handling your first (or next) hoa assessment lien ...texas foreclosure manual bonus materials...

Handling Your First (or Next) HOA Assessment Lien Foreclosure for Condos and Subdivisions

MCLE # 901294338

6.25 Hours (1.25 Hours Ethics) (Click on any blue link below to open articles)

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Requires internet access. MCLE records cannot be updated until after completion of the course Usage License Disclaimer & Disclosure Brochure Preface Copyright Course Director Biography For Our Registrants – Answers to Common Questions Texas Foreclosure Manual Bonus Materials Framing the HOA Foreclosure 1 Roy D. Hailey

Laws Affecting HOA Liens and Foreclosures 2 Sharon Reuler

HOA Pre-Foreclosure Due Diligence 3 Robert D. Burton Emily Jung

Types of Homeowner Association Debts and Liens 4 Mitchell Katine

HOA Foreclosure Demand Letters 5 David Zuehl Conoly

Role of the Attorney in an HOA Foreclosure 6 Trisha Taylor Farine

Expedited HOA Foreclosures 7 Brian S. Bellamy

Non-Judicial HOA Foreclosures: Legal Considerations and Documentation 8 David W. Tomek

Judicial Foreclosure of HOA Assessment Liens 9 Gregory S. Cagle

http://www.texasbar.com/AM/Template.cfm?Section=MyPage&Template=/CustomSource/MyPage.cfm

Handling Your First (or Next) HOA Assessment Lien Foreclosure for Condos and Subdivisions

Detours in the HOA Foreclosure Process 10 Judd A. Austin, Jr. Benjamin West

Right of Redemption and Other HOA Post-Foreclosure Considerations 11 Carey Venditti

Avoiding Wrongful Foreclosure 12 Justin Markel Marc D. Markel Sipra Boyd Addenda

FRAMING THE HOA FORECLOSURE

Author & Presenter: ROY D. HAILEY

Roberts Markel Weinberg Butler Hailey PC

State Bar of Texas HANDLING YOUR FIRST (OR NEXT)

HOA ASSESSMENT LIEN FORECLOSURE FOR CONDOS AND SUBDIVISIONS

November 14, 2014 Austin

CHAPTER 1

Framing the HOA Foreclosure Chapter 1

i

TABLE OF CONTENTS

I. INTRODUCTION ................................................................................................................................................... 1 A. HOA Practice in General ................................................................................................................................. 1 B. Foreclosures in Particular ................................................................................................................................ 1

1. Emotions on Steroids ............................................................................................................................... 1 2. Technical Headache ................................................................................................................................. 1

II. COURSE OVERVIEW ........................................................................................................................................... 2 A. General ............................................................................................................................................................ 2 B. Guide to Addenda ............................................................................................................................................ 2

1. Jargon ...................................................................................................................................................... 2 2. Applicable Law........................................................................................................................................ 2 3. Resources ................................................................................................................................................. 2 4. Miscellaneous .......................................................................................................................................... 2

III. SUMMARY ............................................................................................................................................................ 2

APPENDIX 1 .................................................................................................................................................................. 3

APPENDIX 2 .................................................................................................................................................................. 4

LAWS AFFECTINGHOA ASSESSMENT LIENS AND FORECLOSURES

SHARON REULERSharon Reuler, P.C.

5400 LBJ Freeway, Suite 1200Dallas, Texas 75240

(972) 720-9727E: [email protected]

State Bar of TexasHANDLING YOUR FIRST (OR NEXT)

HOA ASSESSMENT LIEN FORECLOSUREFOR CONDOS AND SUBDIVISIONS

November 14, 2014Austin

CHAPTER 2

Laws Affecting HOA Assessment Liens and Foreclosures Chapter 2

TABLE OF CONTENTS TO ARTICLEPage

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

A. Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. Legal Toolbox . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. Project Toolbox . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

B. Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1C. Truth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

II. BIG PICTURE OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

A. Three Practices Rolled into One . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2B. Chart of Statutes+ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2C. The Actual Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2D. Role of Case Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2E. Hierarchy of Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

1. Macro-Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32. HOA Documents as "Law" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33. Micro-Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

F. Construing Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3G. Laws Not Covered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

III. SOME FUNDAMENTALS OF REAL PROPERTY LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

A. Power of Public Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31. County Clerk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42. First in Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43. Constructive Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

B. What Is an HOA Assessment Lien? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41. Definition, Purpose & Origins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42. Statutory Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43. Contract Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44. Magic Words . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55. Perfection of Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

C. What is "Homestead"? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61. Eight Homestead Protections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62. Homestead vs. HOA Assessment Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63. Condo Statute Recognizes Homestead Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74. Homestead Still Prevents Some HOA Foreclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

