                    In the
               Court of Appeals
       Second Appellate District of Texas
                at Fort Worth
              ___________________________
                   No. 02-18-00357-CV
              ___________________________

GRIFFIN PARC RESIDENTIAL ASSOCIATION, INC., Appellant

                              V.

                 JOHN C. KING, Appellee



          On Appeal from the 158th District Court
                 Denton County, Texas
              Trial Court No. 17-3380-158


         Before Sudderth, C.J.; Pittman and Bassel, JJ.
           Memorandum Opinion by Justice Bassel
                          MEMORANDUM OPINION

                                    I. Introduction

      Appellant Griffin Parc Residential Association, Inc. (the HOA) raises one issue

challenging a summary judgment obtained by Appellee John C. King (Owner).

Owner owns a lot in the Griffin Parc subdivision administered by the HOA. The trial

court rendered judgment that the HOA acted in violation of the Bankruptcy Code’s

automatic stay when it sent Owner notice of the amount of the HOA’s annual

maintenance assessment. The trial court found that the notice was a part of the

collection process for unpaid assessments, that the notice was a necessary act to create

an assessment lien against Owner’s property, and that the bankruptcy stay in effect

when the notice was sent made the notice void because it was a part of the lien-

creation process.

      We disagree. Both the lien and the debt that obligated Owner to pay the

assessment existed long before the notice was sent. The notice merely quantified the

debt that Owner was previously obligated to pay as a result of his ownership of a lot

in the subdivision administered by the HOA. Thus, the notice did not create or

enforce a lien and did not violate the automatic stay. We reverse the judgment of the

trial court and render judgment in favor of the HOA.

                              II. Procedural Background

      The HOA filed an “Application for Expedited Foreclosure Proceeding

Pursuant to Rule 736 of the Texas Rules of Civil Procedure” in which it sought to

                                           2
foreclose its lien on a lot in the subdivision that the HOA administered. See Tex.

Prop. Code Ann. § 209.0092; Tex. R. Civ. P. 736.1. Owner resided on the lot. The

lien that the HOA sought to foreclose allegedly was defaulted after Owner failed to

pay the HOA’s 2016 maintenance assessment.

      Owner responded to the HOA’s foreclosure action by filing a suit for

declaratory judgment. That suit stayed the foreclosure action because it “put[] in issue

. . . [the] enforcement of the . . . lien” that was the basis of the HOA’s suit. See Tex.

R. Civ. P. 736.11. Owner alleged that he had filed a bankruptcy proceeding under

Chapter 7 of the United States Bankruptcy Code before the HOA sent notice of the

2016 annual maintenance assessment. Though Owner conceded that the lien that the

HOA sought to foreclose had its origins in the Declaration governing the subdivision

filed in 2001, he contended that the notice was “necessary” to enforce the lien that the

HOA sought to foreclose. Specifically, Owner alleged that

      the 2001 lien, while forming a basis for Griffin Parc’s claim of its lien rights,
      and without which it could not, fifteen years later, claim a right of foreclosure,
      was merely necessary but not sufficient to enforce an assessment. Other things
      had to take place, namely: Assessment of the amount due for 2016, notice of
      the . . . annual assessment, non-payment on or before the due date, the
      assessment lien which arose on the delinquency date, and later a notice of
      assessment lien.

Allegedly, “[these] additional, necessary steps [were required] to make the 2001 lien

effective [but] were void ab initio” because the Bankruptcy Code stayed the ability of

any creditor to create a lien against property that was part of a bankruptcy estate. See

11 U.S.C.A. § 362(a) (West 2015).

                                           3
      The parties filed cross-motions for summary judgment. The trial court granted

Owner’s motion for summary judgment and denied the HOA’s. The summary-

judgment order included a finding that the HOA had sent notice of the assessment

that was the basis for its foreclosure claim during the time that a creditor’s actions

were stayed by the Bankruptcy Code. For this reason, the judgment decreed that the

notice “was ineffective notice, necessary to create an assessment lien which

assessment lien was essential to [the HOA’s] enforcement action.” Owner nonsuited

other claims made in his declaratory-judgment action, making the trial court’s

summary-judgment order a final judgment. The HOA appealed.

                              III. Factual Background

       The legal effect of the notice sent by the HOA to Owner and the nature of the

HOA’s lien are hotly contested, and we will deal with the factual details of the notice

and lien during our discussion of the document in which they have their origin. But

this appeal also turns on the timing of certain events because they establish the

framework of the two underlying questions that we must resolve: (1) when did the

HOA’s lien and the debt to pay the assessment come into existence, and (2) during

what period did the provisions of the Bankruptcy Code impact the HOA’s actions.

      The timing of the four pivotal events in this case’s chronology is undisputed.

First, in 2001, the developer of the subdivision that included the lot at issue filed in

the appropriate deed records a “Declaration Of Covenants, Conditions[,] And

Restrictions For Griffin Parc” (the Declaration) that created covenants to establish

                                           4
the rules and regulation of the HOA. Second, Owner purchased his lot in the

subdivision in 2004. Third, Owner filed his Chapter 7 bankruptcy proceeding on

November 3, 2015. Fourth, sometime in late December 2015 or early January 2016,

the HOA sent Owner a notice of the 2016 annual maintenance assessment due the

HOA. 1

       All agree that the notice was sent during the time that the Bankruptcy Code

stayed the ability of a creditor to create or enforce a lien. Other acts relating to the

assessment lien, such as filing notice of the lien in the relevant deed records and the

suit to foreclose the lien, occurred after Owner was discharged from bankruptcy and

after the stay no longer was in effect.

IV. The Standard of Review Governing Cross-Motions for Summary Judgment

       We apply a de novo standard of review to summary judgments. Travelers Ins.

Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010).        “When competing summary-

judgment motions are filed, ‘each party bears the burden of establishing that it is

entitled to judgment as a matter of law.’” Tarr v. Timberwood Park Owners Ass’n, Inc.,

556 S.W.3d 274, 278 (Tex. 2018) (quoting City of Garland v. Dallas Morning News, 22

S.W.3d 351, 356 (Tex. 2000)). “[I]f ‘the trial court grants one motion and denies the

other, the reviewing court should determine all questions presented’ and ‘render the




       1
        At oral argument, the HOA acknowledged that a copy of the notice is not a
part of the record because the HOA could not locate it in its records.

                                           5
judgment that the trial court should have rendered.’” Id. (quoting City of Garland, 22

S.W.3d at 356).

                                    V. Discussion

       A. How the provisions of the Bankruptcy Code overlay this appeal

      The Bankruptcy Code creates distinctions that frame this appeal.            The

distinctions begin with the principle that a creditor may have the right to pursue a

debtor in bankruptcy personally and that a discharge in bankruptcy may not free the

debtor from ongoing personal liability on the debt. But a complication arises if the

creditor chooses the wrong time in the process to create a lien to secure the debt.

The creditor may find that the Bankruptcy Code voids that attempt even though that

creditor could otherwise pursue the debtor to collect the debt.

      Owner relies on these distinctions to argue that no matter whether he might

have been personally liable for the 2016 annual maintenance assessment or whether

the HOA might have pursued a judgment for the assessment, the HOA’s attempt to

create or to enforce a lien to secure that debt during the bankruptcy stay was void.

His premise is that the notice created the lien because it was a precondition to the

enforcement of the lien securing payment of the assessment and that the HOA sent

the notice during the automatic bankruptcy stay that made its act void because the

Bankruptcy Code stayed that action. This argument creates our starting point to

describe the bankruptcy principles and the terms that govern here when we as a state

court apply federal bankruptcy law to resolve a state-court foreclosure suit.

                                           6
      The filing of a bankruptcy petition “operates as a stay” of certain actions,

mostly of creditors against debtors who have filed bankruptcy. See 11 U.S.C.A.

§ 362(a). Whether the stay stops a creditor from taking an action against a debtor

often turns on the time that the debt arises. Debts that arise after the filing of a

bankruptcy petition, termed post-petition debts, may often be pursued and collected

from a bankruptcy debtor. In re Zamora, No. 11-52138C, 2012 WL 4501680, at *1–2

(Bankr. W.D. Tex. Sept. 28, 2012) (mem. op.). The HOA and Owner agree that the

annual maintenance assessment in this case was a post-petition debt because it

became due after the filing of Owner’s bankruptcy petition.2

      Though the stay does not prohibit collection efforts for a post-petition debt

against the debtor personally, that does not mean the creditor may also take actions

impacting property held by the bankruptcy estate. Once a bankruptcy is filed, the

debtor and the bankruptcy estate exist in two separate entities. The bankruptcy estate

usually consists of property owned by the debtor when he or she files bankruptcy. See

11 U.S.C.A. § 541(a)(1) (West 2016); R. Hassell Builders, Inc. v. Texan Floor Serv., Ltd.,

546 S.W.3d 816, 827 (Tex. App.—Houston [1st Dist.] 2018, pet. denied) (“The

      2
        Not all federal courts conclude that assessments billed after the filing of
bankruptcy constitute a post-petition debt. See, e.g., Goudelock v. Sixty-01 Ass’n of
Apartment Owners, 895 F.3d 633, 638 (9th Cir. 2018) (stating that owner’s personal
obligation to pay the condo association assessments “was not the result of a separate,
post-petition transaction but was created when she took title to the condominium
unit. As a result, the debt for the assessments arose pre-petition and is dischargeable
under Section 1328(a), unless the Bankruptcy Code provides an exception to
discharge”). In this appeal, Owner does not argue the assessment is a pre-petition
debt.

                                            7
Bankruptcy Code defines ‘property of the estate’ broadly to include ‘all legal or

equitable interests of the debtor in property as of the commencement of the

[bankruptcy] case.’” (quoting Houston Pipeline Co. v. Bank of Am., N.A., 213 S.W.3d

418, 424 (Tex. App.—Houston [1st Dist.] 2006, no pet.))). 3 Some property, such as

the lot that was Owner’s homestead, can pass out of the bankruptcy estate while the

bankruptcy case is pending. 4

       The automatic stay prevents a creditor from taking certain actions against the

property of the estate, even though the creditor is pursuing a post-petition debt. See

Zamora, 2012 WL 4501680, at *2 (“However, ‘the right to undertake collection

activity, including filing a lawsuit, to collect a post-petition debt does not allow all

       As one author explained,
       3



       Commencement of a bankruptcy case creates in effect an “estate” by
       operation of law. The estate consists of the various types of property
       described in 11 U.S.C.A. § 541 “wherever located and by whomever
       held.” 11 U.S.C.A. § 541(a); Texas-Ohio Gas, Inc. v. Mecom, 28 S.W.3d 129,
       [143–44] (Tex. App.—Texarkana 2000, no pet.).                 With limited
       exceptions[,] the debtor’s bankruptcy “estate” is comprised of all the
       debtor’s legal or equitable interests in property as of the commencement
       of the bankruptcy action . . . .

2 Robin Russell et al., Texas Practice Guide: Creditor’s Rights § 7:62 (Nov. 2018).

       Property that the debtor claims to be exempt from creditor’s claims, such as a
       4

homestead, can cease being property of the estate even before the bankruptcy
concludes. If an interested party does not challenge the debtor’s claim that property is
exempt, the property passes out of the estate thirty days after the first meeting of
creditors. 15 W. Mike Baggett, Texas Practice Series: Texas Foreclosure: Law and Practice
§ 16.02 (Apr. 2018). No one contends that the lot at issue—though Owner’s
homestead—passed out of the bankruptcy estate before the HOA’s actions that
Owner contends improperly attempted to create or enforce a lien against the lot.

