Prior to January 1, 2012, when the Texas Residential Property Owners Protection Act became effective, Homeowners Associations (HOAs) were filing liens on their members’ homes for non-payment of annual dues, fees, and assessments, and then selling those homes at foreclosure sales for a fraction of the home’s value.
The Texas Legislature heard about the abuses of some HOAs across the State and decided to enact protections that allow a distressed homeowner to pay their dues, assessments, and fees over 3-18 months “without incurring additional monetary penalties.” The kicker is this ̶̶ The homeowner has to ASK the HOA Management for the payment plan.
Here is what the law requires:
- All HOAs of 14 lots or more must adopt guidelines to establish a reasonable payment plan whereby an owner may make partial payments to the HOA for delinquent regular or special assessments or any other amount owed to the HOA.
- The payment plan must allow the partial payments on the amount due “without accruing additional monetary penalties.”
- The minimum term of the payment plan is 3 months and the maximum is 18 months.
- If you have failed to make payments on a prior payment plan, the HOA does not have to allow you another plan.
- “Monetary penalties” do not include reasonable costs associated with administering the payment plan, or interest.
- HOA Management must file their payment plan’s guidelines in the real property records of each county in which the subdivision is located.
There is no time frame within which the request for the payment plan by a homeowner must be made. Therefore, such a request can be made even after suit is filed against the homeowner by HOA Management, or after a Notice of Lien has been filed.
So far, there has been only one appellate case interpreting this statute, so it is still unclear what else might be added to the definition of “without additional monetary penalties.” A strong argument can be made that this terminology means you don’t have to pay the HOA’s attorney’s fees, court costs, or litigation expenses once you invoke the protections of this statute. But, that remains to be decided.