IV. SOME FUNDAMENTALS OF COLLECTION LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

A. Debt Collection Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7B. Statutes of Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7C. Security for the Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

1. In Personam Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82. In Rem Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83. Distinguishing Secured from Unsecured Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

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Laws Affecting HOA Assessment Liens and Foreclosures Chapter 2

V. SOME FUNDAMENTALS OF HOA LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

A. Historical Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9B. Condo Law in a Nutshell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9C. Subdivision Law in a Nutshell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10D. Other Aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

1. Governance Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102. Micro-Management by State Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103. State Law Overrides Subdivision HOA Docs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104. Bracketed State Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

VI. CONCLUDING REMARKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

LIST OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

EXHIBIT 1 - FLOWCHART OF PRIMARY HOA STATUTES FOR TEXAS CONDOS & SUBDIVISIONS

EXHIBIT 2 - CONDO OR SUBDIVISION? HOW TO TELL ONE FROM THE OTHER

EXHIBIT 3 - ILLUSTRATION TIMELINE OF LIENS AND OWNERSHIP

EXHIBIT 4 - TEXAS HOA ASSESSMENT CASES REPORTED 1987 - 2013

EXHIBIT 5 - CHART OF STATUTES+ AFFECTING HOA ASSESSMENT LIENSAND FORECLOSURE IN TEXAS ~ Condominiums and Subdivisions ~

1 - DEBT COLLECTOR2 - OWNER CHARACTERISTICS3 - HOA CHARACTERISTICS4 - PROPERTY CHARACTERISTICS5 - CHARACTERISTICS of LIEN or DEBT6 - FORECLOSURE METHOD7 - POST-FORECLOSURE ISSUES

ii

HOA PRE-FORECLOSURE DUE DILIGENCE

ROBERT D. BURTON EMILY A. JUNG

Winstead PC 401 Congress Avenue, Suite 2100

Austin, Texas 78701




CHAPTER 3

TABLE OF CONTENTS

I. INTRODUCTION ............................................................................................................................................................. 1 II. DEFINITIONS .................................................................................................................................................................. 1 III. PRE-FORECLOSURE DUE DILIGENCE .................................................................................................................... 1

A. The Engagement ................................................................................................................................................... 1

B. Pre-Referral Collection Efforts ............................................................................................................................. 1

C. Verify Corporate Status ........................................................................................................................................ 2

D. Review Governing Documents ............................................................................................................................. 2

E. Confirm Military Status ........................................................................................................................................ 2

F. Conduct Title Review ........................................................................................................................................... 3

G. Provide Notice to Lienholders .............................................................................................................................. 3 IV. OTHER PRE-FORECLOSURE DUE DILIGENCE CONSIDERATIONS ................................................................ 4

A. Composition of Delinquency ................................................................................................................................ 4

B. Payment Plans and Application of Payments ........................................................................................................ 4

C. Third-Party Debt Collection .................................................................................................................................. 5 V. CONCLUSION .................................................................................................................................................................. 5

EXHIBITS

Pre-Foreclosure Due Diligence Checklist ............................................................................................................. Exhibit A

Instructions for Verifying Active Duty Military Servicemember Status ............................................................... Exhibit B

Web Search Entry ....................................................................................................................................... Exhibit B-1

Conclusive Results ...................................................................................................................................... Exhibit B-2

Inconclusive Results .................................................................................................................................... Exhibit B-3

Sample Written Inquiry to Confirm Active Duty Military Servicemember Status with Military Branch ............. Exhibit C

Sample Notice of Intent to Foreclose to Lienholder .............................................................................................. Exhibit D

Sample Payment Plan ............................................................................................................................................ Exhibit E

HOA Pre-Foreclosure Due Diligence_________________________________________________________________________________________________________Chapter 3

i

TYPES OF HOMEOWNER ASSOCIATION DEBTS AND LIENS

MITCHELL KATINE

Katine & Nechman LLP

1834 Southmore Boulevard

Houston, Texas 77004

State Bar of Texas

HANDLING YOUR FIRST (OR NEXT)

HOA ASSESSMENT LIEN FORECLOSURE

FOR CONDOS AND SUBDIVISIONS

November 14, 2014

Austin

CHAPTER 4

Types of Homeowner Association Debts and Liens Chapter 4

i

TABLE OF CONTENTS

I. INTRODUCTION ............................................................................................................................................. 1 A. Foreclosure is a Harsh Remedy .................................................................................................................. 1 B. The Declaration is a Contract ..................................................................................................................... 1 C. Interpretation of Restrictions ...................................................................................................................... 2

