A Short Guide to Liens in Residential Subdivision Homeowner’s Associations
Under Texas law, an HOA has the right to place a lien on a property if the property owner fails to pay assessments (dues), fees, or fines. However, whether or not an HOA can foreclose on a property is dependent on if the lien is due to failure to pay assessments. Pursuant to Texas Property Code Sec. 209.009, an HOA cannot foreclose on a lien if “the debt securing the lien consists solely of: (1) fines assessed by the association; (2) attorney’s fees incurred by the association solely associated with fines assessed by the association….”
For example, imagine a homeowner has previously failed to pay dues, but is currently up to date on their dues, and as a result of the previous missed payments, the HOA imposed fines in addition to the assessments. Because the homeowner is up to date on their assessments, even though they have not paid their fines, the HOA may not foreclose on the property. Fines and attorney’s fees alone are never grounds on which an HOA may foreclose on a property.
However, a lien on your property due only to fines or attorney’s fees levied by your HOA may still affect the sale of the property. A lien secures the payment of a debt when a property gets sold. Therefore, while the HOA cannot force the foreclosure of your property under these circumstances in order to recover the debt, a lien filed to recover fines and attorney’s fees may still require the property owner to pay off the debts pursuant to the lien before the property can be sold.
Further, your HOA must follow notice requirements set forth in the Texas Property Code in order for a lien on your property to be valid and proper. Before an HOA may file a lien with the county, they must send a homeowner two notices. The first notice may be sent by first class mail or e-mail, and the second notice must be sent by certified mail at least 30 days after the first notice.
We often receive phone calls from homeowners indicating that their HOA has placed a lien on their property, or that their property is being foreclosed on when they had no idea of any assessment or fine delinquency. If you have received a Notice from your HOA indicating a lien has been placed on your property, or that your property is being foreclosed on, it may be in your interest to contact us to ensure that the HOA is acting within their rights, or otherwise ensure that your property remains in the lawfully correct hands.
Nacol Law Firm P.C. – Dallas Texas HOA Attorneys
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.
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:
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- 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:
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- 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:
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- 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:
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- 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
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.
Duties of Management Company
In Texas, homeowners associations (HOAs) and condominium associations (COAs) often hire management companies to handle the day-to-day operations and administrative tasks associated with running the community. These companies act as agents of the association, working under the direction of the association’s board of directors. Below are some of the core functions a management company might perform for an HOA or COA in Texas:
Administrative Services
- Communications: Managing communication with residents, including newsletters, announcements, Notice of fines, Deficiency notices for unpaid annual dues or special assessments.
- Record-Keeping: Maintaining the association’s records, including minutes of board meetings, financial records, contracts, and correspondence.
- Meeting Coordination: Organizing and facilitating association meetings, including preparing agendas, setting up meeting spaces, conducting annual elections, annual meetings, conducting special assessment meetings, and distributing meeting notices and materials.
- Compliance: Ensuring that members of the Association comply with the community’s governing documents and restrictive covenants.
Financial Management
- Accounting: Managing the association’s finances, including accounts payable and receivable, aiding in financial aduits, and producing financial statements and reports
- Dues Collection: Collecting monthly or annual HOA fees from homeowners, managing delinquencies, and, if necessary, initiating collection actions in accordance with the governing documents and state laws.
Property Management
- Maintenance and Repairs: Overseeing the maintenance and repair of common areas and amenities, including hiring and supervising contractors and vendors.
- Inspections: Conducting regular inspections of common areas and, in some cases, individual units (particularly in COAs) to ensure compliance with the community’s architectural standards and maintenance requirements.
- Contract Management: Negotiating and managing contracts for services such as landscaping, pool maintenance, security, and other services required for the community.
Enforcement of Rules and Regulations
- Rule Enforcement: Implementing the community’s rules and regulations, including notifying homeowners of violations and working with the board to address non-compliance.
Legal Compliance and Advisory
- Legal Liaison: Acting as a liaison between the association and legal counsel on matters requiring legal attention, including litigation, document review, and compliance issues. Move often than not, the management company will supply the legal counsel for the HOA or COA.
It’s important to note that the management company’s role is to implement the decisions of the COA or HOA board of directors, not to make those decisions, though this line becomes grey in many situations. The board retains the ultimate authority over the association’s governance. Bad Management companies will overly enforce compliance issues with the members and create contentious issues with the Board of Directors and Community members at large. It is normal to sue both the management company and the Association if litigation is necessary.
Julian Nacol
Nacol Law Firm P.C.
Dallas HOA Attorney
(972) 690-3333
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.
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
