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Subject: How to file a lien for non payment of HOA dues in Texas
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TroyS3
(Texas)

Posts:1


07/13/2018 12:47 PM  
Hello, I am the President of a small community outside of Houston consisting of 53 homes. We have just taken over the HOA board from the developer. I am not sure how to file a lien on homes that have not paid their annual dues. They were due by January 1st and have been sent two certified letters. Trying to find advice on how to file the liens now.
BillH10
(Texas)

Posts:281


07/13/2018 1:09 PM  
Troy, unless you personally are an attorney, you cannot encumber a property in Texas with a lien. They may be only be filed by an attorney.

There are many attorneys in the Houston area who specialize in HOA and condominium law, I recommend you find one, and not an owner in your association who happens to be an assistant DA in the Harris County DA's office. Find the local CAI (Community Association Institute) office and contact them for a member referral.
BillH10
(Texas)

Posts:281


07/13/2018 1:25 PM  
Troy, I responded too quickly.

When you talk with an attorney you will find your association has to establish and follow a documented collections process. If your association is new, it is unlikely you have one in place. It is not enough to send two certified letters, your collections process has to describe explicitly when the assessment is past due (15 days? 5 days? or whatever), when it becomes delinquent (same thing with dates), when a demand letter will be sent (dates again), when the account will be referred to an attorney for collections (more dates), and what can/will happen if the assessment is not paid. On every collections or past due document you send you must offer the delinquent accountholder a payment plan. Your declaration may have language regarding assessments, past due assessments, and collections. Your collections process must follow what is described in the declaration.

I would locate an attorney who specializes in HOA and condominium law as I mentioned in my previous post. I expect you will incur legal fees of at least $500-$800 to establish the collections process, which cannot be recouped. It is a cost of doing business to the Association.

The lien filing and related expenses will cost @ $400 more per delinquent account. Fortunately, all costs of collection can be added to the past due accounts, but the association will have to pay all the costs up front.

Keep very detailed documentation as to the steps you take, if you do not your attorney will likely have you restart the collections process all over before he or she will file a lien. Also keep very detailed records of the expenses you incur: postage, clerical time, mileage, time standing in line in the post office, etc.

It does not sound like you have a management company. I strongly recommend you engage one. This and other HOA processes in Texas can be complicated and costly if you do not follow the requirements of your governing documents, the Texas Property Code, and the recommendations of an attorney who specializes in HOA and condominium law.
MelissaP1
(Alabama)

Posts:7663


07/13/2018 2:50 PM  
The above advice from Bill and above are good. Just wanted to contribute that it's good NOW to establish a proper Lien/Foreclosure procedure/timeline. For example: Our HOA we have a 6 month we lien. 1 year we CONSIDER foreclosure. (Many factors involved that foreclosure doesn't benefit). That way it's not perceived as "Selective Enforcement". Plus it helps make payment arrangements. You can sort through those not paying due to financial, ignorance, or protest. Those who are in financial issues will make payment arrangements. The others not so much...

I would use a lawyer first (NOT a REAL ESTATE one). That way can find out the proper way. You may be able to use a legal service. Just be careful of lawyers who say "I will do whatever you tell me to do". That's code for "There is other options I am not telling you"...

Former HOA President
BenA2
(Texas)

Posts:531


07/15/2018 12:52 PM  
Posted By BillH10 on 07/13/2018 1:09 PM
Troy, unless you personally are an attorney, you cannot encumber a property in Texas with a lien. They may be only be filed by an attorney.

There are many attorneys in the Houston area who specialize in HOA and condominium law, I recommend you find one, and not an owner in your association who happens to be an assistant DA in the Harris County DA's office. Find the local CAI (Community Association Institute) office and contact them for a member referral.




Can you quote the statute that says only an attorney can file a lien? We file our liens without going through an attorney. I would recommend talking to an attorney the first time so you make sure you are doing it properly.
BenA2
(Texas)

Posts:531


07/15/2018 1:05 PM  
Posted By BillH10 on 07/13/2018 1:25 PM
The lien filing and related expenses will cost @ $400 more per delinquent account. Fortunately, all costs of collection can be added to the past due accounts, but the association will have to pay all the costs up front.



