What should our HOA board do when a lot in the community is headed to a property tax sale?

By OurHOA · General information · Revised October 28, 2026

What an HOA board should do when a lot goes to a property tax sale: who gets notice, what happens to the lien, surplus claim deadlines and billing the new owner.

Part of the HOA board handbook: treasurer and money.

The short answer

A tax sale notice means the county, or an investor holding a tax certificate, is about to sell a lot in your community for unpaid property taxes. In Texas, Florida and Colorado the property tax lien outranks the association's assessment lien, so a completed sale usually cuts off the association's lien for the old balance. The covenants survive, and the buyer owes dues from the day title passes. The board has three jobs, in this order. Get the notice to the association's attorney the day it arrives. Put the deadline for claiming any surplus from the sale on the calendar, because a junior lienholder that files on time gets paid ahead of the former owner. Then open the new owner's account as soon as the deed records. Whether to also bid at the sale or pay off the taxes is a business decision, and for most small associations the answer is no. The details below vary by state and by your declaration. This guide is general education, not legal advice.

How the notice reaches the association

Texas. A tax sale follows a delinquent tax suit or a tax warrant (Tax Code 34.01(a)). If the association is served as a defendant in that suit, the citation is your notice. Treat it like any lawsuit against the association and let the attorney decide whether to answer. Tax Code 32.05(b)(2) names property owners' association liens as junior to the tax lien, so there is no priority argument to make. Florida. The county sells tax certificates first. Two years after April 1 of the year a certificate was issued, the holder can apply for a tax deed (Fla. Stat. 197.502(1)). The tax collector's notice list includes any lienholder of record whose recorded lien shows an address (197.502(4)(b)), and the clerk mails the notice by certified mail at least 20 days before the sale (197.522(1)(a)). Missing the letter does not void the deed (197.522(1)(d)). A claim of lien must state the association's name and address (720.3085(1)(a)), so recording one on a delinquent lot is what puts the association on that list. Colorado. Tax liens are sold at the treasurer's annual sale. After August 1 of the third calendar year following that sale, the certificate holder can apply for a treasurer's deed (C.R.S. 39-11.5-102(1)). The treasurer mails a notice of public auction to junior lienors whose liens were recorded with the clerk and recorder before the application (39-11.5-104(4)(g)). A recorded instrument with no address for the party gets no notice at all (39-11.5-104(5)). Recording the declaration perfects the association's lien (38-33.3-316(4)), but an old declaration may show the developer's address or none. Ask your attorney whether to record a notice of lien with the association's current address on lots that fall far behind. Colorado rewrote this procedure effective June 1, 2026 (SB 26-144), so older forms may be out of date.

What the sale does to the lien and the old balance

In Texas, the tax deed passes title subject to restrictive covenants recorded before January 1 of the year the tax lien arose, and to a recorded association lien that the judgment did not extinguish (Tax Code 34.01(n)). Whether your lien survives depends on the judgment's wording. The former owner can still redeem: within two years after the purchaser's deed is recorded for a homestead or agricultural land, and within 180 days for other property (34.21(a), (e)). A purchaser who pays association dues during that window can recover them from a redeeming owner as costs (34.21(g)(2)(A)(iv)), so the buyer has a reason to pay you on time. In Florida, no right or covenant survives a tax deed except as chapter 197 provides (197.552). Section 197.573 keeps the use restrictions alive and protects a covenant that creates a lien for assessments accruing after the tax deed, but not the lien for the old balance. In Colorado, the association's lien is junior to real estate taxes (38-33.3-316(2)(a)(III)). Title vests in the auction buyer free of liens junior to the certificate, subject to the right to claim overbid money (39-11.5-501(1)). Whether the former owner still owes the debt personally is a question for the attorney. Someone who just lost a house to a tax sale is rarely worth suing, so the surplus claim is usually the association's best shot at the old balance.

