Did you know that, as of 2021, Texas had an estimated 21,680 community associations? Over 6.1 million Lone Star State residents live in these communities. Many specifically reside in homeowners associations (HOAs).
HOAs, after all, aim to create desirable communities where property values remain high. Researchers found HOA properties are at least, or on average, 4% higher than similar houses not in HOAs.
HOA communities achieve that goal with the help of dues and fines they impose on residents. Unfortunately, residents who fail to pay them can face an HOA lien.
So, what exactly is an HOA lien? And why should you care?
Read on, as this guide summarizes what you need to know about these liens.
What Is an HOA Lien?
An HOA lien is a legal claim or hold on a property within a homeowner's association. It often results from a property owner's continued failure to pay association dues.
Texas laws refer to these dues as "assessments."
Why Property Owners Should Care About HOA Liens
Suppose you'd like to reap the benefits of HOA living by buying a property in a McAllen, TX, association. You must then agree to a Declaration of Covenants, Conditions, and Restrictions.
This Declaration may implicitly state that the association may create an assessment lien. By law, it must also indicate the terms at which the HOA can make such legal claims.
Either way, unpaid HOA liens can lead to foreclosed properties. Texas foreclosure laws allow HOAs to foreclose on these liens. However, only associations that specifically stated this in their Declaration can do so.
Assessment liens are the last attempt of associations to collect unpaid dues. Before this, your HOA's property manager will communicate with you first and give you time to pay. For instance, they may permit you to pay in installments of up to three months.
If you still fail to pay, this can lead to the HOA (or the HOA manager) sending your account to a debt collector. Continued non-payment can lead to a lien, an HOA foreclosure, and the sale of your property.
How HOA Liens Affect the Entire Association
Assessment liens in McAllen, TX, can make the entire community high risk in the eyes of lenders. For example, they may become less willing to finance properties within the community. They may also be wary of extending credit that the HOA could otherwise use for improvements.
Besides, filing a lien costs money, which an HOA must take out of its reserves. The succeeding foreclosure and legal procedures are also expensive.
Avoid HOA Liens to Protect Your Property
An unpaid HOA lien on your investment property in McAllen, TX, can affect your credit standing. Worse, it can cost you your entire property if it gets foreclosed.
The best way to avoid an HOA lien is to pay your association dues on time. However, this can be challenging if you own multiple properties or don't live in McAllen.
In that case, consider partnering with PMI RGV. We can help you manage your properties, from their maintenance to finances. Contact us today to learn more about what we can do for you!