The 450 Fill-In-The-Blank: When An HOA Collection Agency Charges Top Dollar For Clerical Work — And Gets Paid Twice

The Eighth Problem

The previous parts of this series told the story of a Texas homeowner whose house was sold at HOA foreclosure through a chain of statutory defects: unclaimed certified mail and a process server who knew the house was displaced (Part One); a defective § 209.0064 collection notice (Part Two); unsecured debt quietly converted into a secured claim (Part Three); a board vote on a vague agenda (Part Four); a $200/day fine resurrected from a 2022 notice (Part Five); CARES Act pandemic-relief money paid to the HOA followed by same-day notices and an intent-to-sue (Part Six); and a phantom 2015 amendment vote that authorized the inflated dues in the first place (Part Seven).

This part is about the bill. Specifically, about the line items that turned a default judgment into a foreclosure-sized amount — and about an affidavit the collection agency filed in support of it.

The collection agency that helped secure the default judgment submitted an affidavit swearing that its work constituted “original work that required research,” performed at $450 per hour. In fact, by the homeowner’s account, the work was largely clerical: filling in the blanks on form filings, processing notices, and forwarding paperwork. Routine ministerial work that should not have been billed at attorney rates — and that should not have been billed at all if the collection agent was operating on contingency, as many do.

The agency also claimed post-judgment “necessary collection charges” that, by the homeowner’s account, were inflated beyond what was actually incurred. Each of those numbers went into the judgment. Each of those numbers is now part of what the homeowner has to repay, redeem against, or challenge.

This is the eighth problem in the chain — and it may be the one that is easiest to attack on a strict dollar-for-dollar basis.

What an HOA Is Allowed to Charge the Owner

Texas law gives HOAs a real collection power, but it draws sharp limits around the fees they can recover. Three rules are critical:

1. Reasonable attorney’s fees and costs only (Tex. Prop. Code § 209.008(b))

A property owners’ association may recover… reasonable attorney’s fees and other reasonable costs incurred by the association…

Two words do most of the work: “reasonable.” Fees that are inflated, unnecessary, performed at the wrong rate, or duplicative are not recoverable from the owner.

2. Collection-agent fees cannot be charged to the owner if the agent is on contingency (Tex. Prop. Code § 209.0064(c))

An owner is not liable for fees of a collection agent retained by the property owners’ association if: (1) the obligation for payment by the association to the association’s collection agent for fees or costs associated with a collection action is in any way dependent or contingent on amounts recovered; or (2) the payment agreement between the association and the association’s collection agent does not require payment by the association of all fees to a collection agent for the action undertaken by the collection agent.

This is the rule most homeowners do not know about — and it can be devastating to an HOA’s claimed fees. If the collection agency’s fee is contingent on what it collects (the typical debt-collection arrangement), the owner is not liable for any of those fees. Period. The HOA cannot pass them through. They cannot be added to the lien. They cannot be part of the foreclosure amount.

3. The HOA must have a written collection policy (Tex. Prop. Code § 209.0061)

A property owners’ association shall adopt reasonable written policies to…

The association must have a written policy on collection practices. Fees charged outside that policy — or contrary to its terms — are suspect.

The Contingency-Fee Bar: The Largest Single Win

This deserves its own treatment, because it can wipe out the entire collection-fee portion of a foreclosure amount.

Industry practice. Debt collection by HOAs is almost universally done through third-party collection agencies, not directly by HOA attorneys. Those agencies typically operate on contingency: they take 25-50% of whatever they collect from the homeowner. The HOA pays nothing upfront; the agent gets paid only if it recovers.

What § 209.0064(c) says. In that contingency arrangement, the homeowner is not liable for the collection agent’s fees. The statute does not require the homeowner to pay the percentage. The HOA cannot pass it through.

