HOAs are a popular option for many homeowners in Texas, where over 2 million families live in these communities. People choose this lifestyle because of the appealing shared amenities, great community vibe, and stable home values.
However, all these perks come at a price in the form of HOA fees. These funds contribute to the property's upkeep and ensure homeowners enjoy these benefits.
All community members must pay their fees and comply with certain rules to maintain the prosperity of the HOA. If they don't, there may be serious consequences, including an HOA foreclosure.
Read on to find out more about how this process works in Texas.
What Is an HOA Foreclosure?
Failure to pay HOA fees can result in fines, late fees, interest charges, liens, and even foreclosure, even if your mortgage payments are up-to-date. Residents who disregard community rules and guidelines may also face fines.
During an HOA foreclosure, a judge orders that the home be sold at a public auction, and the HOA may claim the outstanding amounts.
HOA Foreclosure Process
When an HOA assessment becomes past due, the HOA board must contact the offending homeowner to request payment. They may do this telephonically, by mail, or by email.
The HOA must allow the homeowner to set up a payment arrangement with a term of at least three months before taking any action against them.
If the homeowner does not respond to a request for payment within 45 days, the HOA may contact a collections agency to recover the amounts due. The HOA may place an HOA assessment lien on the homeowner's property as a last resort.
HOAs cannot automatically create assessment liens. They must first send two official notices to the owner.
The first notice may be sent via first-class mail or email. After 30 days, the HOA may send a second notice by certified mail.
The HOA can only file the lien 90 days after they send the second notice and may foreclose after that, provided the homeowner's assessments are over 120 days delinquent.
The judicial foreclosure procedure works as follows:
- The HOA files a lawsuit against the homeowner
- A court date is set, and the judge decides on a verdict
- If they rule in favor of the HOA, the home is sold by auction
- The HOA lien money is paid from the sale proceeds
HOA liens do not have super lien status in Texas, which means the sale proceeds will go toward the balance owed on the mortgage first.
Some HOAs can request a court order from a judge authorizing a non-judicial foreclosure. In these cases, the home is sold without further intervention from the court.
How to Stop HOA Foreclosure
It's difficult to fight HOA foreclosure once the process is in motion. Homeowners should preferably make a payment arrangement as soon as they receive their first notice from the HOA.
Apart from paying the full amount owing or setting up a payment arrangement, the only ways to stop a foreclosure are:
- Raising a defense against the foreclosure
- Filing for bankruptcy
Avoid Foreclosures in your HOA
No HOA board wants to undergo the time-consuming and unpleasant HOA foreclosure process. A property management company can help you avoid this by ensuring the timely collection of HOA fees.
PMI Values Your Casa can assist you with all the HOA management services you need to ensure harmony and efficiency in your HOA community. Speak to one of our experts today to get on board.