                                             8
collection activities.’” (quoting Montclair Prop. Owners Ass’n v. Reynard (In re Reynard),

250 B.R. 241, 245 (Bankr. E.D. Va. 2000))). The aspect of the automatic stay at issue

in this case prevents “any act to create, perfect, or enforce any lien against property of

the estate.” See 11 U.S.C.A. § 362(a)(4). In other words, the stay may not impede a

creditor from pursuing a debtor personally on a post-petition debt, but it may prevent

the creditor from creating, perfecting, or enforcing a lien on property of the

bankruptcy estate to secure that debt.5 And if the attempt to create or enforce the

lien occurs while the stay is in effect, that act has no effect; the Texas Supreme Court

is clear that acts in violation of the stay are not merely voidable but void. See York v.

State, 373 S.W.3d 32, 38 (Tex. 2012); Cont’l Casing Corp. v. Samedan Oil Corp., 751

S.W.2d 499, 501 (Tex. 1988).




      5
       Reynard summarized the distinction as follows:

      The right to undertake collection activity, including filing a lawsuit, to
      collect a post-petition debt does not allow all collection activities. The
      automatic stay prevents any act to create, perfect, or enforce any lien
      against property of the estate, and any act to obtain possession of
      property of the estate or of property from the estate or to exercise
      control over property of the estate. [11 U.S.C.A.] §§ 362(a)(4) and (a)(3),
      respectively. Consequently, a post-petition creditor who has the right to
      initiate a suit against a debtor and [to] obtain a judgment for a post-
      petition debt without violating the automatic stay may not have recourse
      to execute on all assets that would have been, but for the filing of a
      chapter 13 petition, property of the debtor. Recourse is limited to
      property that is not property of the estate.

250 B.R. at 244–45.

                                            9
       Further, not every debt is discharged in bankruptcy. One debt excepted from

discharge in a Chapter 7 proceeding (such as Owner filed) is

       for a fee or assessment that becomes due and payable after the order for
       relief to a membership association with respect to the debtor’s interest in
       . . . a lot in a homeowners[’] association, for as long as the debtor or the
       trustee has a legal, equitable, or possessory ownership interest in . . . such
       lot . . . .

11 U.S.C.A. § 523(a)(16) (West 2016). Thus, Owner’s discharge—the relief that

bankruptcy gives for liability on the debt—did not include the debt for the post-

petition assessment that began this controversy.

       The status of the debt and the fact that Owner did not receive a discharge from

it has no impact on the question we face. Our question focuses on whether sending

the notice of the assessment during the period the stay was in place “created” or

“enforced” the lien that the HOA sought to foreclose. See id. § 362(a)(4). In its most

general terms, the question is whether sending notice of the assessment created the

lien because it was some type of precondition to the HOA’s ability to claim a lien

against the lot and whether the attempt to perform that precondition during the

period of the stay effectively rendered the attempt void.           This question is not

impacted because Owner was not discharged for the underlying debt. As we have

described, the bankruptcy scheme creates situations where even if the debt survives

the process, a lien created during the period of time the stay is in place is void.

       As another point of clarification, the issue before us deals only with whether a

lien secured the 2016 assessment. We do not deal with whether the owner of a lot

                                            10
would be liable for the assessments occurring after the discharge and whether the lot

would stand as security for that debt.6

      B. A determination of the effect of the bankruptcy stay requires an
     examination of when the HOA’s assessment lien came into existence.

      The outlined bankruptcy principles that mark a temporal boundary during

which a lien cannot be created or enforced cause a quandary when applied to the lien

at issue in this appeal—the lien the HOA sought to foreclose because Owner failed to

pay the 2016 annual maintenance assessment. We must decide whether that lien was

created when the Declaration governing the HOA was filed, more than fifteen years

before the bankruptcy stay went into effect, or whether the lien is not fully created

and enforceable until the HOA’s notice was sent during the period the stay was in

place. In other words, does the lien circle over the lot like the development’s Griffin




      6
         We note a distinction created by the Bankruptcy Code that is not relevant to
our disposition because Owner filed a Chapter 7 petition. The discharge exception in
in section 523(a)(16) may not apply to the discharge received by a Chapter 13 debtor.
See In re Wiley, 581 B.R. 441, 450 (Bankr. D. Md. 2018) (refusing to adopt “the
position advocated by the Condominium” that essentially asked the bankruptcy court
“to rewrite the Bankruptcy Code to insert the § 523(a)(16) discharge exception into
§ 1328(a)”). Wiley lifted the stay to permit the condo association to reduce its claim to
judgment because a discharge had not been entered. Id. at 451–52. But Wiley also
noted that “a Chapter 13 debtor’s obligation to pay post-petition condominium
assessments continues up to the time of entry of a discharge under § 1328(a) of the
Bankruptcy Code, at which time the condominium’s in rem remedies survive, but the
in personam obligations of the debtor are discharged.” Id. at 447. We reference Wiley
simply to note that our opinion is not a one-size-fits-all opinion in its application of
bankruptcy law to assessments for commonly-owned property.

                                           11
namesake, waiting to pounce if the assessment is not paid, or does it rise like a

phoenix each year if a lot owner does not pay the annual maintenance assessment?7

         It is not clear from Owner’s argument whether he is arguing that the acts of the

HOA created or enforced a lien in violation of section 362(a)(4). We interpret his

argument and the recitations in the trial court’s judgment to mean that the notice

created the debt to pay the assessment and that without that debt, the lien did not

exist.

         Owner’s brief states the issue as follows:

         If there were no notice of assessment, there would be no due date, no delinquency date,
         no continuing debt, no lien, no notice of lien, and no foreclosure. [The HOA]
         would have us engage in a form of time travel, that in July of 2001
         [Owner’s] unpaid assessment, from fifteen years later, had already
         created an [enforceable] lien. It might have been a lien, but it lacked a piece to
         its effectiveness: the unpaid amount on the delinquency date. Notice and demand for
         payment, and the delinquency date, had not happened yet. [Emphasis added,
         citation omitted.]

