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HOA ASSESSMENT LIENS: EVERYTHING YOU NEED TO KNOWTO FIGURE OUT YOUR HEAD FROM YOUR ASSESSMENT LIENGREGORY S. CAGLESavrick, Schumann, Johnson,McGarr, Kaminsky & Shirley, L.L.P.4330 Gaines Ranch Loop, Suite 150Austin, Texas 78735State Bar of Texasth34 ANNUALADVANCED REAL ESTATE LAWJuly 12-14, 2012San AntonioCHAPTER 14
GREGORY S. CAGLESavrick, Schumann, Johnson,McGarr, Kaminski & Shirley, L.L.P.4330 Gaines Ranch Loop, Suite 150Austin, Texas 78735Phone: (512) 347-1604Fax: (512) 347-1676PROFESSIONALEXPERIENCE:Partner, Savrick, Schumann, Johnson, McGarr, Kaminski & Shirley, L.L.P.Statewide representation of clients in litigation matters involving real estate, residential and commercialconstruction, general business litigation, personal injury and products liability defense.General counsel representation of developer and resident-controlled homeowner and condominium associations.Partner, Armbrust & Brown, PLLC (1999 – 2011)Briefing Attorney, Second District Court Of Appeals, Fort Worth, Texas (1998 – 1999)BV Peer Review Rated by Martindale-HubbleMember, Community Association InstituteSTATE BAR ADMISSIONS:Texas, 1998United States District Courts for the Eastern, Northern, Southern and Western Districts of Texas, 1999EDUCATION:J.D., Baylor University School of Law (1998)Top 15% of graduating classBaylor Law Review: Notes and Comments EditorMember of Order of the BarristersB.S. in Advertising, University of Texas at Austin (1995)AUTHORSHIP AND SPEAKER CREDITS:Author, TEXAS HOMEOWNERS ASSOCIATION LAW: The Essential Legal Guide for Texas HomeownersAssociations, 2010Author and speaker, HOA ASSESSMENT LIENS: Everything you need to know to figure out your head from yourassessment lien; presented at the 32nd Annual Texas State Bar Advanced Real Estate Law Course; July 2010Author, CAN YOU HEAR ME NOW? Conducting Board Meetings by Remote Communications Technology;Community Association Living, 1st Quarter (2011)Author, BUILDING BRIDGES, NOT FENCES: Resolving Community Disputes in a NeighborlyManner Without Litigation; Community Association Living, 2nd Quarter (2011)Speaker, Restrictive Covenants, presented at the Capital Area Suburban Exchange (C.A.S.E.) Conference (2006)Speaker, HOA ASSESSMENT LIENS: Everything you need to know to figure out your head from your assessmentlien; presented to the Real Estate Section of the Austin Bar; May 2011Speaker, Restrictive Covenant Enforcement 101, presented at the 2009 Community Association Institute, AustinChapter – Tradeshow (2009)i
HOA Assessment Liens: Everything You Need to Knowto Figure Out Your Head From Your Assessment LienChapter 14TABLE OF CONTENTSI.INTRODUCTION . 1II.COMMONLY USED TERMS AND DEFINITIONS . 2III.COMMON-INTEREST DEVELOPMENTS IN TEXAS . 8IV.HOMEOWNERS ASSOCIATIONS IN TEXAS . 9V.AUTHORITY OF TEXAS HOMEOWNERS ASSOCIATIONS TO LEVY ASSESSMENTSAGAINST LOTS OR UNITS . 10VI.OBLIGATION OF HOMEOWNERS TO PAY ASSESSMENTS . 10VII.CREATION AND PERFECTION OF ASSESSMENT LIENS . 10VIII.SCOPE OF ASSESSMENT LIENS . 11IX.PRIORITY OF ASSESSMENT LIENS . 11X.FORECLOSURE OF ASSESSMENT LIENS . 12A.Judicial Foreclosure of Assessment Liens . 13B.Non-Judicial Foreclosure of Assessment Liens . 14XI.PRE-FORECLOSURE DUE PROCESS PROCEDURES REQUIRED BYSUBDIVISION ASSOCIATIONS . 17A.Required Notice to Holders of Junior Deed of Trust Liens and Opportunity to Cure . 17B.Required Judicial Authorization Prior to Non-Judicial Foreclosure of a SubdivisionAssociation‘s Assessment Lien . 17XII.STATUTORY RESTRICTIONS ON THE RIGHT TO FORECLOSE ASSESSMENT LIENS . 20XIII.TEXAS CONSTITUTIONAL HOMESTEAD PROTECTION . 21XIV.PROTECTION OF ACTIVE DUTY MILITARY SERVICEMEMBERS FROM FORECLOSURE . 23XV.POST-FORECLOSURE NOTICE REQUIREMENTS OF SUBDIVISION ASSOCIATIONS . 24XVI.HOMEOWNER‘S RIGHT OF REDEMPTION FOLLOWING A FORECLOSURE SALE . 25A.Redemption of a Lot Foreclosed by a Subdivision Association. 25B.Redemption of a Unit Foreclosed by a Condominium Association . 29XVII. PAYMENT OF DELINQUENT ASSESSMENTS AFTER RECORDING OF NOTICE OFASSESSMENT LIEN . 29XVIII. KICKING THE WHEELS ON THE NEW EXPEDITED JUDICIAL PROCEDURES REQUIREDFOR NON-JUDICIAL FORECLOSURE OF A SUBDIVISION ASSOCIATION‘S ASSESSMENTLIEN: WHAT IT DOES AND DOESN‘T DO . 30A.The Expedited Judicial Proceeding Under Section 209.0092 Doesn‘t Apply to aCondominium Association . 30B.Section 209.0092 Doesn‘t Prohibit a Subdivision Association from Non-JudiciallyForeclosing Its Assessment Lien . 30i
