Texas Brooks v. Northglen Ass'n (2004): HOA Assessment Increases and Deed Restrictions

Quick Answer

In Brooks v. Northglen Association, decided June 25, 2004, the Supreme Court of Texas held that a Harris County homeowners association could not raise assessments above the limits written in its deed restrictions just because Property Code Chapter 204 gave it default powers. Chapter 204 applies only "unless otherwise provided by the restrictions," and these restrictions did otherwise provide. The Court did let the association charge a $35 late fee on top of 6 percent interest, but held it could not foreclose on a home to collect that late fee.

At a Glance

The Dispute

Northglen Association served six Harris County subdivisions or sections with more than 1,600 single-family homes. Each section had its own deed restrictions, and every owner was a member. The restrictions imposed an annual assessment that funded a maintenance fund.

In 1994 the board amended the restrictions to expand the board and to assess late fees on unpaid assessments. Eight owners, led by Geneva Brooks, formed a committee to remove certain board members, saying the board had acted outside the deed restrictions. The association sued, then nonsuited its own claims. The case went forward on the owners' counterclaim asking for a declaration that the association could not raise assessments or charge late fees without an owner vote.

The trial court sided with the association. It said the board could, without a vote, raise assessments for Sections One, Two and Three, raise Sections Four, Five and Six by 10 percent each year or accumulate and assess increases after several years, and charge a $35 late fee. The court of appeals affirmed in part and reversed in part, and both sides petitioned the Supreme Court.

What the Court Held

Joinder of other owners

The association argued for the first time on appeal that the trial court lacked jurisdiction because not every owner was a party. The Court said the question was "not whether jurisdiction is lacking" but whether the court should have proceeded without the absent owners, a question governed by Rule 39. Because a declaration "does not prejudice" nonparties, any other owner could still bring an individual claim. The association's risk of inconsistent judgments was "the product of its own inaction": it could have asked the trial court to abate the case, join absent owners or grant special exceptions, and it waited. One limit: no owners from Sections Three and Six had sued, so the Court vacated the judgments for those sections and dismissed those claims, because any ruling would be advisory.

Sections One and Two: a dollar cap

The restrictions said assessments were "not to exceed $10 per month or $120 per annum," with the board setting the rate each year. The association argued the board could exceed $120. The Court disagreed: the board could charge any amount up to $120, and could raise a lower rate to $120 on its own, but could not go above the cap. The deed restrictions did offer another route. They could be amended by the signatures of 90 percent of lot owners in the first 40 years and 75 percent afterward.

Sections Four and Five: no accumulating increases

These restrictions let the board raise the maximum assessment each year by the Consumer Price Index or 10 percent, whichever was greater, tied to the prior year's assessment, with larger increases needing a two-thirds vote of each class of members. The association wanted to jump from $120 to $550 using § 204.010(a)(16), which allows accumulating unassessed increases "unless otherwise provided by the restrictions."

The Court held the restrictions "otherwise provide." Because each increase was tied to the previous year's assessment, a $120 assessment could rise to no more than $132 the next year, not $550. The two-thirds vote gave the association another route. The Court did not reach the owners' constitutional challenge to the accumulation provision.

Late fees

Section 204.010(a)(10) lets the association "impose interest, late charges, and, if applicable, returned check charges." The restrictions set 6 percent interest but did not say interest was the exclusive remedy or ban late fees. The Court held the $35 late fee was allowed and did not unconstitutionally impair the owners' contracts, reasoning that the statute operates only where the restrictions do not otherwise provide. It noted a statute forcing late fees where restrictions expressly banned them "would likely be a different case."

Foreclosure

The Court relied on Inwood North Homeowners' Association v. Harris, which allowed foreclosure for unpaid assessments where owners had notice of the lien. Here the restrictions gave no notice of a late fee beyond interest, so "foreclosure is not an appropriate remedy for a failure to pay the late charge." A footnote says the Court expressed no opinion on whether other charges imposed only through Chapter 204 could be enforced by foreclosure.

Why It Matters for Associations

• The deed restrictions come first. Chapter 204 powers are defaults. Where the recorded restrictions set a cap, a percentage formula or a vote requirement, the Court enforced them.
• Amendment is the lawful route to more revenue. The Court pointed to the 90/75 percent and two-thirds provisions as the mechanisms the restrictions themselves provide.
• Foreclosure needs a lien the owner had notice of. Charges not covered by the recorded restrictions were held not enforceable by foreclosure here. Our reading: this is a reason to check which charges the recorded lien language actually covers.
• Raise defenses early. The association lost its joinder argument partly because it did not raise it in the trial court.
• Limited scope. Chapter 204, as the opinion described it in 2004, applied to subdivisions in a county with 2.8 million or more people, which the Court said meant Harris County. We did not re-read the current text of § 204.002, so confirm with counsel whether any statute applies to your association today.

Related Texas Law

• Inwood North Homeowners' Association v. Harris (1987)
• In re Kappmeyer (2023)
• JBrice Holdings v. Wilcrest Walk Townhomes Association (2022)
• Property Code Chapter 204: association powers in certain subdivisions
• Chapter 209: Residential Property Owners Protection Act
• Texas HOA laws complete guide

Board Checklist

• Read the recorded restrictions for each section of the community for any assessment cap, percentage formula or required vote.
• Do not assume a statute lets the board exceed what the recorded restrictions say; have counsel compare them.
• If more revenue is needed, ask counsel what amendment or member vote the restrictions require.
• Check whether late fees, interest and other charges are covered by the recorded lien language before treating them as lienable.
• If sued, raise any joinder or party objections in the trial court at the start.

Frequently Asked Questions

What did Brooks v. Northglen decide about assessment increases?

That the association could not raise assessments past the limits in its deed restrictions on the strength of Property Code Chapter 204, because Chapter 204 applies unless the restrictions provide otherwise, and these did.

Could the association foreclose for unpaid late fees?

No, on these facts. The recorded restrictions gave owners no notice of a late fee beyond interest, so foreclosure was not an appropriate remedy for that charge.

Does the case say the association needed every owner in the lawsuit?

No. The Court held the lack of other owners was not a jurisdictional defect and the association waived the objection by raising it late. It did dismiss claims for two sections where no owner had sued.

Does Brooks apply to every Texas association?

Not automatically. The ruling turned on specific deed restrictions and on Chapter 204 as it applied to that subdivision. Other documents and statutes may lead to a different result.

Where This Comes From

We read the full opinion of the Supreme Court of Texas in No. 02-0492, delivered June 25, 2004, including its footnotes, on Justia. The 141 S.W.3d 158 citation comes from the Supreme Court's 2023 opinion in In re Kappmeyer, which we also read. We did not read the court of appeals opinion or the current text of Chapter 204.

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Legal disclaimer: This article is general information, not legal advice. Laws change and associations differ. Confirm the current statute text and how it applies to your governing documents with a licensed Texas attorney before acting.