Texas Property Code 209.0063: How an HOA Must Apply Owner Payments in Order

Quick Answer

Texas Property Code § 209.0063 tells a property owners' association the order in which to apply a payment it receives from an owner who owes more than one kind of debt: delinquent assessments first, then current assessments, then collection-related attorney's fees and costs, then other attorney's fees, then fines, then any other reasonable amount. The order does not apply when the owner is in default under a payment plan, and in that case a fine may not be given priority over any other amount. The section was added effective January 1, 2012 and amended by SB 1588 effective September 1, 2021.

At a Glance

What the Law Says

Subsection (a) says: "Except as provided by Subsection (b), a payment received by a property owners' association from the owner shall be applied to the owner's debt in the following order of priority":

• "any delinquent assessment";
• "any current assessment";
• "any reasonable attorney's fees or reasonable third party collection costs incurred by the association associated solely with assessments or any other charge that could provide the basis for foreclosure";
• "any reasonable attorney's fees incurred by the association that are not subject to" the previous item;
• "any reasonable fines assessed by the association"; and
• "any other reasonable amount owed to the association."

Subsection (b) creates an exception. If, when the association receives a payment, "the owner is in default under a payment plan entered into with the association," then (1) "the association is not required to apply the payment in the order of priority specified by Subsection (a)," and (2) "in applying the payment, a fine assessed by the association may not be given priority over any other amount owed to the association."

SB 1588 amended subsection (a) effective September 1, 2021 (Section 15 of the bill). The enrolled bill prints the subsection in full without marking the individual changes, so we do not describe what differed from the earlier text. See SB 1588.

What This Means in Practice

For boards and managers

Configure the accounting system so that each incoming payment is applied in the statutory order, and keep ledger entries showing how it was applied. The order separates assessments and attorney's fees tied to assessments (items 1 through 3) from fines (item 5), so a partial payment reduces the assessment debt before it reduces a fine.

An illustration, not a statutory example: an owner owes a $400 delinquent assessment, a $100 current assessment, $150 in collection attorney's fees associated solely with assessments, and a $50 fine. The owner pays $450. Under subsection (a), $400 goes to the delinquent assessment and $50 to the current assessment. The remaining $50 of the current assessment, the $150 of fees and the $50 fine stay open.

For owners

If you are making partial payments, expect them to be applied to assessments first and fines later. If you are on a payment plan and fall behind, the association may apply payments differently under subsection (b), but a fine cannot be put ahead of other amounts. A payment plan itself is governed by § 209.0062, which allows interest and reasonable administrative costs but not other monetary penalties.

Why the order matters

Our reading: the order works alongside the foreclosure limits in § 209.009, which bars foreclosure of an assessment lien if the debt "consists solely of" fines, attorney's fees associated solely with fines, or certain amounts added to an account as an assessment. Because payments go to assessments before fines, a fine is the last of the named debts to be paid. An owner who pays what is owed on assessments will leave the fine, which is not itself a basis for foreclosure. The statute does not state this purpose, so treat it as our interpretation. See foreclosure limits and redemption.

What the section does not say, and open questions

• It does not say whether an owner may designate how a payment is applied (for example, by a note on a check). The text says the payment "shall be applied" in the listed order.
• It does not say how to order items within a single category, such as two delinquent assessments from different periods.
• It does not define "default under a payment plan." Check the written plan and the association's § 209.0062 guidelines. Confirm with counsel.
• Open question: § 209.0063 refers to a payment "from the owner." Whether the order applies to a payment made by a lender or title company at closing is not addressed in the text. Confirm with counsel.

Timeline

Related Texas Law

• § 209.0062: payment plan guidelines
• §§ 209.009 and 209.0092: foreclosure limits and judicial foreclosure
• HB 886: two notices before an assessment lien
• §§ 209.0064 and 209.0065: collections and credit reporting
• Chapter 209 overview
• Texas HOA laws complete guide

Board Checklist

• Set the accounting software to apply payments in the § 209.0063(a) order.
• Keep a ledger showing how each payment was allocated.
• Separate assessments, assessment-related attorney's fees, other attorney's fees, fines and other charges into distinct ledger categories.
• When an owner defaults on a payment plan, document the default before departing from the standard order, and never put a fine ahead of other amounts.
• Match the payment-plan guidelines in § 209.0062 to the way payments are applied.
• Have counsel confirm how payments from closings and third parties are handled.

Frequently Asked Questions

What order must a Texas HOA apply my payment to what I owe?

Delinquent assessments, current assessments, reasonable collection-related attorney's fees or third-party collection costs, other reasonable attorney's fees, reasonable fines, and then any other reasonable amount (§ 209.0063(a)).

Can the HOA apply my payment to fines first?

Not under subsection (a), which puts fines fifth. Under subsection (b), if you are in default under a payment plan, the association need not follow the standard order, but a fine "may not be given priority over any other amount owed."

Does the payment order apply if I am on a payment plan?

Subsection (a) applies "except as provided by Subsection (b)." Subsection (b) relaxes the order only if you are in default under the plan when the payment is received.

Can an HOA foreclose over a fine that I did not pay?

Not if the debt consists solely of fines or attorney's fees associated solely with fines. That limit is in § 209.009, which also bars foreclosure for certain amounts added to an account as an assessment under other sections.

Which attorney's fees come before fines?

Both categories do. Fees or third-party collection costs associated solely with assessments or other charges that could provide the basis for foreclosure come third, and other reasonable attorney's fees come fourth, ahead of fines in fifth place.

When did the payment priority rule take effect?

Section 209.0063 was added effective January 1, 2012 and subsection (a) was amended by SB 1588 effective September 1, 2021.

Does this apply to condominium associations?

Chapter 209 does not apply to a condominium as defined by Section 81.002 or 82.003 (§ 209.003(d)). Condominium associations should review Chapter 82.

Where This Comes From

We read the current text of § 209.0063 as compiled in the 2025 Texas Statutes (Justia mirror of the Texas Property Code), the enrolled text of SB 1588 (87th Legislature) on capitol.texas.gov, and §§ 209.0062 and 209.009 for the related rules. The official statute site is at statutes.capitol.texas.gov.

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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.