II. GOVERNING DOCUMENTS AND STATUTES ........................................................................................... 3 A. Declaration ................................................................................................................................................. 3 B. Chapter 81: Texas Property Code (ATPC@) ................................................................................................ 4 C. Chapter 82: TPC ......................................................................................................................................... 5 D. Chapter 202: TPC ....................................................................................................................................... 5 E. Chapter 204: TPC ....................................................................................................................................... 5 F. Chapter 209: TPC ....................................................................................................................................... 5

III. LEGAL FEES .................................................................................................................................................... 5 A. General Rule ............................................................................................................................................... 5 B. Section 5.006:TPC: Attorney=s Fees in Breach of Restrictive Covenant Action ....................................... 6 C. Chapter 38.002: Texas Civil Practice and Remedies Code: Procedure for Recovery of Attorney=s Fees . 6 D. Chapter 37 (Declaratory Judgment), Section 37.004:Texas Civil Practice and Remedies Code: Subject

Matter of Relief .......................................................................................................................................... 7 E. Chapter 37 (Declaratory Judgment), Section 37.009:Texas Civil Practice and Remedies Code: Costs .... 7 F. (Condo) 82.113(a):TPC: Association Lien for Assessments ..................................................................... 7 G. (Condo) 82.161(a) and (b): TPC: Effect of Violation on Rights of Action and Attorney=s Fees ............... 8 H. (Non-Condo) Chapter 204.010(a)(11)(12): TPC: Powers of Property Owners= Association..................... 8 I. (Non-Condo) Chapter 209: TPC: Restrictions ........................................................................................... 9 J. Legal Fees After Violation Cure .............................................................................................................. 10

IV. INTEREST ....................................................................................................................................................... 11 A. Provided in Declaration ............................................................................................................................ 11 B. (Condo) 82.102(a)(12): TPC: Powers of Unit Owners= Association ........................................................ 11 C. (Condo) 82.113(a): TPC: Association=s Lien for Assessments ................................................................ 11 D. (Non-Condo) 204.010(a)(10): TPC: Powers of Property Owners= Association ....................................... 11

V. LATE FEES ..................................................................................................................................................... 11 A. Provided in Declaration ............................................................................................................................ 11 B. (Condo) 82.102(a)(12): TPC: Powers of Unit Owners= Association ........................................................ 11 C. (Condo) 82.113(a): TPC: Association=s Lien for Assessments ................................................................ 12 D. (Non-Condo) 204.010(a)(10): TPC: Powers of Property Owners= Association ....................................... 12

VI. COLLECTION COSTS ................................................................................................................................... 12 A. Provided in Declaration ............................................................................................................................ 12 B. (Condo) 82.113(a): TPC: Association=s Lien for Assessments ................................................................ 12 C. (Non-Condo) 204.010(11): TPC: Powers of Property Owners= Association ........................................... 12 D. (Non-Condo) 204.010(12): TPC: Powers of Property Owners= Association ........................................... 12

VII. FINES .............................................................................................................................................................. 13 A. Provided in Declaration or Bylaws .......................................................................................................... 13 B. (Condo) 82.102(a)(12): TPC: Powers of Unit Owners= Association ........................................................ 13 C. (Condo) 82.113(a): TPC: Association=s Lien for Assessments ................................................................ 13 D. (Non-Condo) 204.010(6): TPC: Powers of Property Owners= Association(possibly) ............................. 13 E. Fine Foreclosure Restriction 209.009: TPC: Foreclosure Sale Prohibited in Certain Circumstances ..... 13

VIII. CIVIL DAMAGES .......................................................................................................................................... 14 A. ' 202.004(c): TPC: Enforcement of Restrictive Covenants ..................................................................... 14

IX. CONCLUSION ................................................................................................................................................ 14

HOA FORECLOSURE DEMAND LETTERS

DAVID Z. CONOLY David Z. Conoly, P.C. 1930 Glenoak Drive

Corpus Christi, Texas 78418 [email protected] (361) 937-6400

Fax (361) 937-6846




CHAPTER 5

HOA Foreclosure Demand Letters Chapter 5

HOA Foreclosure Demand Letters

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

III. HOA FORECLOSURE STATUTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

A. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

B. Statutes Affecting Both Subdivision HOAs & Condominium HOAs.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

1. TPC Chapter 51. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

a. Security Instrument Includes Contract Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

b. Effect on Other Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

c. Foreclosure Sale of Real Property Under Contract Lien. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

d. Obligation of Debtor to Notify of Change of Address. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

e. Deed-of-Trust Foreclosure After Deed in Lieu of Foreclosure.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

f. Foreclosure of Property Owned by Member of Military. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2. TPC Chapter 202. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

a. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

b. Definitions for Dedicatory Instrument & Property Owners’ Association. . . . . . . . . . . . . . . . . . . . . 2

c. Board Decisions Presumed Reasonable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

d. Governing Documents Must Be Recorded to be Valid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