The theme that the notice created the debt—and thus, the lien—is carried forward

into the trial court’s finding that the notice “was ineffective notice, necessary to create an

assessment lien which assessment lien was essential to [the HOA’s] enforcement action

against” Owner. [Emphasis added.]

         These statements still leave us grasping for the answer as to why Owner and

the trial court contend that the notice served “to create an assessment lien.” As we

       The nature of the lien is one we determine under Texas law. See Douglas v.
         7

Delp, 987 S.W.2d 879, 883 (Tex. 1999) (“Courts look to state law to characterize the
‘property rights in the assets of a bankrupt’s estate.’” (quoting Butner v. United States,
440 U.S. 48, 54–55, 99 S. Ct. 914, 918 (1979))).

                                                   12
note below, the Declaration established every aspect of the obligation to pay the

assessment and the lien to secure that obligation, including the fact that the

assessment became delinquent the day following its due date. The Declaration does

provide that the amount of the assessment is set annually; it states that the Board of

the HOA shall “fix the date of the commencement and the amount of the annual

maintenance assessment against each Lot.” The Declaration then provides for written

notice of the assessment.      In this scheme, the notice serves the function of

communicating to a lot owner the Board’s decision about the date the assessment is

due and its amount. Thus, we conclude that the question we must answer is whether

quantifying the amount of the assessment created the lien even though the

Declaration states that it impressed upon the lot a lien for the payment of future

assessments from the date it was filed and established a continuing debt to pay the

assessment.

      We hold that the lien was created by the filing of the Declaration in 2001 and

not the issuance of the notice in 2015 or 2016. If the covenants creating a declaration

governing a subdivision are appropriately drafted, the Texas Supreme Court holds

that a lien to secure the payment of assessments exists from the time of filing the

declaration. Inwood N. Homeowners’ Ass’n, Inc. v. Harris, 736 S.W.2d 632, 633–37 (Tex.

1987). The declaration also creates an obligation to pay assessments that is “an

inherent part” of a lot owner’s property interest.     Id. at 636.   In this way, the



                                          13
underlying debt and the lien to secure its payment exist from the date of the filing of

the declaration and are not created by notice of the assessment.

      In this case, the Declaration that governs the lot at issue creates a lien against

the lot that attached at the time it was filed. That Declaration also created the debt to

pay the assessment and made that obligation a charge on the ownership of the lot.

Thus, the lien that the HOA sought to enforce was created long before the

bankruptcy stay went into effect, and the stay did not affect its existence.

 C. The Texas Supreme Court holds that a lien to secure the payment of HOA
assessments may come into existence and attach when the declaration creating
                 covenants governing the property is filed.

      In Inwood, the Texas Supreme Court dealt with the priority of an assessment

lien versus a lot owner’s homestead rights. Id. at 633. In Inwood, a developer of a

subdivision had filed a declaration of covenants and restrictions years before

homeowners purchased lots in the subdivision.          Id. at 633–34.    Specifically, the

question before the supreme court was whether the contractual lien described in the

declaration existed before the homeowners took title to their lots. Id. at 635.8


      8
       The usual scheme of a subdivision as a common-interest development is as
follows:

      Subdivision Developments are Common-Interest Developments that
      consist of parcels of land, usually called “Lots,” that are subject to
      separate conveyance and exclusive ownership. In most cases,
      Subdivision Developments arise where a large tract of land is owned by a
      real estate developer who divides the tract into separate, individually-
      owned Lots by filing a subdivision plat with the local governmental
      entity. The subdivision plat must be approved by such local government

                                           14
      The answer to this question turned on when a lien for assessments attached.

The date of attachment answered the question of whether the lien was superior to the

the homestead right in the lots because “if the lien attached prior to the claimed

homestead right and the lien is an obligation that would run with the land, there

would be a right to foreclose.” Id.

      Inwood held that a covenant runs with the land “when it touches and concerns

the land; relates to a thing in existence or specifically binds the parties and their

assigns; is intended by the original parties to run with the land; and when the

successor to the burden has notice.” Id. The opinion concluded that “[t]he covenant

to pay maintenance assessments [created by the declaration that governed the

subdivision] for the purpose of repairing and improving the common areas and

recreational facilities of Inwood North touches and concerns the land.” Id.




      entity and will typically divide the parcel of land into . . . (1) residential
      Lots that are to be separately owned by homeowners; (2) “Common
      Areas” that are to be owned by a Homeowners Association made up of
      and for the benefit of the Lot owners; and (3) streets to provide access
      by the owners to their Lots. The key distinguishing element of this type
      of development is that each Lot is a separate, exclusively-owned parcel
      of real property and [that] the Common Areas of land are owned by the
      Homeowners Association for the benefit of the Lot owners.

Gregory S. Cagle, HOA Assessment Liens: Everything You Need to Know to Figure Out Your
Head From Your Assessment Lien, State Bar of Tex. Prof. Dev. Program, 34th Annual
Advanced Real Estate Law Course 14, 8 (2012), https://ssjmlaw.com/wp-
content/uploads/2012/05/2010-Advanced-Real-Estate-Law-Article-HOA-Assessment
-Lien-Foreclosure.pdf.

                                           15
       Most important to our resolution of this appeal, the supreme court held that

the lien existed prior to the time the owners took title to their lots:

       The record discloses that the liens were contracted for several years
       before the homeowners took possession of their houses. Because the
       restrictions were placed on the land before it became the homestead of
       the parties, and because the restrictions contain valid contractual liens
       [that] run with the land, the homeowners were subject to the liens in
       question[,] and an order of foreclosure would have been proper.

