Did you know that if you don’t pay your HOA dues, your HOA could foreclose on your home? It’s true! An HOA foreclosure is the remedy that HOAs use to obtain overdue assessments from homeowners. This blog post will discuss the HOA lien process, how it leads to foreclosure, and what you can do about it.
Mortgage Lien vs HOA Lien
Keep in mind that just because you are current on your mortgage payments as a property owner doesn’t mean that the HOA can’t foreclose on you. Mortgage liens come from not paying your payments faithfully as a mortgage holder.
However, if you fall behind on HOA fees or don’t pay HOA fees, you can also face a foreclosure sale. The HOA can use the unpaid assessments as the basis for their homeowner’s association lien and initiate foreclosure proceedings. Any unpaid fees can bring an assessments lien that leads to foreclosure.
HOAs in Houston, Texas, must file a lawsuit against the homeowner to obtain a foreclosure against its lien.
Texas Homeowners Association Foreclosure Timelines
How HOA Liens Work
In Texas, homeowners receive 20 days to respond after receiving an HOA “Default & Intent to Accelerate” notice. If the homeowner does not take action within those twenty days, the Homeowners Association may place a lien on their property and register it with the state.
When it comes to HOA foreclosure, the process is similar to mortgage foreclosure. If you fail to make payments on time and in full, your property will face auction within 1-2 months.
Before The HOA Forecloses
Before a foreclosure, you will receive two official warning letters via certified mail. The first of these notifications is the “Notice of Default and Intent to Accelerate.”
Upon receipt of this notice, you have 21 days to pay your debt. The, you receive a second notification, the “Notice of Acceleration and Posting for Foreclosure.”
The HOA files the second notification with county land records courts and physically posts it at local courthouses. The notification provides the public with details on when and where the sale will occur.
Facing a Scheduled Auction
After receiving your second foreclosure notice, you will be advised of the auction date and time. Generally, home auctions occur on the first Tuesday of each month; however, this may vary depending on when you receive notice about your impending sale.
With this second notice, you could have an additional month to plan, or the auction may be only a few days away. It’s critical that you act promptly to defend your rights as a homeowner.
Foreclosure Without a Court Order: Nonjudicial Foreclosure In Texas
In Texas, a lender or homeowners’ association typically doesn’t have to go through the courts to foreclose on your home. This “nonjudicial” means of foreclosure can take place without approval from the court if there is an included power of sale clause in mortgage documents.
You must act fast when facing a nonjudicial foreclosure, as you only have limited time before your property can face foreclosure!
Work With Your HOA
Take the first 20 days to negotiate a solution that works for all parties involved with your Homeowners Association. You may agree to paying off the debt in full or negotiate a payment plan.
However, foreclosure proceedings will begin if nothing is agreed upon within these initial 20 days.
Read Your HOA Contract
It is essential to comprehend what your HOA contract entails. Though legal jargon can be complicated, it’s critical to understand exactly what your document states to protect yourself from any potential issues with homeownership.
As a mortgage holder, in the covenants, conditions, and deed restrictions of your HOA, search for any clauses that give them the right to foreclose. Consult with a knowledgeable real estate lawyer to familiarize yourself with HOA regulations concerning your property.
Unless the HOA is legally permitted to schedule a foreclosure sale, it is illegal for them to issue notices or evict you over unpaid fees.
Check How Your Payments Were Applied
If you suspect that the homeowners association has not accurately tallied your assessment fees, acted contrary to state laws, or improperly applied payments elsewhere, then legal action may be necessary.
You should never have to pay a fine due to misapplied funds from an HOA manager.
Demonstrate that any financial conduct was unethical or in breach of the law and protect yourself from being evicted or having your home foreclosed.
HOA Forecloses Through a Judgment Lien
Don’t let delinquent assessments of your HOA payment obligations go unchallenged! Talk with a local, knowledgeable real estate attorney about their governing documents and determine if the association’s lien is viable. If state laws do not allow for the HOA board to assess your unpaid fines, you may reduce your chances of facing foreclosure.
No one wants to face a foreclosure action, and most homeowners feel unsure whether they owe special assessments or other random fees an HOA or condo association may charge.
If you have unpaid dues for a particular reason, your HOA may work with you on your assessment amount. Depending on the particular neighborhood you live in, they may be legally unable to hold you to an assessment lien.
Find Out How to Face Your HOA Lien
The first step to getting out of a foreclosure action is understanding HOA foreclosures, your fees, and other liens in particular. Talking with a real estate property attorney with experience in these matters can make all the difference when facing a lien on your property title!
At Jarrett Law, our experienced real estate attorneys work with homeowners facing foreclosure due to HOA or tax liens and in other situations such as non-payment of mortgage. If you’re facing a lien, go ahead and handle the situation now before it gets worse. Liens often come with high-interest rates for non-payment. Making decisions sooner rather than later can give you your best options!
Get in touch for a free consultation and find your next best steps! We’re ready to help you find your way to stay at home!