C. Selected Statutes Affecting Only Subdivision HOAs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

1. Introduction to TPC Chapter 209. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

a. Foreclosure Must be Authorize at Open Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

b. Requirement for Payment Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

c. Priority of Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

d. Attorney Fees: Subdivision HOA Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

(1) 30 Day Notice & Right to Cure Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

(2) Separate Notice & Right to Cure Requirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

(3) Fees Deposited in HOA Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

(4) Copies of Invoices May Be Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

(5) Limitations on Amount of Attorney Fees for HOA Foreclosures. . . . . . . . . . . . . . . . . . . 3

(6) Foreclosure Sale Prohibited if Solely for Fines & Attorney Fees. . . . . . . . . . . . . . . . . . . 3

e. Subordinate Lienholder: Notice & 60-Day Right to Cure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

f. Expedited Judicial Approval Required for Nonjudicial Foreclosure. . . . . . . . . . . . . . . . . . . . . . . . 4

D. Selected Statutes Affecting Only Condominium HOAs.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

1. Broad Definition for “Assessment”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2. Personal Obligation Secured by the Unit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

3. Assessment Lien Priority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

4. Perfection of Assessment Lien. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

5. Power of Sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

6. Foreclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

7. No Foreclosure for Fines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

8. Costs Added to Amount Owed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

9. HOA May Purchase at Foreclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

10. Right of Redemption.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

11. Right to Notify Other Lien Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

12. Notice to Lien Holders Requesting Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

13. Deed in Lieu of Foreclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

14. Suit to Recover Money Judgment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

15. Owner’s Right to Avoid Foreclosure by Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

16. Homestead Status Prevents Assessment Lien from Commencing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

17. Assessment Lien Secures Post-Tax Lien Foreclosure Assessments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

18. Owner’s Lien Holder & HOA May Share Information.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

E. Condominium Statutes Relating to Attorney Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

1. TPC §82.117. Obligations of Unit Owners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

2. TPC §82.161. Effect of Violations on Rights of Action and Attorney's Fees. . . . . . . . . . . . . . . . . . . . . . . . . 5

i


3. TPC §82.113. Association's Lien for Assessments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

IV. STEP 1. HOA ASSESSMENT INVOICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

A. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

B. Form of Invoice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

C. Late Charges.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

1. Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2. HOA Late Charges Not Subject to Usury. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

3. Statutory Authority for Late Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

D. Delinquent Interest.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

1. General Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2. Statutory Authority for Delinquent Interest Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

E. Returned Check Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

1. General Comment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2. Statutory Authority for Returned Check Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

F. When Is Notice Effective. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

V. STEP 2. HOA DEMAND FOR PAYMENT OF DELINQUENT ASSESSMENTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

A. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

B. Itemization Required by Consumer Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

C. Special Obligations on Subdivision HOAs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

1. 30 Day Notice & Right to Cure Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

2. Separate Notice & Right to Cure Requirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

3. Payment Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

VI. STEP 3. ENGAGING THE ATTORNEY & REQUEST FOR INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

A. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

B. Engagement Rider. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

C. Financial Information Form.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

D. Board Resolution Authorizing Engagement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

E. Lawyers Creed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

VII. STEP 4. PRELIMINARY REVIEW OF INFORMATION TO DETERMINE HOW TO PROCEED . . . . . . . . . . . . 8

A. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

B. Governing Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

C. Title Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

D. Military Service Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

E. Federal Tax Lien.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

VIII. STEP 5. DECISION TO PROCEED WITH FORECLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

A. Appointment of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

B. Consumer Debt Collection Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

1. The Fair Debt Statutes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

2. Applicability to Attorneys. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

3. Bond Requirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

4. Basic Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

5. Validation Notice.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

6. Comments on Validation Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

7. Contradictions Prohibited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

8. Requests for Validation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

9. “Mini-Miranda” Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

10. Basic Validation and Mini-Miranda Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

11. Added “Safe Harbor” Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

IX. STEP 6. DEMAND FOR PAYMENT & NOTICE OF INTENT TO FORECLOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . 13

A. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

B. Notice of Intent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

C. Deadlines for Payment to Avoid Foreclosure Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

D. Consumer Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ii


X. STEP 7. NOTICE OF FORECLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

A. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

B. Other Coverage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

XI. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

XII. FORMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

A. Engagement Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

B. Engagement Rider. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

C. Lawyers Creed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

D. HOA Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

E. Financial Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

F. Request for Title Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

G. Invoice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

H. HOA Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

I. Attorney Notice of Intent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

J. Attorney Notice of Foreclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

K. Invoice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

L. HOA Notice of Default.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

M. Payment Plan Agreement.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

N. Attorney Notice of Intent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

O. Attorney Notice of Foreclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

iii

ROLE OF THE ATTORNEY IN AN HOA FORECLOSURE

Moderator: ROY D. HAILEY, Houston

Roberts Markel Weinberg Butler Hailey, P.C.