Id. As support for its holding, the supreme court relied on an opinion from the

Florida Supreme Court that even more explicitly held that an appropriately drafted

declaration created a lien that related back to the time of its filing:

       [T]he creation of the lien by acceptance of the deed relates back to the
       time of the filing of the declaration of restrictions. Thus, with regard to
       the time of attachment of the lien, this case is to be treated as if the
       respondents (homeowners) had taken title subject to a valid pre-existing
       lien. Since the acquisition of homestead status does not defeat prior
       liens . . . the lienor’s right prevails over the respondent’s homestead
       right.

Id. at 636 n.1 (quoting Bessemer v. Gersten, 381 So. 2d 1344, 1348 (Fla. 1980) (op. on
re’g)).9

       9
        As a bankruptcy court dealing with a condominium plan described the duties
created by the covenants governing the common interest, the covenant is not a
contract by which a homeowners’ association provides services to condo owners but
is instead a burden on an owner’s interest in the common areas to maintain the
property in which the owner holds an interest:

       The covenants made in the [d]eclaration serve to benefit not a discrete
       third party . . . but rather all the owners in common, imposing a burden
       on each owner for the benefit of all owners. The homeowners’
       association is nothing more than a mechanism by which this covenant is
       enforced . . . and can best be appreciated as an agent for all the owners
       in common. Each condominium owner finds her estate both
       burdened by the assessment obligation and benefited by the function

                                             16
        Thus, the declarations in Inwood created not a potential lien but one that existed

from the time of the declaration’s filing.

   D. The obligation to pay an assessment is also created by the Declaration.

        We also read Inwood to hold that the continuing debt to pay an assessment is

sufficient to underlay the lien and that the lien is not recreated each time an

assessment is quantified. The debt that underlays the lien—the obligation to pay an

assessment—is an equitable servitude that attaches to the property from the time of

filing the declaration. As with other kind of debts, the precise amount of the debt

relies on subsequent events. But that contingency does not mean that there is not a

sufficient debt to support the existence of the lien from the time of filing the

declaration.

        The supreme court in Inwood described the obligation that attaches to a lot in a

subdivision where covenants govern the ownership and management of the

subdivision’s common areas. Specifically, “[t]he purchase of a lot in Inwood Homes

carries with the purchase, as an inherent part of the property interest, the obligation to pay association

fees for maintenance and ownership of common facilities and services. The remedy of foreclosure


        that the assessments serve (namely, the maintenance and preservation of
        the common areas, in which the debtor has an undivided interest
        inseparable from her interest in the condominium unit itself).

Beeter v. Tri-City Prop. Mgmt. Servs., Inc. (In re Beeter), 173 B.R. 108, 114–15 (Bankr. W.D.
Tex. 1994) (bold emphasis added).


                                                   17
is an inherent characteristic of the property right.” Id. at 636 (emphasis added). In

addition to the theory that the declarations created a contractual lien, Inwood also

viewed this mutual and reciprocal obligation of property owners in a development to

pay assessments as an “an inherent property interest possessed by each [lot]

purchaser.” Id.

      Inwood cited and appears to have rejected an argument that raised a variation of

the argument Owner makes—that no lien exists to pay an assessment because the

debt creating the obligation to pay did not arise until the assessment became due. The

issue arose through Inwood’s citation of Johnson v. First Southern Properties, Inc., 687

S.W.2d 399 (Tex. App.—Houston [14th Dist.] 1985, writ ref’d n.r.e.). Id. Inwood cited

Johnson for the proposition that principles governing a condominium scheme should

apply equally to “pro rata common ownership in an association, mandated by the

declaration.” Id. Johnson held that in the context of a condominium scheme, “the

assessment lien constituted a valid pre-existing debt which would overcome the

homestead claim.” 687 S.W.2d at 402. In a footnote, Inwood refenced an analysis of

Johnson contained in a law review article. Inwood, 736 S.W.2d at 636 n.2 (citing Craig

Florence, Note, Johnson v. First Southern Properties Inc:    The Texas Homestead and

Condominium Assessments, 38 Baylor L. Rev. 987 (1986)).

      The cited law review article criticized Johnson’s holding that a preexisting debt,

and thus a lien, burdens the property because the assessment lien should not owe its

existence to the filing of the declaration rather than to the issuance of an assessment.

                                          18
The criticism turned on the fact that a lien must be underlaid by a debt, and that no

debt underlays any lien until an assessment is made; thus, the assessment lien did not

preexist but rose as the phoenix each time the debt arose:

      The question is reduced to whether the contract created a prior debt and
      lien. Although the court necessarily assumed the existence of a valid
      pre-existing debt, this conclusion is suspect. To have a security interest
      in the property, there must be a debt. In Johnson, there was no liability
      for future assessments until the assessments were determined by the
      homeowner’s council. Even when the assessments were made, they
      could be changed later. Therefore, there was not a debt for such
      assessments until after Johnson established his homestead in the
      condominium apartment. The court held that Johnson took [“]the
      apartment subject to the declaration, which declaration designated that the
      homeowner[s’] . . . council had an assessment lien.[”] It would appear,
      however, that since the assessment fee was not due until after Johnson
      established his homestead, then a valid lien did not arise until after the
      [homestead] was established. In that case, because the lien was not for
      purchase money, improvements, or taxes, it would be void.

38 Baylor L. Rev. at 995–96 (footnotes omitted).

      The supreme court in Inwood held a homeowners’ association lien and the debt

to pay an assessment existed from the time of filing the covenants and declaration in

the face of the Note’s criticism of Johnson that no lien could exist without an

underlying debt. The supreme court was obviously aware of this conceptual challenge

to its holding on the existence of a preexisting debt because it cited the article that

contained the criticism. The Note’s criticism that no debt existed to underlie the lien

established in the declaration did not deter the supreme court from its holding.