Claim the surplus before the window closes

When a lot sells for more than the taxes and costs, the extra money goes to lienholders who claim it, by priority, and only then to the former owner. Each state sets its own deadline, and each one bars a late lienholder. Texas: file a petition for excess proceeds in the court that ordered the sale before the second anniversary of the sale (Tax Code 34.04(a)), and serve it on all parties at least 20 days before the hearing (34.04(b)). Lienholders come ahead of the former owner (34.04(c)(3), (5)). Florida: the clerk mails a notice of surplus funds, and the association has 120 days from the date of that notice to file a written claim giving the particulars of its lien and the amount due (197.582(3)). A lienholder claim filed after day 120 is barred (197.582(5)). Colorado: the window is eight business days after the public auction. The claim must include a recorded copy of the lien instrument and a signed, acknowledged statement of the amount due, with per diem interest through the eighth business day (39-11.5-303(1)). The treasurer pays claimants in recording priority between the 9th and 15th business days after the auction (39-11.5-303(3)). In every state, the claim is only as good as the ledger behind it. Keep the lot's ledger current and itemized so the attorney can file within days, not weeks.

Should the association bid or pay the taxes

Florida lets any person redeem a tax certificate before the tax deed issues by paying the face amount plus interest and costs (197.472(1)). In Texas and Colorado the redemption right belongs to the owner (Tax Code 34.21; C.R.S. 39-11.5-106), so the association's only way in is to bid. Buying the lot or paying its taxes rarely pays off for a 40- or 80-home association. Once the association holds title, it pays the property taxes and insurance, collects no dues on that lot, and has to market and sell it. Consider it only when all of these are true: the lot is clearly worth more than the taxes plus the association's balance, the declaration lets the association acquire and sell lots, the attorney has reviewed title, and the money comes from the operating fund without touching reserves. Otherwise, claim the surplus and bill the new owner.

A sample Florida timeline

Day 0: the clerk's certified letter arrives, with the sale at least 20 days out. Scan it to the attorney and treasurer the same day. Days 1 to 5: the treasurer pulls an itemized ledger for the lot and confirms whether a claim of lien is recorded. The board passes the motion below, by written consent if the bylaws allow. Sale day: someone confirms the result with the clerk and writes down the buyer's name and the bid. Deed recorded: the treasurer opens the new owner's account and sends the welcome letter. Notice of surplus funds arrives: the attorney files the claim within 30 days. The limit is 120. The clerk pays claims by priority or files an interpleader action within 90 days after the claim period ends (197.582(6)). The treasurer posts any payment and reports to the board.

Wording the board can use

Motion: "I move that the board direct the association's attorney to follow the tax sale of [lot address], file a claim for any surplus proceeds on the association's behalf, and report to the board at its next meeting, and that the treasurer prepare an itemized ledger for the lot through [date]." Letter to the new owner: "Our records show you acquired [address] by tax deed recorded on [date]. The lot is part of [association name] and subject to its recorded declaration. Assessments are $[amount] per [period], starting with the period that includes [date]. A copy of the declaration, the current rules and payment instructions are enclosed. Questions go to [treasurer name] at [email]." Leave the prior owner's balance out of that letter unless the attorney confirms in writing that the association's lien survived the sale.

Mistakes that cost associations money

Treating the notice as routine mail. Florida gives you as little as 20 days before the sale. Colorado gives you eight business days after the auction to claim the overbid. Assuming the collection attorney is watching the county mail. Send the notice yourself, the day it arrives. Billing the tax-deed buyer for the old balance after the lien is gone. That invites a dispute you will lose. Finding out too late. In Florida, a lienholder can file a property description with the tax collector by May 1 each year, pay a $2 service charge, and get information on delinquent taxes and certificates sold on that lot (197.344(2)). In Texas and Colorado, check the county tax records for every lot on your delinquency list at least once a year. Our guide on whether a tax sale wipes out an HOA lien explains the priority rules for owners, and our guide on collecting HOA dues after a foreclosure sale covers new-owner billing after a mortgage foreclosure.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

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