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INWOOD NORTH HOMEOWNERS'ASS'N v. Harris

Texas Supreme Court
736 S.W.2d 632, 1987 Tex. LEXIS 380, 30 Tex. Sup. Ct. J. 584 (1987)
ELI5:

Sections

Rule of Law:

A homestead exemption does not protect a property owner from foreclosure for nonpayment of homeowners' association assessments if the lien securing those assessments was established by covenants running with the land prior to the owner acquiring the property and establishing their homestead rights.


Facts:

  • In December 1980, a developer filed a declaration of covenants and restrictions for the Inwood North subdivision, creating a homeowners' association and requiring lot owners to pay annual and special assessments.
  • The declaration stated that these assessments would be a charge on the land and were secured by a continuing vendor's lien on the lots.
  • Between 1981 and 1983, the respondents purchased lots within the subdivision, receiving deeds that referenced the maintenance charges or the recorded declaration.
  • The respondents subsequently became delinquent in paying their assessment charges to the Association.
  • The Association attempted to collect the past due amounts and enforce the lien provisions contained in the declaration.

Procedural Posture:

  • The Homeowners' Association sued the delinquent homeowners in the trial court to recover amounts due and to foreclose on the liens.
  • The trial court granted a default judgment for the money owed but refused to order foreclosure on the homes.
  • The Association appealed the refusal to foreclose to the Court of Appeals.
  • The Court of Appeals affirmed the trial court's decision, holding that the homestead laws precluded foreclosure.
  • The Association petitioned the Supreme Court of Texas for review.

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Issue:

Does the Texas homestead exemption protect a homeowner from foreclosure for failure to pay neighborhood association assessments when the assessment lien was created by a declaration of covenants recorded prior to the homeowner purchasing the property?


Opinions:

Majority - Robertson

No, the homestead exemption does not prevent foreclosure because the assessment lien attached to the land before the homestead right existed. The Court reasoned that while Texas law vigorously protects homesteads from forced sale for most debts, this protection cannot destroy pre-existing rights. A covenant runs with the land when it touches and concerns the land, relates to a thing in existence, is intended to run with the land, and the successor has notice. The Court found the assessment covenants met these criteria and the homeowners had constructive notice via their deeds. Therefore, the contractual lien existed upon the property before the homeowners took title. Additionally, the Court noted that a homestead right cannot rise higher than the property interest acquired; because the property interest purchased was inherently subject to the obligation to pay assessments, the homestead protection is subject to that pre-existing obligation.


Dissenting - Mauzy

Yes, the Constitution protects these homeowners because assessment liens are not among the specific exceptions allowing for forced sale of a homestead. The dissent argued that Article XVI, Section 50 of the Texas Constitution unequivocally protects homesteads from all debts except three specific categories: purchase money, taxes, and home improvements contracted in writing. Maintenance assessments fit none of these categories. The dissent contended that the Court effectively created a judicial exception to the Constitution and that even if the covenant runs with the land, the actual judgment lien for the debt arises after the homestead status is established, making it invalid against the homestead.



Analysis:

This decision is a landmark ruling in Texas property law regarding the power of Homeowners' Associations (HOAs). It clarified that validly created assessment liens contained in a subdivision's declaration are superior to a homeowner's constitutional homestead protection, provided the declaration was recorded before the homeowner bought the property. The Court essentially viewed the obligation to pay assessments as an inherent characteristic of the property title itself. This ruling empowered HOAs to use the threat of foreclosure to collect dues, significantly strengthening their enforcement capabilities. It distinguishes between a debt incurred after ownership (which generally cannot force a sale of a homestead) and an encumbrance that is part of the property's very nature at the time of purchase.

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