      The article’s theory that no debt underlies the lien also revealed a

misconception of the obligation to pay an assessment. Though sometimes described

                                          19
as a contract, the assessment obligation arises not as a result of an annual agreement

for the owner to pay the fee to maintain the common areas but as an equitable

servitude on the lot:

      The homeowners’ association is not a discrete party performing
      maintenance services for a fee. It is merely the agent of each and every
      owner, a mechanism created as part and parcel of the equitable servitude
      [that] burdens the estate of each owner, functioning to assure that each
      owner receives the benefits that the equitable servitude was intended to
      confer. There need be no “contract” to impose this servitude on the
      property. It was imposed on the property when the estate in land was
      created pursuant to the documents that created the condominium
      regime, pursuant to state law. No consideration passed, no meeting of
      the minds took place (or needed to take place), incident to the creation
      of this equitable servitude imposed on the estate. The owners could not
      have avoided the terms of the equitable servitude when they purchased
      the property, even had they wanted to.

Beeter, 173 B.R. at 115. Thus, the ownership of the lot in the subdivision carries with

it the obligation to pay the annual maintenance assessment, and that servitude creates

both the lien and the obligation to pay the assessments as they become due.

      In accordance with Inwood, we hold that the assessment lien exists from the

time of the filing of a declaration rather than the time that an assessment was made.

And the ownership of the lot carries the ever-present obligation to pay the

assessments. Though we agree that the dollar amount of the annual maintenance

assessment is not set in the Declaration, that fact does not undermine the obligation

to pay the assessment as a covenant running with the land. Indeed, it appears

impractical for the Declaration to set the amount of an assessment that would

respond to the need of the subdivision fourteen years after its filing. But that does

                                          20
not mean the obligation to pay the debt as it arose did not exist upon the filing of the

Declaration.

       Also, it is hardly unusual for a lien to secure a debt that has not yet been

quantified or is contingent on a future event. For example, a lien may secure the

payment of future taxes by the mortgagee on behalf of the mortgagor. See, e.g., Smart

v. Tower Land & Inv. Co., 597 S.W.2d 333, 336 (Tex. 1980) (“Many Texas cases have

held that if a mortgagor fails to pay taxes he has promised to pay, the mortgagee may

treat the amount owed for taxes as part of the mortgage debt.”); Vista Dev. Joint

Venture II v. Pac. Mut. Life Ins. Co., 822 S.W.2d 305, 307–08 (Tex. App.—Houston [1st

Dist.] 1992, writ denied) (holding that liability for unpaid taxes accruing on property

may be secured by both a lien and a personal liability of maker of note). Further, a

lien may contain a dragnet clause that secures future but not yet quantified advances

of debt. 2 James N. Johnson, Texas Practice Guide: Real Estate Transactions § 10:21

(Sept. 2018) (“A ‘dragnet’ clause in a mortgage or deed of trust refers to a provision

creating a lien securing all indebtedness of the mortgagor to the mortgagee, whether

past or future, prior to discharge of the lien.”).10



       10
         In fact, the court of appeals’ opinion in Inwood recognized that “[a]n owner of
real property may, by executing a written instrument, create a lien on his property to secure
payment of future advances.” Inwood N. Homeowners’ Ass’n, Inc. v. Pamilar, 707 S.W.2d
125, 126 (Tex. App.—Houston [1st Dist.] 1986) (op. on reh’g) (citing First Nat’l Bank
of Corsicana v. Zarafonetis, 15 S.W.2d 155, 158 (Tex. App.—Waco 1929, writ ref’d)),
rev’d, 736 S.W.2d 632 (Tex. 1987). The court of appeals held the covenants governing
the property did not create a lien but only an unsecured obligation to pay the

                                             21
      And one court interpreting the Bankruptcy Code reasoned that a contingent,

unmatured obligation to pay an assessment constituted a debt as defined by

bankruptcy law (though it described the obligation as a contract and dealt with

whether the debt was a pre- or post-petition debt):

      Under those broad definitions of claim and debt, the Rostecks had a
      debt for future condominium assessments when they filed their
      bankruptcy petition. It is true that the Rostecks did not actually owe money to
      Old Willow for assessments beyond those Old Willow had assessed before their
      bankruptcy. But the condominium declaration is a contract, and by entering that
      contract[,] the Rostecks agreed to pay Old Willow any assessments it might levy.
      Whether and how much the Rostecks would have to pay in the future
      were uncertain, depending upon, among other things, whether the
      Rostecks continued to own the condominium and whether Old Willow
      actually levied assessments. But, as we have seen, contingent,
      unmatured, unliquidated, and unfixed debts are still debts. “Contingent”
      means: “‘Possible but not assured; doubtful or uncertain; conditioned
      upon some future event which is itself uncertain or questionable . . . .
      [I]t implies that no present interest exists, and that whether such interest
      or right will ever exist depends upon a future uncertain event.’” This
      definition describes perfectly the Rostecks’ obligation for future assessments: they
      agreed to make payments, but whether and how much they actually had to pay
      depended on future uncertain events. The Rostecks thus had a debt for the future
      assessments under the Bankruptcy Code’s broad definition of debt.

Matter of Rosteck, 899 F.2d 694, 696–97 (7th Cir. 1990) (emphasis added).

      Thus, the Texas Supreme Court, general principles of mortgage law, and

bankruptcy courts agree that a contingent debt may be sufficient to support the

general existence of a lien and to secure the specific payment of a homeowners’

association’s assessments. We now answer the question that we began with. Both the


assessments. Id. The supreme court obviously rejected the holding that no lien could
secure the obligation to pay future advances.

                                              22
obligation to pay the assessment and the lien to secure the ever-present obligation to

pay it do circle over the property rather than spring into existence each year. Contrary

to Owner’s argument, an assessment is a debt that exists before the amount of the

assessment is set, and the existence of the lien to secure that debt is not dependent on

the amount of the assessment being set by the Board.

E. The Declaration creates both the obligation to pay assessments and the lien
                          to secure that obligation.