Author & Presenter: TRISHA TAYLOR FARINE, Houston

Daughtry & Jordan, P.C.

Co-Presenters: JUDD A. AUSTIN, JR., Dallas

Henry Oddo Austin & Fletcher, P.C.

MITCHELL KATINE, Houston Katine & Nechman, P.C.




CHAPTER 6

Role of the Attorney in an HOA Foreclosure Chapter 6

i

TABLE OF CONTENTS

I. INTRODUCTION ................................................................................................................................................... 1

II. WHY FORECLOSURE? ........................................................................................................................................ 1 A. Suspension of services and amenities .............................................................................................................. 1 B. Money judgments & liens ............................................................................................................................... 2 C. Suspension of board membership & voting privileges .................................................................................... 2 D. Neighbor shaming ........................................................................................................................................... 2

III. EDUCATING YOUR CLIENT .............................................................................................................................. 2 A. Know your Case .............................................................................................................................................. 2 B. Which foreclosure procedure do we use? ........................................................................................................ 3 C. Lien priority & mortgages ............................................................................................................................... 3 D. Right of redemption ......................................................................................................................................... 3 E. Realistic expectations for recovery ................................................................................................................. 3 F. Detours on the road to foreclosure .................................................................................................................. 3 G. Additional costs ............................................................................................................................................... 4 H. Payment plans .................................................................................................................................................. 4

IV. MISCELLANEOUS F.A.Q. .................................................................................................................................... 4

V. CONCLUSION ....................................................................................................................................................... 5

EXPEDITED HOA FORECLOSURES

BRIAN S. BELLAMY Savrick, Schumann, Johnson,McGarr, Kaminski & Shirley, L.L.P.

4330 Gaines Ranch Loop, Suite 150 Austin, Texas 78735




CHAPTER 7

Expedited HOA Foreclosures Chapter 7

i

TABLE OF CONTENTS

I. PREFACE .......................................................................................................................................................... 1

II. INTRODUCTION ............................................................................................................................................. 1

III. EXPEDITED HOA FORECLOSURE IS NOT THE EQUIVALENT OF A JUDICIAL FORECLOSURE ... 1

IV. PROMULGATED FORMS ............................................................................................................................... 2

V. FILING A NON-JUDICIAL FORECLOSURE APPLICATION BY A SUBDIVISION ASSOCIATION ..... 2

VI. RESPONDING TO A NON-JUDICIAL FORECLOSURE APPLICATION ................................................... 3

VII. RULING ON A NON-JUDICIAL FORECLOSURE APPLICATION............................................................. 4

VIII. AUTOMATIC STAY AND DISMISSAL OF AN EXPEDITED NON-JUDICIAL FORECLOSURE PROCEEDING UPON FILING OF AN INDEPENDENT LAWSUIT ............................................................ 5

IX. WAIVER OF EXPEDITED FORECLOSURE ................................................................................................. 5

X. MEDIATION IN EXPEDITED FORECLOSURE PROCEEDINGS ............................................................... 6

APPENDIX A ................................................................................................................................................................ 7

APPENDIX B .............................................................................................................................................................. 11

APPENDIX C .............................................................................................................................................................. 14

APPENDIX D .............................................................................................................................................................. 17

APPENDIX E .............................................................................................................................................................. 19

APPENDIX F ............................................................................................................................................................... 21

APPENDIX G .............................................................................................................................................................. 23

APPENDIX H .............................................................................................................................................................. 25

NONJUDICIAL HOA FORECLOSURES: LEGAL CONSIDERATIONS AND DOCUMENTATION

DAVID W. TOMEK David Tomek PLLC

325 N. St. Paul Street, Suite 3300 Dallas, Texas 75201

[email protected] www.dtomeklaw.com




CHAPTER 8

Nonjudicial HOA Foreclosures: Legal Considerations and Documentation Chapter 8

i

TABLE OF CONTENTS

I. PREFACE .......................................................................................................................................................... 1

II. INTRODUCTION ............................................................................................................................................. 1

