if the HOA did not follow the notice obligations in Texas.

If an HOA does foreclose, the law in Texas may enable former owners to claim back the property in some instances. This right of redemption typically applies within a specific period following the sale, as defined by Texas law. Selling the property before the HOA foreclosure can also be a way to preserve equity in the home and legally avoid the costs associated with the HOA foreclosure. Texas does provide some protections to the homestead, but the protections do not prevent HOA foreclosure. Because home equity and financial interests are at stake, homeowners facing HOA liens should evaluate the options they have carefully and take steps promptly. Reaching out to cash home buyers in Texas or surrounding cities can be one of the fastest and most effective ways to sell before foreclosure takes hold.

FAQs

Can You Lose Your House Due to HOA Fees?

If you fail to pay mandatory HOA fees in Texas, you run the risk of losing your property to the HOA. This is accomplished by the HOA placing a lien on your property to initiate foreclosure on the property in order to collect the debt. This process can take several months and requires the HOA to provide you with specific notices during the process. However, if the debt is neglected, foreclosure is a likely outcome.

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

An HOA cannot foreclose a lien comprised entirely of violation fines. However, violation fines may be included as a component of a lien that includes outstanding assessments or dues. To be enforceable via foreclosure, a lien must consist of more than just fines.

Can an HOA Put a Lien on a House That Is Paid Off?

Yes, an HOA can still place liens on houses that do not have a mortgage. It might actually be easier for an HOA to foreclose on someone with no mortgage because there is no mortgage lender that will interfere with the foreclosure process. In these cases, the HOA liens will just be targeting the equity of the house.

What Is the Statute of Limitations on HOA Liens in Texas?

Texas’s Property Code does not outline a particular statute of limitations for HOA liens. The limitations period is determined by the type of debt and the circumstances of its creation. HOA assessment debts are typically governed by principles of contract law; however, the lien continues to encumber the property until it is satisfied or otherwise contested.

Worried about an HOA lien on your Texas home? If mounting HOA fees, lien notices, or the threat of foreclosure are making it difficult to move forward, House Buying Girls can help. We buy houses in any condition and can provide a fair cash offer, allowing you to sell quickly and avoid the stress, legal costs, and uncertainty that often come with HOA lien issues. Ready to explore your options or have questions about your situation? Contact us at (214) 393-8026 for a no-obligation cash offer and take the first step toward a fresh start today.