Texas Condominium HOA’s and Foreclosure
A Texas condominium HOA ( Home Owner Association ) has more power than a Texas residential HOA to foreclosure on a unit. Foreclosure is a constant source of anxiety for many condominium owners that may have exiting outstanding assessment fees. If you are a condominium owner be sure to pay timely your HOA assessment fees.
An HOA may foreclose on your condominium judicially or non-judicially through a deed of trust. Read your Texas HOA By-laws carefully. The By-laws will state what power the HOA has and the notices required before the foreclosure process may be implemented. A few key things to keep in mind regarding Condominium HOA Foreclosures are:
- A Condominium HOA may foreclose if you have outstanding assessment fees;
- A Condominium HOA may not foreclose if the debt you owe is solely based on HOA fines;
- The HOA Bylaws will dictate to whether the association can foreclose on your property judicially or non-judicially;
- After a foreclosure, you will have 90-days to redeem your property from the HOA or a third-party buyer;
- The HOA must send you notice of default for any outstanding assessment fees prior to foreclosure;
If a HOA files for a judicial foreclosure on your condominium, which is utilized as a residence, then you must be given two separate notices per Texas Property Code § 52.001. First a notice of default, which gives you 20-days to cure any outstanding debt. After the notice of default, a notice of sale must be sent 21-days prior to the foreclosure sale. Both notices are mandatory for a judicial foreclosure sale.
If the notices are not properly given or if the HOA wrongfully forecloses on your condominium there is recourse. A wrongful foreclosure cause of action if successful will entitle you to monetary damages but it will be an uphill battle to regain the property if the property is sold and the 90-day redemption period has expired. It is important to know that if a foreclosure has taken place, even if wrongful, it will be difficult to recover the property, especially if a third party purchases the unit, and takes title at the foreclosure sale. It is important to realize that suing an HOA involves inherent risks. Many HOAs are not solvent and obtaining a money judgment against the association may be worthless if the HOA has no property or other assets subject to execution.
The wisest course of action is to contact a lawyer as soon as possible if you have been subjected to a wrongful foreclosure proceeding. It is far easier to stop a foreclosure during the process than it is to regain title to your property after it has been sold.
Julian Nacol, Attorney
Nacol Law Firm P.C.