$400 seems really high to me. I can't imagine it takes more than 30 minutes work to prepare, plus the time to file it at the courthouse, and chances are good an attorney only proofs it, having an assistant or paralegal prepare it and file it.

BillH10
(Texas)

Posts:281


07/16/2018 1:52 PM  
Ben, I was told that by the attorney for an HOA in which we resided about 15 years ago. I had no reason to question it. I have done a bit of research on line and cannot find a citation. I was a Director of the HOA, we were discussing collections processes in general, and we did not even have a delinquent account at the time. I also skimmed Texas Homeowners Association Law, 3rd Edition, by Gregory S. Cagle. While I found no references to who can and cannot file a Lien, reading through the Judicial and Non-Judicial foreclosure process requirements I found the use of an attorney would probably be mandatory to work through a foreclosure.

Within a few years the HOA did have members with significantly delinquent accounts and liens were filed. While I do not have all the costs, looking at old records the member accounts were charged over $400 as shown below:

Management Company Expenses
4 certified letters @ $25.00 each (includes postage, supplies, mileage to the post office, standing in line, etc.) The certified letters are required by the Association's process for collecting past due accounts.
4 first class mail letters @ $2.00 each
Preparation of collection package for referral to attorney $85.00.

Attorney Charges
30 Day Letter $125.00
Notice of Lien $235.00
Filing Fees ??
Other expenses such as for certified mail expenses billed at cost.





BenA2
(Texas)

Posts:531


07/16/2018 2:39 PM  
Thank you, Bill. I also did a little research and I actually found an opinion by an attorney that said only an attorney could prepare a lien based on a Texas code (81.101) that says preparing a document "incident to an action or proceeding on behalf of a client" is practicing law. I think it is interesting he seemed to ignore the clause about a client.

I'm not an attorney but I took a mediation class last year and we discussed that code section extensively. The issue was whether a non-attorney mediator could write out an agreement, which is a contract, at the end of the mediation.

The instructor and three or four attorneys in the class all agreed that, based on that state code, writing the agreement for the parties would be practicing law because it would be on behalf of someone else. The key was that it had to be on behalf of another party.

So, I think a member of an HOA could prepare the lien since it is the HOA doing it on behalf of itself, although a manager preparing it would probably cross the line since the HOA is his or her client. Obviously, there are going to be gray areas in the law which is why it is always better to use an attorney when possible.

Also, our attorney is aware that we do our own liens and is fine with it.
RichardP13
(California)

Posts:3054


07/16/2018 3:33 PM  
I think you in Texas are screwed when having to deal with liens. Almost as bad as Florida in that you can't blink without using an attorney.

Having done them in California for 9 years, I can tell you it is a relatively easy process as long as you follow proper protocol. The problem is you will have to pay upfront for their services and hope that the owner pays in the end.
NigelB
(Texas)

Posts:239


07/17/2018 10:13 AM  
Posted By TroyS3 on 07/13/2018 12:47 PM
Hello, I am the President of a small community outside of Houston consisting of 53 homes. We have just taken over the HOA board from the developer. I am not sure how to file a lien on homes that have not paid their annual dues. They were due by January 1st and have been sent two certified letters. Trying to find advice on how to file the liens now.




Bear in mind that your covenants probably have a clause about assessments and specify that assessment constitute a continuing vendors lien against the lot. In Texas an association is required to adopt and record an assessment collection policy under Section 209.0062 of the Texas Property Code.

You do not need to have an attorney file a lien, it is merely an instrument evidencing the nonpayment of assessments or other charges owed to a property owners ’ association
and filed in the official public records of a county it is a legal instrument affecting title to real property. The notice of assessment lien is usually signed and filed by the associations attorney, but that attorney is signing on behalf of the board of directors.

