HOA Foreclosure Redemption - TX

13 Replies

I have a seller who recently had his home foreclosed on by HOA here in Dallas, TX. The home was sold to a buyer at auction for 13K, which was the amount due to HOA. The home is still in its redemption period until May. The house was appraised at 475K, and the mortgage still has a balance of 360K remaining (excluding late fees) . The owner wants to get his home back with hopes of selling it through owner finance.

What are some possible options in the owner getting his home back? Could I potentially find a buyer who'd be willing to pay the HOA fees and buy the home? Thanks for the guidance.



House was foreclosed on through HOA. Was sold to a buyer for 13K, which was the amount due to HOA. The home is currently in its redemption period until May. House was appraised at 475K, mortgage still has a balance of 360k remaining. What are my options in terms of reclaiming my house to sell it?

Originally posted by @O'Neil Mbakwe :

@Ronald Rohde the house was foreclosed at an amount of 13k. As far as what’s owed in premiums, interests, taxes, and penalties..I’m not sure.

 I don't think it sold for $13,000 that is waste and not an arms length transaction for a home valued at $400,000.

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Originally posted by @O'Neil Mbakwe :

@Ronald Rohde The home was foreclosed through HOA for an amount of 13k. That's the message I got from the seller

I don't dispute that back HOA, penalties, costs, interest were $13,000. I'm saying the home didn't convey for $13,000. If you don't have actual documents, you don't have the facts.

@Steven Picker @Ronald Rohde That is true. So if a buyer were to come in wanting to buy the property, they'd have to pay the back HOA, penalties, costs, interest, and any late mortgage payments?

Is it possible to purchase the property subject to the existing financing? I.e paying the fees and penalties associated with HOA, then making a payment (100k-130k) to bring the mortgage payments to a current status to continue with the existing financing? Or are there any stipulations since HOA has foreclosed on it? It's in its redemption period right now.

@O'Neil Mbakwe

On second thought, something isn't right about what you were told. HOA liens are not generally subject to a redemption period, but tax lien sales are, and the redemption period on TX for homestead tax lien is 6 months. Are you sure it's not a tax lien foreclosure? If so, unless the rules have changed, the homeowner will have to pay what the tax lien buyer paid plus a statutory premium. I think the premium was 25%, but it's been a few years since I was fully up on those rules.

Originally posted by @Bill Crow :

@O'Neil Mbakwe

On second thought, something isn't right about what you were told. HOA liens are not generally subject to a redemption period, but tax lien sales are, and the redemption period on TX for homestead tax lien is 6 months. Are you sure it's not a tax lien foreclosure? If so, unless the rules have changed, the homeowner will have to pay what the tax lien buyer paid plus a statutory premium. I think the premium was 25%, but it's been a few years since I was fully up on those rules.

Many of these general advice threads lack full details to analyze. But the right of redemption is limited to (1) sales for unpaid ad valorem taxes, in which case a former owner of homestead or agricultural property has a two-year right of redemption (for commercial properties, the redemption period is 180 days); and (2) HOA foreclosure of an assessment lien, in which case a former owner may redeem no later than the 180th day after notice.

Prop. Code section 209.011 is divided into two general parts: the first deals with the situations where the HOA purchases the delinquent property, and the second pertains to purchases by a third party. If the HOA is the purchaser, then it may receive all amounts previously due; interest to the date of redemption (10% if no rate is stated in the association's documentation); costs including attorney's fees; the amount of any subsequent assessment that may have been levied; any sums expended for mortgage payments, repair, and leasing of the property; and any remaining net amount as determined by the purchase price paid by the HOA.

If the property was purchased by a third-party investor, then redemption is essentially accomplished by paying the amounts due the HOA (as outlined above) plus the purchase price paid by the investor; the amount of the deed recording fee; any amounts paid for taxes, penalties, and interest following the sale; and any costs incurred in connection with an eviction relating to the property. That is all. There is no premium due the investor. Additionally, if the investor collects rent from the property during the redemption period, this must be credited to the account of the homeowner if he or she redeems. Tex. Prop Code § 209.011(i).

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