Texas Requires a Court Order Before an HOA Can Foreclose

Chapter 209, the Texas Residential Property Owners Protection Act, is narrower than its name suggests. Section 209.003(a) applies it only to a residential subdivision whose declaration authorizes the association to collect regular or special assessments on all or a majority of the property, and Section 209.003(b) limits it to associations with mandatory membership for all or a majority of residential owners. Section 209.003(c) makes the label irrelevant, so a body calling itself a community association is covered on the same terms. Section 209.003(d) then excludes any condominium as defined by Section 81.002 or Section 82.003.

The sequence starts long before a sale. Section 209.0094(c) to (f) requires two notices of delinquency before the association may even file an assessment lien in the county records. The first goes by first class mail to the owner's last known address or by e-mail to an address the owner gave the association. The second must go by certified mail, return receipt requested, no earlier than the 30th day after the first, and the association may not file the lien before the 90th day after that second notice was sent. The Legislature added those waiting periods by Acts 2023, 88th Leg., R.S., Ch. 807 (H.B. 886), effective September 1, 2023.

Texas also builds in a cure route. Under Section 209.0062(a) an association composed of more than 14 lots must adopt guidelines for an alternative payment schedule letting an owner pay delinquent assessments in partial payments without accruing additional monetary penalties, and Section 209.0062(b) sets a minimum plan term of three months. The association need not stretch a plan past 18 months from the date of the request, need not offer one to an owner who defaulted on a previous plan within the last two years, and need not allow more than one plan in any 12-month period. If the association never filed its guidelines in the county real property records, Section 209.0062(e) says that failure does not deprive the owner of the payment schedule. Before the association can charge an owner for a collection agent's fees, Section 209.0064(b) requires certified-mail notice itemizing each delinquent amount, describing the payment-plan options, and giving at least 45 days to cure. Section 209.0063(a) then fixes how a payment is applied: delinquent assessments first, current assessments second, and fines only fifth, so a partial payment cannot be steered into fines to keep an assessment balance alive for foreclosure.

At the foreclosure step itself, Section 209.0092(a) is the operative bar. The association must first obtain a court order in an application for expedited foreclosure under rules the Texas Supreme Court adopts under Section 74.024, Government Code, which Section 209.0092(b) requires to be substantially similar to the home-equity foreclosure rules under Section 50(r), Article XVI of the Texas Constitution. An association whose dedicatory instruments grant a right of foreclosure is treated as having any power of sale the procedure requires. Section 209.0092(c) lets an owner waive expedited foreclosure only in writing at the time the foreclosure is sought, and forbids making that waiver a condition of transferring title. Section 209.0092(d) lets the association skip the expedited track and instead foreclose under a court judgment ordering sale. Before either route, Section 209.0091 requires written notice of the total delinquency, by certified mail, to any holder of a subordinate lien of record evidenced by a deed of trust, plus 60 days for that lienholder to cure.

After a sale, Section 209.010(a) gives the association 30 days to send written notice of the date and time of the sale, by certified mail return receipt requested, to the lot owner and to each lienholder of record. The purchaser of an occupied lot must bring a forcible entry and detainer action under Chapter 24 to take possession, so nobody is put out by the sale alone. Redemption under Section 209.011(b) runs 180 days from the mailing of that notice for the owner; a lienholder cannot redeem in the first 90 days and only then if the owner has not. Section 209.011(c) blocks the purchaser from transferring the property to anyone but a redeeming owner during that window. The redemption price under Section 209.011(d) includes interest at the rate stated in the dedicatory instruments or 10 percent a year if none is stated, and Section 209.011(m) extends the deadline to the 10th day after the payoff figures arrive if the owner sends a certified-mail request to redeem on or before the last day. Section 209.011(k) leaves a redeemed lot subject to every lien that existed before foreclosure. Owners can also take the power away entirely: Section 209.0093 lets a dedicatory instrument's foreclosure provision be removed by a vote of at least 67 percent of the total votes allocated to owners, and owners holding at least 10 percent of the voting interests can petition to force a special meeting for that vote.

Condominium owners get a materially worse deal, which is why the Chapter 209 rules must not be assumed to apply. Section 82.113(d) provides that by acquiring a unit the owner grants the association a power of sale, exercised under Section 51.002 of the Property Code, the same nonjudicial statute mortgage lenders use. Section 82.113(e) confirms the association may foreclose judicially or nonjudicially, with the single limit that it may not foreclose a lien for assessments consisting solely of fines. Redemption under Section 82.113(g) lasts only 90 days after the sale, and where a third party bought the unit the redeeming owner pays interest at six percent on the bid amount. Section 82.113(j) does let a unit owner stop a nonjudicial sale at any time before it happens by paying all amounts due, and Section 82.113(b)(3) subordinates the condominium lien to a first vendor's lien or first deed of trust recorded before the assessment went delinquent, so Texas grants no super-priority to condominium associations. Under Section 82.002(c), Section 82.113 reaches condominiums whose declarations were recorded before January 1, 1994 as well.

0094(b) makes an assessment lien a legal instrument affecting title, a premature filing is a cloud on the owner's title. 009. 0091(a). 011(a), or in a separate action. 011(f) lets the owner or lienholder sue and recover reasonable attorney's fees as the prevailing party. 0064(b).