HOA Fines: How Your HOA Can Seek Recourse
It is assumed for the purposes of this article that the fines levied by the HOA referenced herein are proper, valid, and do not violate the Texas Property Code or other applicable statutes. This article is in relation to residential subdivision homeowner’s associations governed by Texas Property Code Chapter 209.
There are three principal (though not the only) ways an HOA may remedy the fines on a homeowner’s account: (1) file a lien against the property; (2) report the delinquency of an owner to a collection agency; and (3) file suit on the homeowner.
Liens
After an HOA has placed fines on your account, they may seek to place a lien on your property in order to secure payment when the property is sold. Pursuant to Tex. Prop Code Sec. 209.009:
“A property owners’ association may not foreclose on a property owners’ association’s assessment lien if the debt securing the lien consists solely of:
- Fines assessed by the association;
- Attorneys fees incurred by the association solely associated with fines assessed by the association; or
- Amounts added to the owner’s account as an assessment under Section 209.005(i) [records reproduction requests] or 209.0057(b-4) [charges to a homeowner for vote recounts].
While Texas law does not automatically grant HOAs the authority to create liens, the HOA can create that authority if it is granted in their governing documents. The documents should specify (if any) which types of charges may be subject to a lien (e.g., past-due assessments, fines, attorneys fees, etc.).
Collections (see Tex. Prop. Code. Sec. 209.0064)
An HOA may also seek recourse by reporting delinquencies to a collection agency. An HOA cannot hold a homeowner liable for fees incurred by the HOA for retaining a collection agency to collect the outstanding balance unless the HOA sends the homeowner notice via certified mail that:
“(1) specifies each delinquent amount and the total amount of the payment required to make the account current;
(2) if the association is subject to section 209.0062 or the association’s dedicatory instruments contain a requirement to offer a payment play, describes the options the owner has to avoid having the account turned over to a collection agent, including information regarding availability of a payment plan through the association; and
(3) provides a period of at least 45 days for the owner to cure the delinquency before further collection action is taken.”
Filing Suit
Lastly, an HOA may seek to enforce a restrictive covenant and obtain monetary damages from a homeowner. Pursuant to Tex. Prop. Code Sec. 202.004(b)-(c):
“(b) a property owners’ association or other representative designated by an owner of real property may initiate, defend, or intervene in litigation or an administrative proceeding affecting the enforcement of a restrictive covenant or the protection, preservation, or operation of the property covered by the dedicatory instrument.
(c) a court may assess civil damages for the violation of a restrictive covenant in an amount not to exceed $200 for each day of the violation.”
If an HOA files a suit of this nature, they are typically seeking specific performance, meaning they are asking the court to force the owner to do or stop doing a specific action in order to comply with the governing documents. However, as stated in subsection (c) above, the HOA can also seek payment of fines in the amount of $200 for each day of the violation.
In conclusion, while this list is not comprehensive, there are a variety of ways an HOA can seek to collect overdue fines on your homeowner’s account. If you have any concerns about the actions of your HOA, please contact us.
Dallas HOA Attorneys
Nacol Law Firm P.C.
(972) 690-3333
Disclaimer: The information provided in this article is in no way intended to constitute legal advice. The information provided is merely an overview of the relevant law. Do not act on this information. Always consult an attorney for legal advice.
Texas Homeowner’s Association: Appealing HOA Fines and a Realistic Result
Texas Homeowner’s Associations can be difficult to deal with. If an individual needs to file a suit due to arbitrary or capricious actions, it is important to know your rights prior to filling any suit.
Texas Property Code § 209.007 allows for dispute resolution and appeal to the board of directors if there is an improper fine due to an alleged offense of the Rules and Regulations of a residential residence.
The HOA shall conduct the hearing not later than 30th day after the date the Board receives owner’s request for a hearing.
At the hearing an individual will have the opportunity to verify the facts and allegations actions that lead to the fine or violation. Furthermore, the homeowner will have an opportunity to rescind the fine, justify any action, or ask for clemency.
This is a convenient and cheaper way to attack an unlawful or improper fine, but usually it is unhelpful.
If a Board or a management company, which is normally an agent of the Board, fines an individual then an appeal will be a waste of time. Likely, Board members will not care enough, nor listen to a homeowner’s complaints regarding violations. Texas Property Code § 209.007 was passed by Texas Legislature in a misguided attempt to promote resolution as an alternative dispute process.
HOA Boards and HOA Management companies do not entertain appeals and the appeal is usually worthless. It is a waste of money to hire an attorney to represent you in this ordeal because the judge and jury are the Board Members that fined you in the first palace. Usually, the President of the HOA board is a “Karen” that has nothing better to do than get involved in other people’s business.
Filing an appeal, though worthless does have one added benefit. It gives you time to find a lawyer before the fine becomes permanent. It is not needed to hire a lawyer to represent you in the appeal and anything you say at the appeal will likely be recorded by the HOA and used against you if a suit is filed. HOA Board members usually do not know the law, procedure, or the property code, thus these appeal hearings are shams to give the illusion that you are being heard.
