Texas HOA and condo late fees and interest

You may see websites say Texas caps HOA late fees at 10%. It does not. Bills with that cap were filed in 2017 and never passed, and the 2025 session did not add one. Section 209.0061, the section those bills would have created, is now the rule requiring a written fine policy, and it contains no limit on late fees.

That makes the fee schedule the only place the number lives. Say your declaration allows a $25 late fee per missed payment plus 18% annual interest, and you miss a $300 quarterly assessment. You would owe the $25 fee, and interest of about $4.50 a month for as long as the $300 stays unpaid. A different association might charge $10 and 6%. Both can be legal, which is why you read the documents rather than assume.

For condominiums, Property Code 82.102(c) adds one guardrail: a bylaw or rule must not be arbitrary or capricious to be enforceable. For subdivision HOAs, the dedicatory instrument has to authorize the charge in the first place.

In a subdivision HOA, Property Code 209.0063 fixes the order. Your money pays delinquent assessments first, then current assessments, then reasonable attorney's fees or collection costs tied to assessments, then other reasonable attorney's fees, then fines, then anything else. The list does not name late fees or interest. The point is that a payment cannot be soaked up by fines while the assessment itself stays past due. If you are in default on a payment plan, the association can use a different order, but it still cannot put a fine ahead of other amounts.

An association of more than 14 lots must adopt payment plan guidelines under 209.0062 and let you pay a delinquent balance in installments over at least three months without accruing additional monetary penalties. Interest and reasonable costs of running the plan do not count as penalties, so those can still be charged. The association does not have to offer a plan longer than 18 months, a second plan within 12 months, a plan to someone who defaulted on one in the last two years, or a plan after the 45-day cure period in its collection notice has run.

That 45-day notice comes from 209.0064. Before you can be billed for a collection agent's fees, the association must send a certified letter listing each delinquent amount and giving you at least 45 days to cure.

Condominiums are not covered by chapter 209 (209.003(d)). A Texas condo association sets its own rules on applying payments and collecting delinquent assessments under 82.102(a)(13), so the order and any plan come from its documents.

Read these before you make an offer:

• The late fee amount and interest rate in the declaration, bylaws or collection policy.
• Whether late fees are charged once per missed payment or repeat every month the balance is open.
• The payment plan guidelines, if the HOA has more than 14 lots, and whether they were recorded.
• The order the association says it applies payments in, compared with 209.0063.
• The seller's account ledger, so any late fees and interest are paid at closing and not carried to you.
• Whether the management certificate is recorded and on file with the Texas Real Estate Commission.

With no state cap, two Texas neighborhoods a mile apart can charge very different amounts for the same late payment. A steep monthly late fee stacked on high interest turns one missed quarter into a balance that grows every month, and unpaid assessments can become a lien on the home.

An HOA Notes brief pulls the late fee, interest rate and collection terms out of your packet, checks the payment order and payment plan language against chapter 209, and cites the page behind each finding.

Texas Property Code section 209.0063 and section 82.102(a)(12) (Late fees, interest, payment order). Texas sets no statutory cap on late fees or interest; the amount must come from the dedicatory instrument (204.010(a)(10), 82.102(a)(12)). For a POA, each payment must be applied first to delinquent assessments, then current assessments, then reasonable attorney's fees or collection costs tied to assessments, then other reasonable attorney's fees, then reasonable fines, then any other reasonable amount (209.0063(a)); an owner is not liable for interest that accrues while the management certificate is unrecorded or not filed with TREC (209.004(e); for condos 82.116(d), effective September 1, 2025). The association may impose interest and late charges at the rates its declaration, bylaws, or adopted collection rules set; a POA may depart from the 209.0063 order if the owner is in default under a payment plan, but may not give a fine priority over any other amount; interest and reasonable plan administration costs may still accrue during a 209.0062 payment plan. Chapter 209 does not apply to condominiums.

When you read the disclosure packet, watch for payments shall be applied first to late fees, interest, and collection costs, then to assessments, payments shall be applied first to fines and penalties, late fees shall continue to accrue on an account under an approved payment plan, and interest charged during a period when no management certificate was on file. HOA Notes flags each of these against the statute and tells you which restrictions are actually enforceable.