Inwood North Homeowners' Ass'n v. Pamilar

OPINION ON MOTION FOR REHEARING DUNN, Justice. The original opinion filed on December 12, 1985, is withdrawn, and this opinion is substituted in its place. This is an appeal from a default judgment in which the trial court granted all of the relief requested by appellant except a judgment for foreclosure and an order for sale of properties owned by appellees (“homeowners”). Appellant requests this Court to modify the trial court’s judgment to provide for foreclosure and to order a sale of the property in question. None of the homeowners filed a brief with this Court. We affirm the trial court’s judgment. Appellant is a non-profit homeowners’ association in charge of the collection, expenditure, and management of maintenance funds, the enforcement of restrictions, the maintenance and architectural control of the residential lots and houses, and the general supervision of a subdivision named Inwood North. The homeowners each own homes in the subdivision. At the time of their purchase, the homeowners were given deeds stating, in effect, that the deeds were subject to any covenants and conditions on file in the Harris County deed records. When each of the homeowners purchased their homes, an instrument entitled “Declaration of Covenants and Restrictions — Inwood North, Section Six” (“Declaration”) was already recorded in the Harris County records. In addition to stating that the restrictions enumerated in the document would be binding on the developer, the homeowners’ association, and the property owners, the Declaration states that each of the homeowners is [126] deemed to covenant and agree to pay appellant annual assessments and that the assessments will be secured by a continuing “vendor’s lien” on the land. The trial court awarded appellant judgments against the homeowners ranging from $577 to $705 for unpaid maintenance fees. The lawsuit was brought to recover judgment for the amounts owing, and to foreclose the “vendor’s lien” claimed by appellee on the properties involved. Appellant contends in its only point of error that the Declaration, which was filed of record before the homeowners moved into their homes, created a vendor’s lien that attached to the lots and encumbered them before the homestead status attached. It argues that a recent opinion rendered by another court of appeals, Johnson v. First Southern Properties, Inc., 687 S.W.2d 399 (Tex.App—[14th Dist.] 1985, writ ref’d n.r.e.), supports its argument that the court erred in not granting it a judicial foreclosure on the “vendor’s lien” contained in the Declaration. Even though the declaration attempts to secure the payment of assessment charges with what it calls a “vendor’s lien,” it is clear from the record that the assessment charges were not a part of the purchase price of the property, and cannot be secured by a true “vendor’s lien”; therefore, a default in payment cannot be used as a basis to foreclose on the respective homeowners’ properties. Lifemark Corp. v. Merritt, 655 S.W.2d 310, 313 (Tex.App.—Houston [14th Dist.] 1983, writ ref’d n.r.e.). Further, the Johnson case is distinguishable from the situation in this case. Johnson purchased a condominium, receiving a percentage ownership in the common elements. He accepted a deed, subject to a declaration of covenants and restrictions, which stated that the condominium homeowners’ council had an assessment lien. Johnson, 687 S.W.2d at 402. Johnson then used his percentage ownership to secure, by his deed of trust, the payment of unpaid future assessments. An owner of real property may, by executing a written instrument, create a lien on his property to secure payment of future advances. First National Bank of Corsicana v. Zarafonetis, 15 S.W.2d 155, 158 (Tex.Civ.App.—Waco 1929, writ ref’d). In this case, the homeowners are not condominium owners and have not received a property interest in the common elements as in Johnson. Although the homeowners’ respective warranty deeds contain language stating that they took subject to the Declaration, there are no deeds of trust, or other documents signed by the homeowners by which they expressly agreed to secure assessments with their property. At most, the homeowners have committed themselves to an unsecured obligation to pay the assessment charges pursuant to the terms of their respective deeds and declarations. Each of the homeowners’ deeds was made subject to the Declaration, which provided for the assessment charges. When property is transferred subject to declarations of covenants and restrictions, full title to the property is nevertheless transferred to the grantee, and the grantor retains no interest or rights in the property. If a breach of the covenants and restrictions occurs, e.g., failure to pay assessment fees, such as in this case, the remedy is a suit based on the covenant to pay and not foreclosure. See Hearne v. Bradshaw, 158 Tex. 453, 312 S.W.2d 948, 951 (1958); Wichita Falls Grain Co. v. Taylor Foundry Co., 649 S.W.2d 798, 800 (Tex.App.—Fort Worth 1983, writ ref’d n.r.e.); Bailey v. Mullens, 313 S.W.2d 99, 102 (Tex.Civ.App.—San Antonio 1958, writ ref'd n.r.e.). Although we have found no secured lien, or vendor’s lien, this does not mean that the homeowners are relieved of their obligations. Each of the homeowners remains obligated to abide by the covenants and restrictions. The appellant has a judgment for the past-due assessments and may enforce such by way of a judgment lien against the properties, provided defenses under the Homestead Act are not available. Tex. Const, art. XVI, sec. 50. Appellant’s only point of error is overruled. [127] The judgment of the trial court is affirmed. Appellant’s Motion for Rehearing is overruled.