III. PREREQUISITES FOR FORECLOSING ASSESSMENT LIENS PURSUANT TO POWER OF SALE ..... 1 A. Condominium HOAs ................................................................................................................................. 1

1. TUCA Assessment Lien – Application, Scope, Enforcement, and Relationship to Assessment Lien in Condominium Declaration ............................................................................................................. 1

2. TUCA Assessment Lien – Creation, Perfection and Priority ............................................................. 2 3. Notices to and Communications with Other Lienholders .................................................................. 3

B. Subdivision HOAs ..................................................................................................................................... 3 1. No Statutory Assessment Lien with Power of Sale ............................................................................ 3 2. CC&Rs Assessment Lien ................................................................................................................... 3

IV. REAL PROPERTY NONJUDICIAL FORECLOSURE STATUTES .............................................................. 3 A. Chapter 51 .................................................................................................................................................. 4 B. Summary of Significant Changes to Chapter 51 Since 2003 ..................................................................... 4

1. 2003 Legislative Session .................................................................................................................... 4 2. 2005 Legislative Session .................................................................................................................... 4 3. 2007 Legislative Session .................................................................................................................... 4 4. 2009 Legislative Session .................................................................................................................... 4 5. 2011 Legislative Session .................................................................................................................... 4 6. 2013 Legislative Session .................................................................................................................... 5

V. FITTING ASSESSMENT LIEN FORECLOSURES INTO CHAPTER 51 ..................................................... 5

VI. TRUSTEES ........................................................................................................................................................ 5

VII. NOTICE OF FORECLOSURE SALE............................................................................................................... 5 A. Contractual Requirements .......................................................................................................................... 5 B. Statutory Requirements .............................................................................................................................. 5

1. Posting ................................................................................................................................................ 5 2. Filing .................................................................................................................................................. 6 3. Serving ............................................................................................................................................... 6

C. Recommended Contents of Notice of Foreclosure Sale ............................................................................. 6

VIII. FORECLOSURE SALE .................................................................................................................................... 7 A. Conducting the Foreclosure Sale ................................................................................................................ 7 B. Permitted Bidders ....................................................................................................................................... 7

IX. POST-SALE MATTERS ................................................................................................................................... 7 A. Foreclosure Sale Deed ................................................................................................................................ 7 B. Distribution of Nonjudicial Sale Proceeds ................................................................................................. 8 C. No Petition by Unit Owner......................................................................................................................... 8

Appendix A - APPOINTMENT OF TRUSTEE .............................................................................................. 9 Appendix B - AFFIDAVIT OF FILING AND POSTING ............................................................................ 11 Appendix C - AFFIDAVIT OF MAILING .................................................................................................... 13 Appendix D - NOTICE OF FORECLOSURE SALE .................................................................................... 15 Appendix E - FORECLOSURE SALE DEED .............................................................................................. 17 Appendix F - FORECLOSURE SALE TRANSCRIPT ................................................................................. 22 Appendix G - AUTHORITY TO FORECLOSE ........................................................................................... 24

JUDICIAL FORECLOSURE OF HOA ASSESSMENT LIENS

GREGORY S. CAGLE Savrick, Schumann, Johnson,

McGarr, Kaminski & Shirley, L.L.P. 4330 Gaines Ranch Loop, Suite 150

Austin, Texas 78735




CHAPTER 9

Judicial Foreclosure of HOA Assessment Liens Chapter 9

i

TABLE OF CONTENTS

I. PREFACE .......................................................................................................................................................... 1

II. INTRODUCTION ............................................................................................................................................. 1

III. AUTHORITY OF TEXAS HOMEOWNERS ASSOCIATIONS TO LEVY ASSESSMENTS AGAINST LOTS OR UNITS ............................................................................................................................ 2

IV. OBLIGATION OF HOMEOWNERS TO PAY ASSESSMENTS ................................................................... 2

V. CREATION AND PERFECTION OF ASSESSMENT LIENS ........................................................................ 3

VI. SCOPE OF ASSESSMENT LIENS .................................................................................................................. 3

VII. PRIORITY OF ASSESSMENT LIENS ............................................................................................................ 4

VIII. JUDICIAL FORECLOSURE OF ASSESSMENT LIENS ............................................................................... 5 A. Court of Appropriate Jurisdiction for a Judicial Foreclosure Lawsuit ....................................................... 5 B. Necessary Parties in a Judicial Foreclosure Lawsuit .................................................................................. 6 C. Pleadings in a Judicial Foreclosure Lawsuit .............................................................................................. 6 D. Affirmative Defenses in a Judicial Foreclosure Lawsuit ........................................................................... 7 E. Burden of Proof in a Judicial Foreclosure Lawsuit .................................................................................... 7 F. Final Judgment in a Judicial Foreclosure Lawsuit ..................................................................................... 8 G. Issuance of an “Order of Sale” ................................................................................................................... 8 H. Conducting a Judicial Foreclosure Sale ..................................................................................................... 9