If you are being fined by the management company or HOA best thing to do is file suit or send a demand letter.
Dallas Texas HOA Attorneys
Nacol Law Firm P.C.
(972) 690-3333
What is a Restrictive Covenant?
When a homeowner purchases a home controlled by an HOA, the homeowner (and the HOA) agrees to and are bound by certain restrictive covenants. These covenants are stated in the governing documents of the HOA⎯specifically, the HOA’s Covenants, Conditions, & Restrictions (“CC&Rs”). Typically (or rather, hopefully), all of the HOA’s governing documents are provided to the home buyer prior to or at closing. Unfortunately, although understandably, because these governing documents are filled with hundreds of pages of legal jargon, the vast majority of homeowners do not care to read these restrictive covenants prior to purchasing their home, nor do they even know where to look.
Here is what you need to know about restrictive covenants:
In essence, a restrictive covenant limits the permissible uses of land within the HOA. In other words, they provide the homeowner with a set of limitations as to what they can and cannot do with their property. These restrictions can be wide ranging; however, most homeowners encounter issues when attempting to modify or alter their property or landscape in some way. Restrictive covenants are treated as contracts between the homeowner and the HOA, and a breach of these covenants can result in one party seeking legal remedy against the other. A 2017 Texas Court of Appeals case described restrictive covenants as such:
“A declaration containing restrictive covenants in a subdivision defines the rights and obligations of property ownership, and the mutual and reciprocal obligation undertaken by all purchasers in a subdivision creates an inherent property interest possessed by each purchaser.”
It is important to note, however, that any restrictive covenant must not violate any Texas statute⎯most importantly, the Texas Property Code⎯or else it is a violation of Texas law. Texas Property Code §§ 202.003 & 202.004 lay the groundwork for the construction and enforcement of restrictive covenants:
Texas Property Code § 203.003
(a) A restrictive covenant shall be liberally construed to give effect to its purposes and intent.
(b) In this subsection, “family home” is a residential home that meets the definition of and requirements applicable to a family home under Chapter 123, Human Resources Code. A dedicatory instrument or restrictive covenant may not be construed to prevent the use of property as a family home. However, any restrictive covenant that applies to property used as a family home shall be liberally construed to give effect to its purposes and intent except to the extent that the construction would restrict the use as a family home.
Texas Property Code § 203.004
(a) An exercise of discretionary authority by a property owners’ association or other representative designated by an owner of real property concerning a restrictive covenant is presumed reasonable unless the court determines by a preponderance of the evidence that the exercise of discretionary authority was arbitrary, capricious, or discriminatory.
(b) A property owners’ association or other representative designated by an owner of real property may initiate, defend, or intervene in litigation or an administrative proceeding affecting the enforcement of a restrictive covenant, or the protection, preservation, or operation of the property covered by the dedicatory instrument.
(c) A court may assess civil damages for the violation of a restrictive covenant in an amount not to exceed $200 for each day of the violation.
Courts tend to hold that the intent of any particular restrictive covenant shall be interpreted by a court if the covenant is disputed. However, courts will hold common law rules favoring the “free and unrestricted use of land” over all else. Furthermore, courts have held that any ambiguity in a covenant must be strictly construed against the party seeking to enforce the covenant.
While this blog is intended to be an overview of restrictive covenants, each situation and covenant is unique and deserves its own analysis as to whether it is binding on a homeowner and whether it complies with Texas law.
Julian Nacol
Nacol Law Firm P.C.
Dallas Texas HOA Attorney
(972) 690-3333
Make My HOA Pay for My Attorney!
Attorney’s fees and costs in litigation can get high quickly, especially when the other party is a Homeowner’s Association. People are often scared by the potential costs of litigating a claim against their Homeowner’s Association, which invariably leaves them wondering if they can achieve a result where their Homeowner’s Association must pay for their attorney’s fees. The answer is YES … maybe.
Pursuant to Section 38.001(b) of the Texas Civil Practice and Remedies Code, “A person may recover reasonable attorney’s fees from an individual or organization … if the claim is for:
(1) rendered services;
(2) performed labor;
(3) furnished material;
(4) freight or express overcharges;
(5) lost or damaged freight or express;
(6) killed or injured stock;
(7) a sworn account; or
(8) an oral or written contract.”
For our purposes, number 8 applies primary, as it is highly likely any claims related to a Homeowner’s Association will not relate to the other items on the list. This section of the Civil Practice and Remedies Code tells us that if we can prove as a matter of law that our Homeowner’s Association breached a contract they had with us, we are entitled to recover the amount of our attorney’s fees from them.
Each Homeowner’s Association has a contract with its residents in the form of their governing documents, namely, the Bylaws and the Covenants, Conditions, & Restrictions. In layman’s terms, as an owner of property within the Homeowner’s Association, a homeowner agrees to be bound by the rules and restrictions set forth in these documents. Similarly, the Homeowner’s Association agrees to be bound by a similar set of rules and restrictions. This acts as an enforceable contract between a homeowner and the Association, and if such contract is breached by either party, pursuant to Section 38.001(b) of the Texas Civil Practice and Remedies Code, one party is entitled to recovering attorney’s fees against the party that breached the contract.
