Texas uses the term "assessments" to refer to what you might think of as "dues." Assessments are charges that each owner of property in a property owners' association must pay according to the bylaws or articles of incorporation. They can be "regular assessments," which are charged on a regular basis (like monthly or yearly), or "special assessments" which are charged once for a specific reason.
For most of Texas, an association's authority to charge its members assessments comes from the governing documents such as the articles of incorporation and bylaws. Likewise, the governing documents would give the association the authority to charge late fees and interest. When asking questions about what kinds of fees, fines, and assessments your property owners' association can charge you, please read the governing documents for your organization first.
In certain areas of Texas, state law grants the authority to charge assessments and late fees. Section 204.010 of the Texas Property Code grants that authority in certain counties. According to Gregory S. Cagle on page 391 of Texas Homeowners' Association Law, the only counties this chapter applies to are Harris County, Montgomery County, and Galveston County. Please see Section 204.002 of the Texas Property Code for the complete details of which counties are subject to Chapter 204.
If you owe overdue assessments to a property owners' association consisting of 15 lots or more, they must allow you to make payments towards what you owe on a payment plan. Section 209.0062 of the Texas Property Code requires these organizations to develop guidelines for an alternative payment schedule that will allow members to pay towards overdue assessments without racking up additional fees. The payment plan must be at least 3 months.
If you continue to owe overdue money to your property owners' association, they may decide to send your account to a debt collector.
The debt collectors need to follow the same fair debt collection laws that we describe in our Debt Collection research guide. In addition to the protections provided by those laws, Chapter 209 of the Texas Property Code also prevents an owner from being charged for attorney fees or collection fees related to their overdue payments unless they are given proper notice that this will happen.
Section 209.0064 states that an owner can only be charged for debt collection fees if:
Section 209.0065 prohibits an association from reporting delinquent fines or fees to a credit reporting agency if they are the subject of pending disputes. Before reporting a delinquent payment history, an association is required to provide a 30-day notice to the property owner as well as give the owner the opportunity to enter into a payment plan. No fees can be charged for the reporting to a credit reporting agency.
Similarly, Section 209.008 requires that an owner must be notified in writing before they can be charged for attorney's fees connected to collecting overdue payments.
The last resort in an attempt to collect overdue money owed to a property owners' association is an assessment lien. A property owners' association can foreclose on the lien and trigger the sale of the property.
The ability to create assessment liens is a power that is not automatically granted by Texas law. It must be specifically stated in the Declaration of Covenants, Conditions, and Restrictions. The procedure for creating and perfecting an assessment lien will need to be described in the association's Declaration. The Declaration should also specify what kinds of debts a lien can secure - late assessments, attorney's fees, interest, etc.
In 2001, foreclosure proceedings against an 82-year-old widow named Wenonah Blevins living in Harris County made headlines due to how they were conducted. The homeowner was not given proper notice of the proceedings against her, and as a result, her house was sold at auction without her knowledge. To protect homeowners from improper foreclosures by their property owners' associations, the Texas Legislature passed the Wenonah Blevins Residential Property Owners Protection Act.
All property owners' associations can foreclose on an assessment lien using a judicial foreclosure. A judicial foreclosure requires a property owners' association to file a petition for foreclosure with the district or county court (depending on the amount of money owed) where the property is located. Once a judgment has been issued, Texas Rule of Civil Procedure 309 authorizes a sheriff or constable to seize and sell the property to satisfy the judgment.
When the option is available, many property owners' associations will opt to choose a non-judicial foreclosure (see the box below) instead as it is a much faster process than a judicial foreclosure.
To learn more about the foreclosure process in Texas, check out our Foreclosure research guide for more information.
The governing documents of some property owners' associations may permit "non-judicial foreclosures." This means that the property is sold without a foreclosure lawsuit and judgment from the court. Although a judgment from the court allowing the property to be sold is not required in an expedited foreclosure, Texas law requires the property owners' association to apply for and obtain a court order allowing the sale of the property, unless the property owner waives this requirement in writing.
The property owner and the residents of the property must be given notice that an application for expedited foreclosure has been filed. They have the right to request a hearing by filing a response to the application for expedited foreclosure.
Unlike property owners' associations, condominium owners' associations are granted the right to foreclose non-judicially by Texas law.
To learn more about the foreclosure process in Texas, check out our Foreclosure research guide for more information.