IX. ADVANTAGES AND DISADVANTAGES OF JUDICIALLY FORECLOSING AN ASSESSMENT LIEN ........................................................................................................................................ 9

APPENDIX A ............................................................................................................................................................... 11

APPENDIX B ............................................................................................................................................................... 18

APPENDIX C ............................................................................................................................................................... 25

DETOURS IN THE HOA FORECLOSURE PROCESS

JUDD A. AUSTIN, JR. BEN A. WEST

Henry Oddo Austin & Fletcher, P.C. 1700 Pacific Avenue, Suite 2700

Dallas, Texas 75201 (214) 658-1900

[email protected]




CHAPTER 10

Detours in the HOA Foreclosure Process Chapter 10

i

TABLE OF CONTENTS

I. INTRODUCTION ................................................................................................................................................... 1

II. SERVICEMEMBERS CIVIL RELIEF ACT (SCRA) ........................................................................................... 1 A. SCRA basics .................................................................................................................................................... 1 B. Who is covered ................................................................................................................................................ 1 C. What is covered ............................................................................................................................................... 1 D. How to determine active-duty status ............................................................................................................... 2 E. Providing notice of SCRA benefits ................................................................................................................. 2 F. Effect of the SCRA on HOA foreclosures ...................................................................................................... 2 G. Proving “materially affected” .......................................................................................................................... 3 H. Servicemember waiver of rights ...................................................................................................................... 3 I. Consequences of violating the SCRA ............................................................................................................. 3 J. Important processes for HOAs with regard to the SCRA ............................................................................... 3

III. BANKRUPTCY ...................................................................................................................................................... 3 A. Bankruptcy basics ............................................................................................................................................ 3 B. What the Chapter 7 Means Test means for an HOA’s foreclosure efforts ...................................................... 4 C. Bankruptcy’s automatic stay ........................................................................................................................... 4 D. The expiration of the automatic stay ............................................................................................................... 4 E. Terminating the stay through litigation ........................................................................................................... 5 F. Steps the HOA and/or its managing agent must take ...................................................................................... 5 G. When a Chapter 13 debtor fails to pay ............................................................................................................ 5 H. Consequences of ignoring the automatic stay ................................................................................................. 6 I. Important processes for HOAs with regard to bankruptcy .............................................................................. 6

IV. FEDERAL TAX LIENS ......................................................................................................................................... 6 A. Federal tax lien basics ..................................................................................................................................... 6 B. Providing notice of the sale ............................................................................................................................. 7 C. Notice requirements ........................................................................................................................................ 7 D. IRS right of redemption ................................................................................................................................... 7 E. Important processes for HOAs with regard to federal tax liens ...................................................................... 8

V. PROBATE ............................................................................................................................................................... 8 A. Probate basics .................................................................................................................................................. 8 B. Types of creditor claims .................................................................................................................................. 9

1. Matured secured claims 9 2. Preferred debt and lien claims 9

C. Receiving notice of the debtor’s death .......................................................................................................... 10 1. Foreclosure after death with dependent administration 10 2. Foreclosure after death with an independent administration 10 3. Required notices 10

D. Statute of limitations ..................................................................................................................................... 11 E. The HOA’s options when probate proceedings have not been opened ......................................................... 11

1. Opening a creditor’s administration 11 2. Wait four years to foreclose 11

F. Important processes for HOAs with regard to probate issues ....................................................................... 12

VI. CONCLUSION ..................................................................................................................................................... 12

RIGHT OF REDEMPTION AND OTHER HOA POST-FORECLOSURE CONSIDERATIONS

CAREY GUNN VENDITTI 401 Congress Avenue, Suite 2100

Austin, Texas 78701 (512) 370-2883

[email protected]




CHAPTER 11

Right of Redemption and Other HOA Post-Foreclosure Considerations Chapter 11

i

TABLE OF CONTENTS

I. SCOPE .................................................................................................................................................................... 1

II. APPLICABLE LAW ............................................................................................................................................... 1

III. RIGHT OF REDEMPTION AND OTHER POST FORECLOSURE ISSUES ..................................................... 1 A. An Owner’s Right of Redemption ................................................................................................................... 1

1. TUCA allows the owner of a condominium unit purchased at a foreclosure sale to redeem the property up to 90 days after the date of the foreclosure sale. .................................................................. 1 2. Chapter 209 allows the owner of property in a residential subdivision or the lienholder of record to redeem property purchased at a foreclosure sale up to 180 days after the date of the sale. ..... 2

