Delinquent HOA Dues in Texas: A Board’s Guide to a Fair, Legal Collection Process

Every association has a few owners who fall behind. A job loss, a medical bill, a missed autopay after a bank change: most late accounts start with something ordinary, and most of them can be brought current with a reminder and a reasonable plan. The trouble starts when a board has no written process, so each late account gets handled differently depending on who is on the board that year and how they feel about the owner. That is how communities end up with budget shortfalls on one side and angry neighbors, or worse, a legal challenge, on the other.

This guide walks a Texas HOA board through a fair, consistent and legally sound way to handle delinquent HOA dues: what the Texas Property Code requires before collection costs can be charged, how payment plans work, the order payments must be applied in, and where foreclosure fits (and where it does not). It is written for volunteer directors of single-family HOAs, townhome communities and master-planned communities in greater Houston. Condo boards should also read our guide on how condo association management differs from an HOA in Texas, because condominiums operate under a different chapter of the code.

This article is general information, not legal advice. Your declaration, bylaws and the association’s attorney set the exact rules for your community.

Why do delinquent HOA dues matter so much to the whole community?

Assessments are the association’s only real source of income. When a handful of owners stop paying, the shortfall does not disappear: it is covered by everyone else, either through a higher assessment next year, a thinner reserve contribution, or projects that get pushed back. A board that adopts its budget in the fall, as our guide on how to prepare an HOA budget in Texas explains, usually builds in a bad-debt allowance. A slow or inconsistent collection process is what turns that allowance into a real hole.

Delinquencies also touch the reserve fund. If collections run behind for a year or two, boards are tempted to skip reserve transfers to keep the lights on, and the community falls behind the funding plan in its HOA reserve study. That is how a manageable delinquency problem becomes a special assessment later.

Finally, unpaid balances surface when a home sells. The resale certificate and payoff figures that title companies request will show the open balance, which is why our guide to HOA estoppel letters and the Texas resale certificate stresses accurate, current ledgers.

What should a Texas HOA collection policy include?

The single best protection a board has is a written collection policy, adopted at an open board meeting and applied the same way to every owner. A good policy answers these questions in plain language:

• Due dates and grace period: when assessments are due and when an account is considered late, as set by the declaration.
• Late charges and interest: only what the governing documents authorize, stated as a fixed amount or rate.
• The reminder sequence: how many courtesy notices go out, by what method, and at what intervals.
• Payment plan guidelines: the terms an owner can request and who approves them.
• The turnover point: when an account goes to a collection agent or the association’s attorney, and the notice that must come first.
• Board involvement: which steps the manager handles under the policy and which require a board vote.
• Hardship requests: how an owner asks for a plan or a waiver of late fees, and who reviews it.

Writing the policy down protects directors as much as owners. When the process is written, approved and followed, no one can credibly claim the board singled out a neighbor, and new directors inherit a system instead of a pile of judgment calls. Our article on how management companies keep boards on the right side of the law covers why consistent, documented decisions are the foundation of compliance.

What does the Texas Property Code require before an HOA uses a collection agent?

Texas sets clear guardrails in Chapter 209 of the Property Code. The most important one for collections is Section 209.0064. Before an association can hold an owner responsible for the fees of a third-party collection agent, it must send a written notice by certified mail that:

1. Lists each delinquent amount and the total needed to bring the account current;
2. Describes the owner’s options for avoiding turnover to a collection agent, including whether a payment plan is available; and
3. Gives the owner at least 45 days to cure the delinquency before further collection action is taken.

The same section adds protections boards should know. An agreement with a collection agent cannot stop the owner from talking to the board or the managing agent about the balance. If the association’s payment to the agent depends on what is recovered, or the agreement does not require the association to pay all of the agent’s fees, the owner is not liable for those fees. And the association cannot sell or transfer its accounts receivable, except as collateral for a loan.

In practice, this means the certified 45-day letter is the hinge of the whole process. Courtesy reminders come before it; agent or attorney involvement comes after it. Skipping or rushing that letter is one of the most common ways an association ends up unable to recover its collection costs.

Does a Texas HOA have to offer a payment plan?

For most associations, yes. Section 209.0062 requires an association with more than 14 lots to adopt reasonable guidelines for an alternative payment schedule, so an owner can pay a delinquent balance in installments without accruing additional monetary penalties during the plan. The association may still charge reasonable costs of administering the plan and interest.