Why this rule exists. Contingency-fee arrangements create an obvious conflict of interest. An agent paid by percentage of recovery is incentivized to inflate the amount collected, prolong the collection, and resolve in a way that maximizes its cut — not in a way that minimizes the homeowner’s debt. The Legislature’s solution was to make those fees the HOA’s problem, not the homeowner’s. If the HOA wants to use a contingency collector, the HOA pays the contingency. If the HOA wants to recover fees from the homeowner, the HOA must use a non-contingency arrangement that pays the agent regardless of recovery — at which point the fees are arguably more reasonable because they are not driven by recovery pressure.

What it means in this case. If the collection agency working this matter was on contingency (or had a hybrid arrangement where part of its fee was contingent), the entire collection-fee component of the judgment is non-chargeable to the homeowner. That could eliminate a substantial portion of the foreclosure amount.

The $450-an-Hour Problem

Even when fees are not on contingency, they still must be reasonable — both in rate and in hours. Several problems are visible in this case.

Rate reasonableness. $450 an hour is at the top end of attorney rates, even in major metropolitan markets. Texas courts applying the “lodestar” method (reasonable rate × reasonable hours) look at what comparable attorneys in the same area charge for similar work. Collection work — particularly the clerical, form-driven work this case allegedly involved — is typically billed at significantly lower rates. A $450 hourly rate for filling in the blanks on a form filing is not a “reasonable rate” for that work.

Hours reasonableness. “Reasonable hours” means hours that were actually worked, on tasks that were actually necessary. If the bulk of the work was clerical and ministerial — printing forms, filling in addresses, processing routine filings — it should not have been charged at attorney rates at all. Many such tasks are properly billed at paralegal rates (often $100-150/hour), and some are properly billed as overhead, not as billable time. An affidavit that claims “original research” for clerical form-filing is a candidate for fee reduction.

Necessity reasonableness. Even at $450 an hour, fees are only recoverable if the work was necessary. Charging for “research” that never happened, “calls” that were never made, or “review” of documents that did not require review, is not recoverable. Fees must reflect work that was actually performed, on tasks that actually needed doing.

Duplicate work. If two people at the collection agency each billed time on the same task, only one of them can recover fees for it. Itemized billing that does not distinguish who did what — or that double-counts the same task — is a candidate for adjustment.

When an affidavit claims “original work” at premium rates for clerical tasks, that is not just an ethical problem — it is also a fee reasonableness problem. The amount claimed can be reduced by the court on motion.

The Affidavit Problem

The collection agency’s affidavit described its work as “original” and “requiring research.” If the actual work was filling in the blanks on form filings — work that requires no research and is not “original” — then the affidavit contains statements that are at least misleading and may be knowingly false.

A sworn affidavit containing materially false statements has several possible consequences:

1. Perjury. Texas Penal Code § 37.02 makes it a crime to make a false statement under oath. An affidavit filed in support of a judgment that contains materially false statements about the work performed — if knowingly false — can support a perjury prosecution. This is not the homeowner’s primary remedy, but it can be raised with the court or the local prosecutor if the facts support it.
2. Fraud on the court. A judgment obtained through a sworn affidavit containing materially false statements can be challenged as procured by fraud. The Texas Supreme Court has long recognized that extrinsic fraud — fraud that prevents a party from presenting their case — can support setting aside a judgment.
3. Vacating the judgment. A judgment supported by a false affidavit of fees can be a candidate for a bill of review or a motion to vacate. The homeowner’s exposure depends on what the affidavit was used for: if it was the only support for the fee component of the judgment, the entire fee award can be challenged.
4. Disciplinary exposure. If the affidavit was signed by a Texas-licensed attorney, false statements in support of fee awards are a disciplinary matter. The State Bar of Texas has authority to investigate and sanction attorneys who make unsupported or misleading representations in court filings.

Why This Matters for the Foreclosure Amount

Every fee that was inflated — or that should never have been charged at all under the contingency-fee bar — went into the judgment. Every dollar in that judgment is a dollar that the lien secured. Every dollar the lien secured is a dollar the foreclosure was supposed to recover.

