Generally speaking, homeownerassociations, by and througha property managementcompany, will send a letter tothe homeowner, advising thatthey failed to make a scheduledassessment payment. In thatletter, the homeowner is given acertain date that payment mustbe received, and advised that thematter will be turned over to anattorney if not received by the duedate.
Once turned over to anattorney, a homeowner can expectto incur attorney’s fees of at least$250 just for the attorney to senda letter requesting payment. Ifyou continue to fail to pay yourassessments, the homeownersassociation can direct the attorneyto initiate foreclosure proceedingson your property.
Many homeowners may notrealize the Texas Constitutionguarantees that only undercertain conditions can ahomestead be foreclosed upon.Nevertheless, one of the rightsmany homeowners associationshave is the right to forecloseon a residential property fordelinquent assessment fees. Theissue of foreclosure proceedingson delinquent assessments isespecially sensitive because itinvolves a family’s home.
While some challenge thefundamental right of homeownerassociations to take someone’shome for nonpayment ofmaintenance fees, the TexasSupreme Court has unequivocallyruled that a homeownersassociation can foreclose uponone’s homestead as long as theDeclaration of Conditions,Covenants and Restrictionsprovides adequate notice that sucha remedy is available.
There are two types offoreclosure available tohomeowner associations inmany states – judicial and nonjudicial.Judicial foreclosureinvolves filing a lawsuit againsta homeowner who has notresponded to the homeownerassociations’ requests forpayment of delinquentassessments. The process canbe lengthy and expensive forboth the association and thehomeowner. Under Texas law,homeowners associationsmust file a lawsuit against thehomeowner – hence, a judicialforeclosure.
Non–judicial foreclosure,on the other hand, requiresless time and money, as theprocess entails an attorney:1) advising the homeownerof the association’s intentto foreclose if payment isnot received or paymentarrangements not made withina specified statutory time,period, and, following thisperiod, 2) posting the homeaddress at the courthouse,where by a certain date eitherthe association’s attorney orother trustee conducts theforeclosure sale. In most cases,the homeowner association hasmade every effort to collect thepast due funds before referringthe account to its attorney,and the attorney has sentseveral communications to thehomeowners before filing theforeclosure documents.
However, keep in mindadditional legal fees can drivewhat started out as a smallamount of delinquent fees toa substantial balance requiredto be paid to the homeownersassociation to preventforeclosure. Under Texas law,condominium associationsare allowed a non–judicialforeclosure which in effectallows the association to movefairly quickly to foreclosure.
Under both non–judicialand judicial foreclosure, thehomeowner can usually haltthe proceedings at any time,including up to the momentof foreclosure by either payingthe delinquent total accrued orreaching a payment agreementplan with the association.
As a practical matter, anassociation may post a homefor foreclosure, but very fewforeclosure sales actually occurbecause the delinquency ismost often paid or settled.Ultimately, homeownerassociations just want themaintenance fees paid sothe association can meet itsfinancial obligations.
The lesson to be learnedis that if you fall behind inpayment of your assessmentsyou need to call thehomeowners associationimmediately before they turnthe matter over to an attorney.Explain your circumstancesand initiate a payment plan sothat the matter is resolved.
What you cannot afford todo is ignore assessment noticesand allow attorney fees, interestand penalties to build up andallow your house to possiblybecome subject to foreclosure.