There are a number of steps required to go through prior to filing a lien and under the Texas Property Code associations are required to offer a payment plan to homeowners that are in arrears.
NigelB
(Texas)

Posts:239


07/17/2018 10:16 AM  
Posted By BenA2 on 07/16/2018 2:39 PM
Thank you, Bill. I also did a little research and I actually found an opinion by an attorney that said only an attorney could prepare a lien based on a Texas code (81.101) that says preparing a document "incident to an action or proceeding on behalf of a client" is practicing law. I think it is interesting he seemed to ignore the clause about a client.

I'm not an attorney but I took a mediation class last year and we discussed that code section extensively. The issue was whether a non-attorney mediator could write out an agreement, which is a contract, at the end of the mediation.

The instructor and three or four attorneys in the class all agreed that, based on that state code, writing the agreement for the parties would be practicing law because it would be on behalf of someone else. The key was that it had to be on behalf of another party.

So, I think a member of an HOA could prepare the lien since it is the HOA doing it on behalf of itself, although a manager preparing it would probably cross the line since the HOA is his or her client. Obviously, there are going to be gray areas in the law which is why it is always better to use an attorney when possible.

Also, our attorney is aware that we do our own liens and is fine with it.




That opinion is one of those "don't break my rice bowl" opinions. A lien can be filed by anyone, and a board member represents the association. Liens are filed on behalf of the board and the association.
BillH10
(Texas)

Posts:281


07/19/2018 7:53 PM  
Richard--

It is confusing between the sections of Texas law which touch on HOAs and Condominiums.

Some areas are similar to equal, others are not. Generally, Section 209 regarding HOAs is more restrictive than Chapter 81 (Texas Condominium Act),and Chapter 82 (TUCA/Texas Uniform Condominium Act). Chapter 82, which superseded Chapter 81 based on the date of incorporation, is more restrictive than Chapter 81 but not as restrictive as Section 209. In most situations.

But, a few elements of Section 209 are common to Chapter 82 and possibly even Chapter 81. Some condominium associations predate the TUCA/Chapter 82 and are covered under Chapter 81. Unless they have opted to be covered by Chapter 82 by resolution. Fun, right?

To carry this on, some Chapter 81 Associations may fall under a few elements of Chapter 82, or even elements of Section 209 which addresses HOAs, regardless of the incorporation date.

As a property management company, we have to pay attention to incorporation dates and which Chapter or Section of the property code is applicable. The type of association is obvious in the Bylaws so that is not so much an issue. Fortunately, CAI in Texas does a good job of interpreting legislative changes for us.

Why the Texas legislature has elected to codify POAs separately into two groups in this way, HOAs and Condominiums, is a mystery to us. Obviously various interest groups have had, from time to time, one ox or another to gore, or spare, is all we can think of.
JenniferG11
(Texas)

Posts:457


07/20/2018 6:59 PM  
Oh yeah, it's a blast. I think there are more court cases and subsequent updates to HOAs than condo regimes. Of course there are notable differences between single family homes and condo complexes, so it isn't odd to me there are different property codes in general, but some differences don't make any sense at all.

To clarify, all chapter 81 condo regimes fall under the following sections of chapter 82, whether the elect to or not:

"Sections 82.005, 82.006, 82.007, 82.053, 82.054, 82.102(a)(1)-(7) and (12)-(22), 82.108, 82.111, 82.113, 82.114, 82.116, 82.157, and 82.161. The definitions prescribed by Section 82.003 apply to a condominium in this state for which the declaration was recorded before January 1, 1994, to the extent the definitions do not conflict with the declaration."

I have this as a 'sticky' for when I need to review something for our COA.
JanetB2
(Colorado)

Posts:4151


07/24/2018 10:45 PM  
Posted By RichardP13 on 07/16/2018 3:33 PM
I think you in Texas are screwed when having to deal with liens. Almost as bad as Florida in that you can't blink without using an attorney.

Having done them in California for 9 years, I can tell you it is a relatively easy process as long as you follow proper protocol. The problem is you will have to pay upfront for their services and hope that the owner pays in the end.


LOL ... That is why will not buy in an HOA in either of those States. Do have to give kudos to TX in their changes made over last few years as they are trying to make their HOA’s conform more with the UCIOA, but still have a little ways to go ...
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