Texas law has recently changed regarding the notices a homeowners association (HOA) must provide to its member homeowners of a lien relating to unpaid assessments. Find out how the law has changed and how those changes may impact the timing of HOAs contracting with design professionals and contractors for property improvements.

Most everyone has dealt with a HOAs in one way or another. HOAs often deliver services that are commonly reserved for local government entities like trash pickup, street paving, and lighting. Depending on the community, an HOA may also maintain swimming pools, tennis courts, playgrounds, and other amenities that most Americans cannot afford on their own, as well as provide security, social activities, clubhouses, walking trails, and more for the benefit of their homeowners and residents.

To pay to maintain such obligations and provide such services, the HOA must have a source of income. Typically, those sources are regular assessments or monthly dues, and special assessments. The declaration of covenants, conditions and restrictions (Declaration) for an HOA-governed community generally requires each member of an HOA to pay assessments that are used to cover expenses for routine services. Such expenses might include landscaping and irrigation, security, maintenance of on-site amenities, and the hiring and payment of third-party property management groups to oversee the running of the community. Declarations also create a framework under which an HOAs’ members can vote on and agree to pay special assessments for unusual expenses.  Such expenses may include large capital improvements such as replacing elevators, replacing an aging swimming pool, or installing new roofs.

Declarations usually vest the HOA with tools to collect unpaid assessments, and in many cases, the ability to foreclose a lien against a delinquent homeowner‘s property for non-payment of assessments, i.e. an assessment lien. In legal terms, an assessment lien is a lien, lien affidavit, or other lien instrument evidencing the nonpayment of assessments or other charges owed to a property owners’ association and is a legal instrument affecting title to real property filed in the official public records of a county.

In 2001, after an outcry to better protect Texas property from foreclosure by way of an Assessment Lien, the Texas Legislature enacted the Texas Residential Property Owners Protection Act, Chapter 209 of the Texas Property Code. Chapter 209 imposes certain due process requirements on HOAs that govern subdivision developments before they can assess a fine, file a lawsuit, or seek reimbursement of attorneys’ fees against a homeowner/member.

In the recently concluded 2023 Texas session, the Legislature amended Chapter 209’s collection process as to assessment liens. Section 209.0094 outlines the procedure for notice requirements and filing an assessment lien. This section was amended to include a longer time period and method of communication requirements. Starting September 1, 2023, the procedure now includes a 120-day time period requirement.

Now, before an HOA or its attorney can file a lien or notice of lien against homeowners, the HOA must send three monthly written notices: (1) one notice sent via first class mail or email; (2) a second notice sent via certified mail (return receipt requested), at least 30 days after the first notice was sent; and (3) a third notice of Assessment Lien that cannot be sent until at least 90 days after the second notice was sent. Each notice must detail the amount owed, clarify the homeowner’s rights, and provide at least a 30-day period in which the homeowner can pay the owed amount without any additional charges.

Like the detailed notice requirements and pre-requisites detailed in the Texas mechanics and lien laws for residential properties, the new notice requirements under Chapter 209 demonstrate Texas’ desire to protect its citizens’ property.  Perhaps unintentionally, the modifications to Chapter 209 may also delay HOAs awarding contracts for improvements to accommodate the extended notice periods and to allow for collection of assessments.

The attorneys in our Austin and Dallas offices have experience preparing and foreclosing on many different types of liens, including but not limited to mechanics’ liens.  Please contact us at info@gstexlaw.com if you have any questions.

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