The key terms the statute sets:

• Minimum term: a plan must be at least three months long.
• Maximum term: the association is not required to allow a plan that runs more than 18 months from the owner’s request.
• When a plan can be refused: the association does not have to offer a plan to an owner who defaulted on a previous plan within the last two years, after the 209.0064 cure period has expired, or more than once in any 12-month period.
• Recording: the guidelines must be filed in the real property records of each county where the community is located. Failing to file does not take away an owner’s right to request a plan.

Boards sometimes see payment plans as a concession. In practice they are usually the fastest route to a current account. An owner who can see a realistic monthly number tends to engage; an owner who receives only a lump-sum demand tends to stop opening the mail.

In what order must an HOA apply a homeowner’s payments?

This is the rule that catches the most boards off guard. Section 209.0063 sets a priority order for applying payments received from an owner:

There is one exception: if the owner is in default under a payment plan when the payment arrives, the association does not have to follow this order, although it still cannot give a fine priority over any other amount owed. The practical takeaway is that accounting software and ledgers must be set up to apply payments in the statutory order automatically. Applying a payment to late fees first, as many generic billing systems do, can put an association out of compliance without anyone noticing.

Can a Texas HOA foreclose for unpaid dues?

Foreclosure is the step owners fear most, and Texas limits it carefully. Under Section 209.009, an association may not foreclose its assessment lien if the debt consists only of fines, attorney’s fees tied solely to those fines, or certain amounts added to an account under the records and audit sections of the chapter. In other words, a fine for an unapproved fence can never be the basis for a foreclosure on its own.

Where unpaid assessments are involved, Section 209.0091 adds another step before the association can file for an expedited court order or a judicial foreclosure: it must notify any other lienholder of record whose deed of trust is subordinate to the association’s lien, by certified mail, and give that lienholder until the 61st day after the notice is mailed to cure the delinquency. In practice, the owner’s mortgage company often pays the balance at this stage to protect its own position.

Most boards never get this far, and they should not want to. Foreclosure is slow, expensive, emotionally hard on a community and a poor fit for small balances. A consistent policy, early contact and a real payment plan resolve the large majority of accounts long before an attorney is needed. When an account does reach that point, the decision belongs to the board, made with the association’s attorney.

What does a fair HOA collection timeline look like?

Every community’s documents differ, so treat the schedule below as an illustration, not a template. Your declaration sets the due date and charges, and the statutory steps cannot be shortened.

The tone of each notice matters as much as its timing. Owners respond better to a clear, respectful letter that leads with options than to legal language that leads with threats. Our article on how management companies defuse homeowner disputes explains why early, human contact prevents most escalations.

How can a board keep collections consistent without making it personal?

Collections are one of the hardest jobs a volunteer director can take on, because the late owner is often a neighbor. A few habits keep the process fair and keep relationships intact:

• Let the policy decide. Directors approve exceptions in an executive session where appropriate and record the outcome, but routine notices follow the written schedule automatically.
• Review an aging report monthly. A simple 30, 60, 90 and 90-plus day report shows whether the problem is growing, without anyone discussing a neighbor’s finances at the pool.
• Keep the ledger owner-friendly. Owners who can see their balance, payment history and plan status online dispute far less. Our guide on what to look for in modern HOA management software covers the features that help.
• Protect the money. Separate operating and reserve accounts, dual controls on disbursements and regular reconciliation matter as much on the income side as on payables. See how management companies protect HOA assets and prevent fraud.
• Know the tax angle owners ask about. Owners on a plan sometimes ask whether their dues are deductible; our guide on whether HOA fees are tax deductible in Texas answers that question so the board does not have to.

When does it make sense to hand collections to a management company?

If your board is tracking late accounts in a spreadsheet, drafting letters from scratch, or debating each account at every meeting, it is probably time. A professional manager runs the reminder schedule, sends the statutory notices on time, applies payments in the correct order, administers payment plans and reports the aging to the board every month, so directors make policy decisions instead of chasing neighbors.

Sterling ASI’s finance and accounting team handles assessment collections and payables for associations across greater Houston, and calls are answered by a real person, not voicemail, which matters when an owner is ready to set up a plan. Collections are one part of our full HOA and community association management services, and our overview of what a full-service HOA management contract should include shows how collections fit with budgeting, compliance and communications.

We serve boards in Houston, Katy, Kingwood, Sugar Land, The Woodlands and Cypress. If your current arrangement is not keeping delinquencies under control, our Texas checklist for switching HOA management companies shows how to make the change cleanly, including the handoff of owner ledgers and open payment plans.

Delinquent HOA dues: frequently asked questions