Simulation: a fictional property for practice.

A Texas HOA sale: the mortgage and the 180 days

A Texas HOA is selling a house for $5,800 of unpaid dues. Check the court order, the mortgage and the buy-back period before the price.

A fictional house in a subdivision HOA in fictional Prairie Glen County, Texas. Condos follow different rules.

• Sale: HOA foreclosure by trustee’s sale, Texas
• HOA debt: $5,800 of unpaid assessments
• First deed of trust: $230,000; the declaration ranks it ahead of the HOA lien
• Value as-is: About $320,000

Mission 1: Is this sale set up properly?

Pick everything you’d confirm.

• The HOA got a court order (a Rule 736 order) or won a court foreclosure before the sale
• The debt isn’t only fines
• Lenders whose liens are inferior to the HOA’s lien got 60 days after the HOA’s notice to pay
• Nothing: if the notice was posted, the sale is fine

If the owner files a separate lawsuit by 5 p.m. on the Monday before the sale, a Rule 736 case stops, and a sale held anyway is void (Rule 736.11).

Mission 2: What do you get if you win?

Pick the right answer.

• The owner’s interest, still subject to the $230,000 deed of trust, with a 180-day buy-back period after the HOA mails its notice
• The house free of the mortgage, mine outright
• The house subject to the mortgage, with a 90-day buy-back period

Your real price is the bid plus the $230,000 loan, plus taxes, dues and about 7 months of holding costs (the 180-day buy-back starts when the HOA mails its notice, up to 30 days after the sale).

Mission 3: If the owner buys it back

What do you get back? Pick all that apply.

• My price and the recording fee
• HOA dues and property taxes I paid after the sale
• What I spent on a new kitchen
• All the rent I collected, on top of everything else

Any lease you sign during the buy-back period is subject to it (209.011(k)). Plan to hold, not flip.

Would you bid?

Buy, investigate or pass? Work through the drill to see what an experienced investor would weigh.