Last Updated on September 8, 2025
Table of contents
If you have ever studied Texas tax‑deed lists and noticed entries marked “maintenance fee” rather than “tax sale”, you are looking at properties being foreclosed by a homeowners’ association (HOA). Many new investors find these listings confusing because HOA assessments are not part of the county tax deed system. In this article we explain, in plain language, how HOA maintenance fees work, what makes them different from tax‑deed sales, and how you can use them to earn solid returns. We base our guidance on our own experiences at Texas sales over the last few months and support it with research from reputable legal sources.
How HOA liens differ from tax‑deed liens
Are HOA liens senior or junior? Under Texas law, most mortgages are recorded before an HOA assessment, so the HOA lien is junior to the first mortgage. The purchaser at an HOA foreclosure sale takes title subject to the mortgage, meaning the mortgage does not get wiped out. Because the HOA’s lien is subordinate, the lender can later foreclose its mortgage, or redeem the property within a statutory period if the HOA lien is superior. Only in rare “super‑lien” situations do HOA assessments have priority.
Do HOA liens ever come first? In some subdivisions the Declaration of Covenants, Conditions and Restrictions (CC&Rs) expressly makes HOA assessment liens subordinate to first‑lien mortgages. If the declaration does not subordinate the lien, Texas law still protects the mortgage holder by requiring the HOA to give the lender 60 days to cure the delinquency before foreclosing and by providing a 180‑day right of redemption after foreclosure. These protections mean lenders typically redeem the property to protect their interests, so investors buying an HOA lien often receive a 25 % penalty on their purchase price when the property is redeemed. We will discuss this strategy later.
Why HOA maintenance‑fee auctions are risky
At a traditional tax‑deed sale, paying the delinquent taxes clears most other liens and mortgages. In contrast, a buyer of an HOA maintenance fee at auction purchases only a lien, not the property. The mortgage remains, and the homeowner or bank can redeem the property. Because the mortgage survives, you must bid conservatively. Legal sites such as Justia warn that an HOA lien typically takes priority over junior liens but is subordinate to the first mortgage. Nolo explains that when a junior lienholder forecloses, senior liens survive. Therefore, your bid on the HOA lien must account for the full mortgage balance.
Researching HOA auction properties
Before bidding on a maintenance‑fee property, follow these steps:
- Check the county foreclosure list. HOA foreclosures are usually labelled “maintenance fee” on the far left of the listing. When we attended recent auctions, we specifically looked for this label so we knew we were bidding on HOA fees rather than tax deeds.
- Drive‑by inspection. Without entering the property, observe the exterior. Look at the condition of the roof, siding, and lawn, and note the vehicles in the driveway. A well‑kept exterior may signal a well‑maintained interior. Avoid drawing attention; stay in your vehicle, especially if people are present.
- Research the mortgage. Order a title search from a professional service. We use a company that provides the date the mortgage was taken out and its original amount; however, you must estimate the current balance. Many investors estimate the mortgage by looking at comparable recent sales and subtracting expected equity. Confirm whether the CC&Rs subordinate the HOA lien.
- Set a maximum bid. Determine your maximum comfortable bid by subtracting the estimated mortgage balance and rehabilitation costs from the property’s market value. Never exceed this number at auction. In one of our recent auctions, the property was worth about $85 000, our maximum bid was $45 000 and we expected $10 000 in repairs, leaving a profit margin if redeemed or resold. Other bidders went as high as $76 000; those bids erase most of the margin and expose the buyer to major losses if unexpected repairs arise.
Example: bidding strategy and profits
The bar chart below shows the difference between the property value, our maximum bid, and the high bid placed by another investor in one of the auctions. The high bidder paid far more than we were willing to risk.
In this scenario:
| Item | Amount (USD) |
| Fair market value | 85 000 |
| Our maximum bid | 45 000 |
| Expected repair costs | 10 000 |
| Profit margin with our bid (if redeemed) | ~25 % penalty on 45 000 |
| High bid by other investor | 76 000 |
By sticking to our limit, we leave room for profit. If the bank redeems the property, Texas law requires a 25 % penalty to be paid to the lienholder, so our $45 000 investment could return $11 250 in penalties. If the bank does not redeem, we must decide whether to keep the property and pay the mortgage or sell the lien at a discount.
Tips for investing in HOA maintenance‑fee liens
- Bid conservatively. Because the mortgage remains, low bids reduce risk. Over‑bidding leaves little margin for repairs or unexpected costs.
- Factor in the redemption period. In Texas, lenders and owners have a limited period (often 180 days) to redeem the property. During this time you can collect rent from tenants, but you must be prepared to return the property if redeemed. In Georgia, by contrast, investors must wait a full year before taking possession, so rules vary by state.
- Inspect but respect privacy. Drive by the property to assess condition; do not enter or bother residents. Note the condition of the yard, roof and vehicles to gauge maintenance.
- Understand local laws. Study the CC&Rs and state statutes governing HOA foreclosures. Many HOAs in Texas subordinate their liens to first mortgages, but not all. If the lien is not subordinate, the HOA may have priority and could wipe out the mortgage.
- Use professional title research. A small fee for a title search can save thousands by revealing mortgage balances, tax liens or other encumbrances.
Frequently asked questions
Maintenance fees are regular assessments collected by the HOA to fund upkeep of common areas like gates, landscaping and amenities. When owners fall behind, the HOA records a lien and may foreclose to recover the debt. Unlike property taxes, these fees are not a priority lien
No. Legal sources explain that the first mortgage remains on the property after an HOA foreclosure. The buyer of an HOA lien takes title subject to the mortgage.
Yes. In Texas, lenders typically redeem the property to protect their interests, paying the lien amount plus a 25 % penalty. Redemption deadlines are set by statute; check local laws.
At a tax‑deed sale, paying the delinquent property taxes usually clears mortgages and other liens. At an HOA sale, you are bidding on a secondary lien, so any mortgage remains in place. This makes HOA liens riskier but also creates opportunities when banks redeem.
Yes. See our guide on picking properties for tax‑deed sales and read about the key trait you need to succeed in tax lien investing. These articles complement this topic and provide a deeper understanding of due diligence and mindset
.
Conclusion and next steps
HOA maintenance fee auctions in Texas are a way to invest in real estate. They are different from tax-deed sales. The HOA lien is usually less important than the first mortgage. This means the mortgage is still there when you buy the property. Before you bid, check the properties carefully.
Know how much you want to spend. Learn about redemption laws. This is what happens if the owner pays off their debt. You can make money from these liens. Keep in mind the cost of repairs and any rent you might earn. Don’t bid too high. If the property is redeemed, you could get a nice return. If not, be ready to pay off the mortgage or walk away.
For more help, you can download our free mini-course or book a free call with our team. We have checklists and videos to help you learn. Starting to learn is the best way to invest wisely!.