HOA Assessment Liens: Everything You Need to Knowto Figure Out Your Head From Your Assessment LienC.D.XIX.Chapter 14An Expedited Judicial Proceeding Under Section 209.0092 May Not Be Utilized inLieu of a Traditional Lien Foreclosure Lawsuit . 30Requiring Subdivision Associations to Obtain a Prior Court Order Through an ExpeditedJudicial Proceeding May Substantially Discourage Non-Judicial Foreclosures of AssessmentLiens. 31LOOKING BEYOND THE LEGAL ASPECTS OF ASSESSMENT LIEN FORECLOSURE . 32A.Portrait of the Typical Assessment Lien Foreclosure Scenario . 32B.When should a Homeowners Association Foreclose an Assessment Lien? . 33C.Assessment Lien Foreclosure: Good Business or Poor Politics? . 34SAMPLE NOTICE OF ASSESSMENT LIEN AGAINST PROPERTY FOR SUMS NOT PAIDTO PROPERTY OWNERS ASSOCIATION . 37SAMPLE NOTICE OF PAYMENT TO PROPERTY OWNERS ASSOCIATION AND RELEASEOF NOTICE OF ASSESSMENT LIEN . 39ii
HOA Assessment Liens: Everything You Need to Knowto Figure Out Your Head From Your Assessment LienChapter 14common areas; maintenance and upkeep ofcommunity amenities; insurance for commonlyowned structures and areas; restrictive covenantenforcement; mailing costs for newsletters and othercorrespondence; employment of a managementcompany or on-site manager; security personnel andgate maintenance; and any other item delineated in thegoverning documents for the HomeownersAssociation or agreed to by the board of directors forthe Homeowners Association. The Declaration alsocommonly vests the Homeowners Association withtools to collect unpaid assessments, and in a lot ofcases, the ability to foreclose a lien against adelinquent homeowner‘s property for non-payment ofassessments (commonly referred to as an ―AssessmentLien‖).Assessments are the lifeblood of HomeownersAssociations, without which they would be unable tofulfill their duties to their community. Inevitably,some lot or unit owners in every HomeownersAssociation will not pay levied assessments and, as aconsequence, the Homeowners Association will be putin the unenviable position of having to engage incollection efforts against residents in its owncommunity. While no Homeowners Association wantsto be a debt collector, boards of directors have a dutyto act in the best interest of their community and withdue care in the management of the HomeownersAssociation‘s affairs, which in most cases means thatboards of directors have an obligation to make effortsto collect these unpaid assessments and, in appropriatecircumstances, to foreclose its Assessment Lienagainst a delinquent homeowner.2Perhaps no function of a HomeownersAssociation has attracted as much public mediaattention as the collection of Assessments and theexercise of foreclosure rights in connection with suchcollection efforts. In fact, in response to certain publicoutcry following the foreclosure of an AssessmentLien by a Homeowners Association in Harris Countyin 2001, the Texas Legislature enacted the TexasResidential Property Owners Protection Act (which isgenerally referred to as Chapter 209 of the TexasProperty Code).3 Chapter 209 of the Texas PropertyHOAASSESSMENTLIENS:EVERYTHING YOU NEED TOKNOW TO FIGURE OUT YOURHEAD FROM YOUR ASSESSMENTLIENI.INTRODUCTIONThe fastest growing form of housing in ts,‖ which include planned s.TheseCommon-InterestDevelopments are almost always governed by anassociation of property owners, commonly referred toas a ―Homeowners Association‖ or simply a ―HOA,‖which is a legal entity created by the real estatedeveloper for the purpose of managing thedevelopment, maintaining development amenities andcommonly-owned improvements, and enforcingdevelopment restrictions. In fact, the CommunityAssociations Institute, a national organization forassociation-governed communities, estimates that asof 2011, there are more than 314,000 associationgoverned communities in the United States, whichgovern more than 25 million homes and 62.3 millionresidents, an increase of more than 3,000 percent fromthe same data compiled in 1970.1Nowadays, Homeowners Associations oftendeliver services that were once the exclusive provinceof local governments, including trash pickup, streetpaving, and lighting, to name a few. This transfer, orprivatization, of services has become commonplace asthe demand for housing has outpaced the ability ofmany local governments to provide services. Inaddition, many Homeowners Associations alsomaintain swimming pools, tennis courts, playgrounds,and other amenities that most Americans cannotafford on their own, as well as provide security, socialactivities, clubhouses, walking trails, and more for thebenefit of their homeowners and residents.In order for a Homeowners Association toperform such obligations and provide such
i GREGORY S. CAGLE Savrick, Schumann, Johnson, McGarr, Kaminski & Shirley, L.L.P. 4330 Gaines Ranch Loop, Suite 150 Austin, Texas 78735 Phone: (512) 347-1604
