Homeowners often begin to panic when they discover their HOA has either filed to foreclose or has already foreclosed on their property. Often, this happens (sometimes improperly) without the homeowner realizing or having knowledge the HOA was about to foreclose. The question then becomes, what happens if the property is foreclosed on and sold?  The answer to this question is governed by Texas Property Code Sec. 209.010 and 209.011.

After an HOA forecloses on and conducts the sale of an owner’s lot, written notice must be sent to the lot owner within 30 days of the sale. After the sale, the lot owner or lienholder has 180 days from the notice of sale to redeem (meaning to legally take back) the property. A lienholder (such as the bank financing the mortgage), however, may not redeem the property until the passage of 90 days after the homeowners association mailed the written notice of sale. 

When the property is purchased by the HOA at the foreclosure sale, the lot owner must pay the following to the association in order to redeem the property:

(1)  all amounts due the association at the time of the foreclosure sale;

(2)  interest from the date of the foreclosure sale to the date of redemption on all amounts owed the association at the rate stated in the dedicatory instruments for delinquent assessments or, if no rate is stated, at an annual interest rate of 10 percent;

(3)  costs incurred by the association in foreclosing the lien and conveying the property to the lot owner, including reasonable attorney’s fees;

(4)  any assessment levied against the property by the association after the date of the foreclosure sale;

(5)  any reasonable cost incurred by the association, including mortgage payments and costs of repair, maintenance, and leasing of the property; and

(6)  the purchase price paid by the association at the foreclosure sale less any amounts due the association under Subdivision (1) that were satisfied out of foreclosure sale proceeds.

When the property is purchased by a third party other than the homeowners association, lot owner, or lienholder, the lot owner must pay the following to the association and the third party in order to redeem the property:

(1)  must pay to the association:

(A)  all amounts due the association at the time of the foreclosure sale less the foreclosure sales price received by the association from the purchaser;

(B)  interest from the date of the foreclosure sale through the date of redemption on all amounts owed the association at the rate stated in the dedicatory instruments for delinquent assessments or, if no rate is stated, at an annual interest rate of 10 percent;

(C)  costs incurred by the association in foreclosing the lien and conveying the property to the redeeming lot owner, including reasonable attorney’s fees;

(D)  any unpaid assessments levied against the property by the association after the date of the foreclosure sale; and

(E)  taxable costs incurred in a proceeding brought under Subsection (a); and

(2)  must pay to the third party who purchased the property at the foreclosure sale:

(A)  any assessments levied against the property by the association after the date of the foreclosure sale and paid by the purchaser;

(B)  the purchase price paid by the purchaser at the foreclosure sale;

(C)  the amount of the deed recording fee;

(D)  the amount paid by the purchaser as ad valorem taxes, penalties, and interest on the property after the date of the foreclosure sale; and

(E)  taxable costs incurred in a proceeding brought under Subsection (a) of Property Code Sec. 209.011.

Redemption can be a complex process. This article is in no way intended to encompass the entirety of the redemption process, rather, our intent is to lay out the basic timeline and requirements for post-foreclosure redemption. We highly recommend contacting us to help you through the process. Refer to Texas Property Code Sec. 209 for the relevant statutes. 

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.