Additionally, pursuant to Section 5.006 of the Texas Property Code, “an action based on breach of a restrictive covenant pertaining to real property, the court shall allow to a prevailing party who asserted the action reasonable attorney’s fees in addition to the party’s costs and claim.
(b) To determine reasonable attorney’s fees, the court shall consider:
(1) the time and labor required;
(2) the novelty and difficulty of the questions;
(3) the expertise, reputation, and ability of the attorney; and
(4) any other factor.”
As implied by the name, a Homeowner’s Association’s Covenants, Conditions, & Restrictions are a list of restrictive covenants (or rules) that govern the conduct of both the homeowners and the Association. According to the above Section 5.006 of the Texas Property Code, a breach of one of those restrictive covenants by either a homeowner or Association entitles the other party to recovery of attorney’s fees, similar to that of the breach of contract statute described above.
None of the above statutes imply a guarantee that attorney’s fees and costs will indeed be awarded or that if they are awarded that one necessarily receives the full amount they have paid in attorneys fees. Rather, the above statutes imply that if one can establish either a breach of contract or a breach of restrictive covenant occurred, a party is allowed to recover attorney’s fees against the breaching party. That does not mean they must recover such fees. Ultimately, the determination of the amount of attorney’s fees that a party recovers comes down to a decision of a judge or a jury at trial.
Can a POA Board Adopt Fining Policies if the CC&Rs Are Silent in Texas?
Property Owners’ Associations (POAs) play a crucial role in maintaining community standards, enforcing rules, and ensuring property values remain stable. However, one common question that arises in Texas is whether a POA’s Board of Directors can impose fines for violations if the association’s Declaration of Covenants, Conditions, and Restrictions (CC&Rs) does not explicitly mention fining as a method of enforcement. The answer depends on several key factors, including Texas state law, the association’s governing documents, and due process considerations.
- Texas Law Governs POA Authority
Texas has specific laws regulating POAs and their enforcement powers. Chapter 209 of the Texas Property Code (applicable to residential POAs) outlines the procedures that property associations must follow when imposing fines.
Key requirements under Texas law include:
-
- POAs must provide written notice of the violation and an opportunity to cure before imposing a fine.
- Homeowners must be given a hearing if requested.
- Fines must be reasonable and comply with any limitations set in the CC&Rs or bylaws.
However, if the CC&Rs do not explicitly grant the POA the authority to fine, the Board cannot impose fines unilaterally based on Texas law alone.
- Reviewing the POA’s Bylaws and Governing Documents
Even if the CC&Rs do not specifically mention fines, the POA’s bylaws or rules and regulations might provide some enforcement authority. If the bylaws grant the Board broad discretion to establish enforcement mechanisms, they may be able to implement fines as part of their authority to regulate the community.
However, bylaws cannot override the CC&Rs. If the CC&Rs are silent or explicitly exclude fines, the Board may need to seek an amendment to grant fining authority.
- Amending the CC&Rs to Include Fining Authority
If the POA’s governing documents do not mention fines, the safest approach is to amend the CC&Rs. This process typically requires a vote by the membership, with a required approval percentage outlined in the governing documents.
The amendment process may include:
-
- Drafting clear language specifying fine amounts and enforcement procedures.
- Holding a community vote to approve the amendment.
- Recording the amendment with the county clerk to ensure enforceability.
- Due Process Considerations
Regardless of whether a POA has explicit authority to fine, proper due process must always be followed to avoid legal challenges. A fair enforcement policy should include:
-
- Clear notification: Homeowners must be informed of violations and potential fines.
- Opportunity to be heard: Homeowners should have the chance to appeal or challenge fines.
- Reasonable fines: Penalties should be proportionate and not excessive.
- Alternative Enforcement Methods
If fining is not an option, POAs in Texas can explore other enforcement mechanisms, such as:
-
- Suspending privileges (e.g., access to amenities like pools or clubhouses).
- Filing a lawsuit to enforce compliance.
- Placing a lien for unpaid assessments (if permitted by Texas law and governing documents).
If your POA’s CC&Rs do not specifically allow fines, the Board cannot simply adopt a policy imposing them without proper authority. The best course of action is to review Texas law, analyse governing documents, and, if necessary, amend the CC&Rs to provide clear fining authority. Ensuring compliance with due process protections will help the POA enforce rules fairly while avoiding legal disputes with homeowners.
Dallas Property Owner Association Attorneys – POA Attorneys
Nacol Law Firm P.C.
(972) 690-3333
NACOL LAW FIRM P.C.
8144 Walnut Hill Lane
Suite 1190
Dallas, Texas 75231
972-690-3333
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Attorney Mark A. Nacol is board certified in Civil Trial Law by the Texas Board of Legal Specialization
