Planned communities all over Texas have obligations that involve maintenance, repair and other operations that require that property owners pay their assessments and fees in a timely manner. When owners refuse or are unable to pay over a period of time, the delinquency becomes a burden to the community.
Property owners’ associations have remedies through their bylaws or covenants, conditions and restrictions. But if the situation goes on for too long, they may resort to the court system, getting a lien on the home or even foreclosing the property. Finding the best path forward can be challenging, so it can help to get more information on strategies that will resolve the situation in a cost-effective way.
What are the first steps?
If a property owner falls behind on monthly assessments, the association will start with notification by phone call or mail. Texas law does not authorize the assessment of property owners, rather it is the CC&Rs which are the governing documents for assessments as well as late fees and added interest. The association may also take away the delinquent owner’s privileges to use the common areas, or even file a lawsuit to get a money judgement against them.
The next step will be to send the property owner’s account to a debt collector. In order for the association to charge collection or attorney’s fees, they must give proper notice to the delinquent owner. The association may even report the delinquent payment history to a credit reporting agency.
What happens if the owner still does not pay?
The association’s last resort for collecting overdue fees is to create an assessment lien, which the association can foreclose on in order to trigger a foreclosure that can be judicial or nonjudicial. The declaration in the CC&Rs grants the association the authority to create a lien, as well as what kinds of debt the lien will secure, such as late assessments, attorney’s fees or interest. It is also important to note that the association may not foreclose a lien only on the fines.
In a judicial foreclosure, the association files a petition in the county or district of the property, after which the sheriff seizes and sells the property. The whole process can go on for a few months to years. Many associations prefer to use the nonjudicial proceeding, as it takes far less time. In this case, if the governing CC&Rs may permit this proceeding, the association must obtain a court order to foreclose unless the owner waives the requirement.