Jump to a topic: Definition | Authority to charge assessments | Assessment increases | Payment plans | Debt collection | Credit reports | Assessment liens | Judicial foreclosure | Nonjudicial foreclosure
In Texas, assessments refer to what many people call "dues." Each owner in a property owners' association must make these payments. Failure to pay assessments can result in fines and serious penalties, including foreclosure.
Regular assessments are charged on a consistent basis (like monthly or yearly) to cover general maintenance and expenses. Special assessments are charged once for a specific reason. Examples can include major repairs, unexpected events, and property enhancement projects.
In most of Texas, an association's authority to charge assessments, late fees, and interest comes from the articles of incorporation or bylaws. Associations do not have an inherent right to charge assessments unless one of the governing documents says so—except for some counties listed below.
In some counties, this authority is granted by Section 204.010 of the Texas Property Code. Counties that qualify are listed in Sect. 204.002. According to Gregory S. Cagle's Texas Homeowners' Association Law (p. 391), it includes Harris, Montgomery, and Galveston counties.
To learn about assessments, fines, and fees in your property owners' association, read the governing documents for your organization first.
Texas law places no limit on how much or how often assessments may increase. Any caps or restrictions will likely be found in the association's governing documents. Articles of incorporation or bylaws often limit the maximum amount that can be charged without approval by the general vote. Owners must typically vote to approve increases beyond this amount and any special assessments.
If the board of directors wants to vote on or discuss an assessment increase, the board meeting must be made open to all members. This law is in Section 209.0051 of the Texas Property Code.
An additional provision applies to associations listed in Sect. 204.002. If the governing documents allow for annual assessment increases without a membership vote, the board may, according to Sect. 204.010:
This section applies if the association's articles of incorporation or bylaws do not say otherwise.
Property owners' associations with 15 lots or more must allow their members to pay overdue assessments through a payment plan. The term of the plan must be at least 3 months. Some owners, including those who previously defaulted on a payment plan or have already participated in a payment plan within 12 months, may be ineligible to apply.
Section 209.0062 of the Property Code discusses the law related to payment plan requirements and owner eligibility. The association's policies will list additional details and information on how to apply.
Overdue payments owed to a property owners' association may be sent to a collections agency.
Chapter 209 of the Property Code prevents associations from charging attorneys' fees or collection fees unless a proper notice is given in advance. According to Section 209.0064, an owner may be charged a debt collection fee only if:
Debt collectors must follow certain laws discussed in the Debt Collection guide.
Yes. An association may report delinquent assessments, fines, or fees within their jurisdiction to a credit reporting agency, but it must follow some rules.
The association or a collections agency may not report any charges that are being disputed or charge the owner fees for making this type of report, as stated in Section 209.0065 of the Texas Property Code.
Additionally, Sect. 209.0065 says that before making a report, the association must give the owner:
The association must also send a written notice to the owner by certified mail, as stated in Sect. 209.006.
As a last resort, a property owners' association may place an assessment lien on the property. A lien secures the payment of debt when a property gets sold. The association can then force the sale of the property and collect the money owed by the homeowner.
Texas law does not automatically grant associations the power to create assessment liens. This authority must be specifically stated in the association's governing documents. The documents should also state what kinds of debts a lien may secure: overdue assessments, fines, interest, attorneys' fees, etc.
Before filing a lien in the county's official public records, an association must send the owner two notices.
The notice requirements can be found in Section 209.0094 of the Texas Property Code. They took effect September 1, 2023.
In 2001, foreclosure proceedings against an 82-year-old widow Wenonah Blevins made headlines. The homeowner was not informed about the upcoming foreclosure, and her house was sold at auction without her knowledge. To protect homeowners from improper foreclosures by property owners' associations, Texas Legislature passed the Texas Residential Property Owners Protection Act, also known as the Wenonah Blevins Residential Property Owners Protection Act.
Property owners' associations with a right to foreclose on a lien may use the judicial foreclosure process. It involves filing a lawsuit against the property owner in a district court or a county court where the property is located. This will be based on the amount of money owed. If the court rules in favor of the association, the court will order a sheriff or a constable to seize and sell the property in a public auction according to Rule 309 of Texas Rules of Civil Procedure. Any money owed to the association will be taken from the sale proceeds.
To learn more about the foreclosure process in Texas, see our Foreclosure research guide.
Some property owners' associations have the right to foreclose using nonjudicial foreclosure. The governing documents must grant the association a "power of sale" or the right to foreclose if the association wants to use this option.
In nonjudicial foreclosure (or "expedited foreclosure"), the property is sold at public auction by a representative ("trustee") appointed by the association. The court does not order the sale nor oversee the sale process. However, the association must still obtain an expedited court order that lets them proceed with the foreclosure, unless the property owner waives this requirement in writing. This process is sometimes called a "Rule 736 proceeding," in reference to the Texas Rules of Civil Procedure.
Unlike subdivision property owners' associations, all condominium owners' associations have the right to nonjudicial foreclosure. It is granted by Section 82.113 of the Texas Property Code.
The property owner and an occupant of the property must be given notice that an application for expedited foreclosure has been filed. The owner has the right to file a response with the court to contest the application and request a hearing. These rights are listed in Rule 736 of the Texas Rules of Civil Procedure.
If the owner does not file a response, the court will issue an order without a hearing.
To learn more about the foreclosure process in Texas, check out our Foreclosure research guide for more information.