      We see nothing in the Declaration to suggest that it does not create the

preexisting lien and continuing obligation to pay assessments described in Inwood. The

Declaration uses the present-tense to state that the lien it creates exists from the time

of its filing. Nor do we see the notice that is the linchpin of Owner’s suit as

performing any other function than meeting the practical need of informing a

homeowner of the amount of the annual maintenance assessment. Also, many of the

other events that Owner suggests are preconditions to the effectiveness of the lien are

established by the terms of the Declaration and are not contingent on the terms of the

notice. These include when an assessment becomes delinquent.

      Obviously, different declarations may have different terms, and whether a

declaration creates a contractual lien from the time of its filing depends on its specific

provisions. See Kenneth D. Eichner, P.C. v. Dominguez, No. 14-16-00192-CV, 2017 WL

2561334, at *6 (Tex. App.—Houston [14th Dist.] June 13, 2017, no pet.) (mem. op.)

(“[W]e must look to the Association’s declaration in the instant case to determine


                                           23
whether the assessment lien attached when the declaration was filed in 1978 or when

Dominguez defaulted on the monthly assessments.”); Red Rock Props. 2005, Ltd. v.

Chase Home Fin., L.L.C., No. 14-08-00352-CV, 2009 WL 1795037, at *3 (Tex. App.—

Houston [14th Dist.] June 25, 2009, no pet.) (mem. op.) (“[W]e look to the

condominium declaration in the instant case to determine whether the assessment lien

attached when the Declaration was filed in 1984 or when the Barbours defaulted on

the monthly assessments in November 2004.”).

      The provisions that we outline next demonstrate that the Declaration at issue

provides for a lien that had its inception at the time the Declaration was filed and

continued as a charge on the land. And our interpretive task is limited to a review of

the Declaration’s terms because Owner concedes that he took title to his lot burdened

with the Declaration’s covenants and because the deed to his lot demonstrates that he

did.11 Further, the parties have cited no statutory provision that impacts the question

of whether and how the Declaration creates an assessment lien.12


      11
         The deed conveying the lot to Owner states: “This Deed is executed,
delivered[,] and accepted subject to all . . . covenants, restrictions common to the
platted subdivision in which said real property is located . . . .”
      12
        Unlike condominiums, homeowners’ associations do not have a statutory
framework. See Tex. Prop. Code Ann. §§ 82.001–.164 (Uniform Condominium Act).
Although there is a chapter in the Texas Property Code governing the conduct of a
homeowners’ association in some circumstances, none of the provisions of that
chapter provide instruction on how to interpret the provisions of the Declaration
here. See, e.g., Tex. Prop. Code Ann. § 209.003 (applicability of Texas Residential
Property Owners’ Protection Act), § 209.006 (requiring HOA notice before
enforcement), § 209.009 (prohibiting certain foreclosure sales based on certain

                                          24
      The Declaration creates the HOA for the purpose of “(i) maintaining and

administering the common properties and facilities, (ii) administering and enforcing

the covenants and restrictions contained herein, and (iii) collecting and disbursing the

assessments and charges hereinafter created.” The Declaration requires every owner

of a lot in the Griffin Parc subdivision to be a member of the HOA. Membership in

the HOA grants the owner “a non-exclusive right and easement of use and enjoyment

in and to” the common area of the development.13

      Section 5.01 of the Declaration describes an owner’s liability to pay assessments

and how that debt is a charge on the land and “a continuing lien”:

      Declarant, for each Lot owned by it, hereby covenants and agrees, and
      each purchaser of any Lot by acceptance of a deed or other conveyance
      document creating in such Owner the interest required to be deemed an
      Owner, whether or not it shall be so expressed in any such deed or other
      conveyance document, shall be deemed to covenant and agree . . . to pay
      the Association . . . annual maintenance assessments or charges (as
      specified in Section 5.04 hereof), such assessments to be fixed,
      established[,] and collected from time to time as herein provided . . . .
      The annual maintenance, special capital, and special individual assessments
      described in this Section 5.01 (hereinafter, the “Assessment” or the
      “Assessments,” together with interest thereon, attorneys’ fees, court
      costs[,] and other costs of collection thereof, as herein provided, shall be a
      charge on the land and shall be a continuing lien upon each Lot against which any
      such Assessment is made. [Emphasis in italics added.]

The assessment pays for managing, improving, and maintaining the common areas.


assessments), § 209.0091 (providing owner an opportunity to cure), § 209.0092
(requiring judicial foreclosure).
      13
        No one disputes that the lot at issue is a “Lot” as defined in the Declaration
or that Owner is an “Owner” as defined in the Declaration.

                                             25
      Section 5.08 of the Declaration does require the HOA’s Board of Directors to

“fix the date of commencement and the amount of the annual maintenance

assessment against each Lot.” In turn, that section requires a “[w]ritten notice of all

assessments” to be sent to lot owners. But section 5.08 is also clear that the failure to

fix a new assessment does not relieve a lot owner of the obligation created by the

Declaration to pay assessments:

      (c) The omission of the Board of Directors to fix the assessments within
      the time period set forth above for any year shall not be deemed a waiver
      or modification in any respect of the provisions of this Declaration, or a
      release of any Owner from the obligation to pay the assessments, or any installment
      thereof for that or any subsequent year, but the assessment fixed for the
      preceding year shall continue until a new assessment is fixed. [Emphasis
      added.]

      The consequences of the failure to pay an assessment are established by section

5.09 of the Declaration. Section 5.09(a) sets the date that an assessment becomes

delinquent by stating that “[a]ny Assessment, or installment thereof, which is not paid

in full when due shall be delinquent on the day following the due date (herein

‘delinquency date’) as specified in the notice of such Assessment.”