If the contingency bar eliminates $5,000 in collection fees, the judgment (and the lien, and the foreclosure amount) should have been $5,000 lower. If the reasonableness requirement reduces $10,000 of attorney time to $3,000, the same is true. The cumulative effect can be substantial — particularly when the HOA’s collection agent was paid on contingency and the entire fee component is barred.

A homeowner fighting the foreclosure has multiple tools here:

• On a motion to set aside or in a bill of review: argue that the affidavit was fraudulent and the judgment should be vacated in whole or in part
• On objection to fee awards: argue that the fees were unreasonable and request a hearing under Texas law
• In a separate action: sue the HOA and the collection agency for fraud, civil extortion (Part Six), or unjust enrichment if the fees were charged and collected despite being barred

What Homeowners Should Do

1. Ask whether the collection agent is on contingency. This is the single most important question. If the answer is yes — or if part of the fee is contingent — the entire collection-fee component of what you’re being asked to pay is non-chargeable to you under § 209.0064(c). Demand the HOA’s agreement with the collection agent under § 209.005 (records request).
2. Demand itemized billing. The HOA’s collection policy under § 209.0061 must be in writing. Demand it. Demand the underlying agreement between the HOA and any third-party collection agent. Demand itemized billing for every hour claimed and every task performed. If the billing is not itemized, that alone is grounds to challenge the reasonableness of the fees.
3. Challenge clerical work billed at attorney rates. Routine form filings, processing, and ministerial work should not be billed at $450 an hour. If the affidavit claims “research” for clerical tasks, that’s a misrepresentation in a sworn document. Ask the court to disallow those fees and to require testimony from the affiant about what work was actually performed.
4. Cross-check the contingency-fee bar against the affidavit. If the affidavit describes extensive attorney-style “research” and “review,” but the underlying arrangement was contingency, ask the court to inquire whether the contingency-fee bar applies. The HOA cannot recover collection-agent fees that it never had to pay itself.
5. Consider professional discipline. If an attorney signed a fee affidavit containing materially false statements, the State Bar of Texas can be notified through the Chief Disciplinary Counsel’s office. This is not the homeowner’s first remedy, but it can be a powerful secondary tool — particularly when the same attorney or firm is involved in other HOA cases.
6. Consider a fraud claim. If the affidavit was false and the HOA knew it was false (or the collection agent knew it was false), that may support a civil fraud claim, an unjust-enrichment claim, or a claim under the Texas Deceptive Trade Practices Act. The same facts that support a fee reduction may also support a separate action for damages.

The Bigger Point

The HOA’s collection fees are not unlimited. They are bounded by three independent rules: reasonableness, the contingency-fee bar, and the truthfulness of the affidavits that support them. Each rule works on its own; together they create an aggressive defense against inflated bills.

A collection agency that submits an affidavit swearing to $450-an-hour “original research” for clerical work is not just overcharging — it is certifying to a court that the work was something it likely was not. A Texas court asked to enforce such a fee has both the authority and the obligation to scrutinize it. And where the underlying arrangement was contingency, the entire fee component is non-chargeable as a matter of statute.

The collection agency was paid by the HOA. If it was contingency, it was paid twice: once by collecting from the homeowner, and once by keeping a percentage of what it collected. The Texas Legislature made that second payment the HOA’s problem — not the homeowner’s.

This article is for informational purposes only and does not constitute legal advice. Statutes cited: Tex. Prop. Code §§ 209.005, 209.0061, 209.0064, 209.008; Tex. Penal Code § 37.02; Tex. Bus. Orgs. Code (governing nonprofit corporations and HOA fiduciary duties). This article is the eighth in a series on Texas HOA enforcement notices. Part One addressed certified-mail delivery and unclaimed notices; Part Two addressed the defective § 209.0064 collection notice; Part Three addressed the conversion of unsecured debt into a foreclosed lien; Part Four addressed the board vote authorized on a vague or missing agenda; Part Five addressed the resurrected 2022 violation used to claim a $200/day fine; Part Six addressed the federal CARES Act payment followed by same-day notices; Part Seven addressed the fraudulent 2015 amendment vote.