Living within a community association, like a homeowners association (HOA), can be a benefit to many. Most often, HOAs help maintain property values, provide additional support for repairing homes, and give access to amenities.
There are of course downsides to having an HOA, and one of them is the risk of going into property debt. Under Texas state law, if you live in an HOA and you’re behind on your dues, the HOA can put on a lien on your house.
At PPS, we have walked plenty of home sellers through this red tape. Here’s how the laws work and how to get out of this situation.
How HOAs and HOA Fees Work
Homeowners purchasing a condominium, townhome, or single-family home as part of a planned community gain access to a wide range of benefits. However, when you do, you are required to pay fees and additional assessment fees (or one-time expense fees) to the appropriate homeowners association (HOA) or condominium owners’ association (COA).
An HOA fee averages $250 and can range from $100 to $1,000 a month. They usually pay for:
- Shared lobbies, patios, pools, and community centers
- Road maintenance
- Community parking
- Amenities, like laundry, club house, neighborhood parks, and tennis courts
In most cases, residents like HOAs because they can also pay for utilities, like water and sewage fees, garbage disposal, new roofing, and structural repairs.
While there are numerous benefits, HOAs can also be hard to live with. In some cases, HOAs and COAs put restrictions on what members can do with their property, how it can look, and the types of changes or repairs a homeowner can make. While approvals are helpful for maintaining standards, they can also delay how long it takes to sell if repairs are needed but approvals take months to secure.
There are also downsides if you fail to pay your HOA fees. You could find yourself paying more to your HOA if you fail to pay your dues, are fined, and rack up interest or debt with the HOA.
What Happens If You Violate Your HOA’s CC&Rs?
HOAs regulate their members through Covenants, Conditions, and Restrictions (CC&R) and they usually cover rules on development, home decorations, vehicle parking, storage of garbage bins, and so on.
Violating an HOA rule, not paying your dues, or having a delinquent assessment can lead to additional penalties, including fines, suspension of privileges, forced compliance (the HOA will go onto your property to fix something for you), and they can even file a lawsuit against you.
Dealing with a troublesome HOA or condo association may spell disaster. These situations can get worse if a property owner violates CC&Rs and fails to pay an HOA-imposed fine or HOA assessment. If this happens, then the organization could have the option to place a lien on your property if it’s allowed by the state. Unfortunately, this is the case with Texas state law.
If you live in a homeowners association or condos association and you fail to pay your dues or an imposed fee, then the HOA has the right to file a lawsuit against you. In most cases, the HOA will have to go this route before they can legally place a lien on your house. If they go to court and win, then they are issued a money judgment and the HOA may record that as a judgment lien on the county records against your property. Since this is a state law, it will affect you whether you have a home in Katy or Spring.
Getting a Lien On Your Property from the HOA
Having a lien against your property is no good and it restricts what you can and cannot do as a property owner. If you get into this situation, then you’ll want to do your best to avoid fee or penalty delinquency with your HOA or COA, read the rules of the HOA or COA, or pay the debt to remove the lien.
If you don’t do any of this, then the HOA might foreclose that lien and take your house. Texas law states that an HOA or COA can put a lien on your property if there is the following:
- Unpaid assessments
- Late fees
- Collection costs
- Attorney fees
- Other fees
- Any amount owed by the homeowner
With a COA and HOA, a lien can be foreclosed judicially or non judicially, meaning that the lien can be foreclosed in or out of court. While there are some limitations around what type of lien can go through judicial foreclosure (for example, it can’t consist only of fines), you can still get out of the lien and redeem your home. This is the case even after your home is foreclosed; this is known as the redemption period.
In order to redeem your property after the HOA or COA forecloses, you have to pay the redeeming value within 90 days. This includes:
- All amounts due at the time of COA or HOA foreclosure
- Attorney fees and cost (within reason)
- Any unpaid assessment(s) levied after the COA or HOA foreclosure
- Any other reasonable costs incurred, like maintenance
What To Do If Your HOA Placed a Lien On Your Property
If your HOA or COA placed a lien on your property, then you’re probably in a sticky situation. Most likely you have unpaid dues or you have a fine or penalty that you don’t agree with. No matter what, you probably can’t afford to redeem the lien and you might feel stuck.
Having a lien on your property is not good, especially if you plan to sell. The HOA or COA could stop that property sale or take your house and all the money from the house sale.
Luckily, you have options if this happens to you.
Can I Sell My Home if the HOA Placed a Lien on Your Property?
Yes, you can sell your house with an HOA or COA lien on it, but the house cannot be sold with outstanding HOA fees on it. If you try to do this, then the HOA will take the property and foreclose it. Most real estate agents will require this to be resolved prior to listing your home.
Instead, we recommend you sell directly to a real estate investor like us at PPS House Buyers. Otherwise, you will have to negotiate a lower price with a regular buyer to pay the outstanding HOA fees to remove the lien at closing, and real estate commissions.
Will the HOA Take My Home if They Put a Lien On It?
If you do not pay your lien or refuse to pay your HOA lien when you sell, then the HOA and COA can take your home and foreclose it.
Can I Redeem My Property Even if the HOA or COA Forecloses On it?
You can still redeem your property even if the HOA or COA has foreclosed on it. There is a 90 day redemption period, which is 90 days after the HOA foreclosure date, where you can still pay the fees and get your house back.
How to Recover From an HOA Putting a Lien on Your Property
If you have an HOA or COA lien on your property, you’re probably wondering how to get out of it. You can pay the HOA lien, negotiate with them a lower price, file for bankruptcy, get a loan to pay off the lien, or work with debt collection to get rid of the lien. However, most people don’t realize that they can sell their home even with a lien against it.
Selling your home to a legitimate cash buyer and HOA foreclosure investor is the best way to go. Our real estate investors here at PPS House Buyers are happy to take this trouble off your hands. When it comes to dealing with HOA liens and other debts against your house, it can be such a hassle.
Luckily, we can step in so you can sell your house fast and in as-is condition, despite the presence of existing lien debts against it.
We understand how frustrating an HOA lien can be. If you’re in the Houston, Texas area and are experiencing trouble with your HOA and have a lien on your house, we can help. Reach out to us to get a free no obligation offer!