      Section 5.09(b) of the Declaration carries forward the theme that liability for

the assessment is a continuing debt and that the Declaration creates a lien to secure

that debt:

      The unpaid amount of any Assessment not paid by the delinquency date
      is and shall be, together with the interest thereon as provided in Section
      5.09(a) hereof and the cost of collection thereof, including reasonable
      attorneys’ fees, a continuing debt, secured by, and there is hereby impressed upon


                                              26
       and created against each Lot, a lien and charge on the Lot of the non-paying
       Owner . . . .

             To evidence any lien, the Association shall prepare a written
       notice of lien setting forth [certain information]. [Emphasis in italics
       added.]

There is no controversy that the word “hereby” is a reference to the Declaration.

Owner’s brief “concedes the point of grammar and verb usage, ‘there is hereby

impressed upon and created against each lot, a lien[]’ is present tense. ‘Present tense’

as in ‘2001.’ This shows that a lien did indeed arise seventeen years ago.”

       Section 5.09(c) reiterates the theme that the Declaration causes a lien to attach

to each lot in the subdivision on the date of its recordation: “The lien securing the

payment of the Assessments shall attach to the Lot belonging to such non-paying

Owner upon recordation of this Declaration with the priority set forth in this

Section.”

       Section 5.10 provides for the priority of the assessment lien relative to other

liens that may attach to lots in the subdivision after the filing of the Declaration:

       The lien securing the payment of the Assessments shall be subordinate
       and inferior to the lien of any bona fide first lien mortgage or deed of
       trust now or hereafter recorded against any Lot; provided, however, that
       such subordination shall apply only to the Assessments [that] have
       become due and payable prior to a sale, whether public or private, of
       such property pursuant to the terms and conditions of any such
       mortgage or deed of trust. Such sale shall not relieve the new Owner of
       such Lot from liability for the amount of any Assessment thereafter
       becoming due nor from the lien securing the payment of any subsequent
       assessment.



                                            27
      After a review of its terms, we interpret the Declaration to carry out the

standard practice of a declaration to establish and attach a lien to secure the payment

of future assessments and to establish an obligation to pay the assessment that runs

with the land. Certainly, the Declaration provides for notice. That notice only

quantifies the amount of the preexisting debt that runs with the land and to inform

the lot owners of that amount. It does not create the debt.

F. Because the Declaration, not the notice of the assessment amount, created
  the lien and debt, the HOA did not create or enforce a lien in violation of
   section 362(a)(4) by sending the notice of the 2016 annual maintenance
                                 assessment.

      Thus, we come full circle to the Bankruptcy Code and ask if the notice of the

amount of the annual maintenance assessment—sent while the Lot was property of

the Owner’s bankruptcy estate—created or enforced a lien and thereby violated

section 362(a)(4). The sending of the notice did not violate the stay.

      The notice was not a precondition to the lien or the obligation to pay the

annual maintenance assessment.         Both were created upon the filing of the

Declaration. Under Inwood, the lien “existed” from the time of the filing of the

Declaration. The supreme court did not hold that the lien came into existence with

each assessment but existed from the time of the filing of the declaration. And the

obligation to pay the annual maintenance assessment was not the result of the notice

but a continuing debt—or as some term it, an equitable servitude—that ran with the

land and was incident to the ownership of the lot. The notice of assessment sent by


                                           28
the HOA created neither the lien nor the debt. Nor did the notice set the date of

delinquency for the assessment; again, the Declaration set that date.

       In the final analysis, a lien that already exists cannot be created in violation of

section 362(a)(4). One example that we gave earlier of a lien that secures a future

contingent debt was a future advance made under a dragnet clause, and federal courts

hold that adding debt to a lien that already exists does not create a lien in violation of

section 362(a)(4). See Beeler v. Jewell (In re Stanton), 303 F.3d 939, 942–43 (9th Cir. 2002)

(concluding that lender’s advance of funds pursuant to future advance clause did not

“create” new lien each time an advance was made). Further, performing an act that

continues the existence of a lien that is already in place does not create a lien. See

Jacobs v. Brain Power Am., Inc., Nos. 2:15-cv-00533-JAD, 2:15-cv-00911-JAD, 2:15-cv-

00912-JAD, 2017 WL 834978, at *3 (D. Nev. Mar. 2, 2017) (order) (“The automatic

stay is a creature of the bankruptcy code. It prevents a creditor from ‘creat[ing],

perfect[ing], or enforc[ing]’ a lien, and it prohibits a creditor from ‘enforcement’

efforts against the debtor. What is notably missing is a prohibition on renewing an

existing judgment.” (citation omitted)).

       The trial court’s judgment also mentions one of the other prohibited acts of

section 362(a)(4), which is the enforcement of a lien. It does not find that the HOA

enforced its lien but rather that it had allegedly put itself in the position to enforce its

lien by giving notice that was “necessary to create an assessment lien which

assessment lien was essential to [the HOA’s] enforcement action.”

                                             29
      We agree that the action of the HOA by sending notice of the 2016 assessment

was not an act of enforcement under section 362(a)(4). The definition of the word

“enforcement” in section 362(a)(4) does not embrace the HOA’s setting and giving

notice of the assessment amount. See Houston Pipeline, 213 S.W.3d at 427 (“A lien ‘is

enforced by affirmative action such as filing lawsuits, foreclosing, and filing a notice

of lis pendens.’” (quoting Kocurek v. Arnold (In re Thurman), 163 B.R. 95, 100 (Bankr.

W.D. Tex. 1994))). The record establishes that the HOA did not file a notice of the

assessment lien or foreclose on that lien until after Owner received his discharge and

after the automatic stay was no longer in effect.

      Accordingly, we sustain the HOA’s sole issue.

                                   VI. Conclusion

      Having sustained the HOA’s sole issue, we reverse the judgment of the trial

court and render judgment that the HOA’s sending of the notice of the 2016 annual

maintenance assessment did not violate the provisions of section 362(a)(4) of the

United States Bankruptcy Code.

                                                      /s/ Dabney Bassel

                                                      Dabney Bassel
                                                      Justice

Delivered: April 25, 2019




                                           30