B. Post-Foreclosure Considerations: Notice to Vacate and Eviction Proceedings .............................................. 3 1. A tenant or occupant of a residential property at the time it is purchased at a foreclosure sale must be given written notice to vacate under Texas law; however, current federal law set to expire at the end of 2014 provides additional protections for tenants with a written lease who are not in default. ............................................................................................................................. 3 2. Chapter 24 outlines the procedure that an HOA must follow in order to lawfully evict an individual from the residential property they are occupying. .................................................................. 3

IV. CONCLUSION ....................................................................................................................................................... 4

APPENDIX A - FORMS RELATING TO OWNER'S RIGHT OF REDEMPTION .................................................... 7

APPENDIX B - FORMS RELATING TO THE NOTICE TO VACATE AND THE EVICTION PROCESS ........... 15

AVOIDING WRONGFUL FORECLOSURE

Presented by: MARC MARKEL


Authored by: MARC MARKEL

SIPRA BOYD JUSTIN MARKEL





CHAPTER 12

Avoiding Wrongful Foreclosure Chapter 12

i

TABLE OF CONTENTS

I. INTRODUCTION ............................................................................................................................................. 1

II. DEBT OWED TO PROPERTY OWNERS’ ASSOCIATIONS ........................................................................ 1 A. Assessments, Fines, Fees, and Interest Owed ............................................................................................ 1

1. Kinds and Amounts of Debt ............................................................................................................... 1 2. Confusing or Inconsistent Actions by Associations in Relation to the Debt ...................................... 1 3. Changing Management Companies .................................................................................................... 2

B. Debt Secured by the Association’s Lien .................................................................................................... 2

III. METHOD OF FORECLOSURE (JUDICIAL, NONJUDICIAL, AND EXPEDITED) ................................... 3

IV. NOTICES PROVIDED BY THE ASSOCIATION ........................................................................................... 3 A. Requisite Notices ....................................................................................................................................... 3 B. Errors in the Pre-Foreclosure Notices ........................................................................................................ 3

1. Errors in the Stating the Owner’s Name or Address .......................................................................... 3 2. Errors in Mailing the Notices to the Owner ....................................................................................... 3

C. Death, Bankruptcy, and Divorce of Owners .............................................................................................. 4

V. ERRORS IN THE FORECLOSURE SALE ...................................................................................................... 4

VI. INADEQUATE SELLING PRICE AND CAUSAL CONNECTION .............................................................. 5

VII. CONCLUSION .................................................................................................................................................. 5

APPENDIX A ................................................................................................................................................................. 7

ADDENDA




ADDENDA CONTENTSADDENDUM A - GLOSSARY

A-1 Topical Glossary

A-2 Alphabetic Cross-Reference to Topical Glossary

ADDENDUM B - FORECLOSURE STATUTES

B-1 Texas Property Code, Chapter 51, Provisions Generally Applicable to Liens

B-2 Texas Rules of Civil Procedure, Rule 735 (Foreclosures Requiring a Court Order) & Rule 736(Expedited Order Proceeding)

ADDENDUM C - CONDOMINIUM STATUTES

C-1 Texas Property Code, Chapter 82, (Texas) Uniform Condominium Act - Select Provisions

C-2 Texas Property Code, Chapter 81, (Texas) Condominium Act - Select Provisions ADDENDUM D - SUBDIVISION STATUTE

D-1 Texas Property Code, Chapter 209, Texas Residential Property Owners Protection Act - SelectProvisions

ADDENDUM E - OTHER TEXAS STATUTES

E-1 Texas Government Code, Chapter 83, Certain Unauthorized Practice of Law

ADDENDUM F - CONSUMER DEBT COLLECTION STATUTES

F-1 (Federal) Fair Debt Collection Practices Act, 15 U.S.C. §§1692-1692p

F-2 (Texas) Debt Collection Act, Texas Finance Code, Chapter 392

ADDENDUM G - RESOURCES

G-1 Bibliography of HOA Assessment Lien Foreclosure Resources

G-2 Summary of Contents to Texas Foreclosure Manual, Third Edition (2014), by State Bar ofTexas

ADDENDUM H - MISCELLANEOUS

H-1 The Texas Lawyers Creed, A Mandate for Professionalism, promulgated by the SupremeCourt of Texas and the Court of Criminal Appeals on November 7, 1989

Handling Your First (or Next) HOA Assessment Lien Foreclosure for Condos & Subdivisions________________________________________________________________________________________________________Addenda