June 15, 2010 — -- It should have been a happy summer for Michael Clauer. The Texas Army National Guard captain was winding down his time in Iraq, preparing for a new unit to arrive and replace him and the 130 service members under his command.
But a phone call in June 2009 left him so shaken that a colleague suggested he seek psychiatric help: his wife, her voice choked with tears, told him that their homeowners association had foreclosed on and sold their Frisco, Texas house -- which the Clauers say is valued at more than $300,000 -- for $3,200, according to county land records.
"I couldn't believe it," Clauer, 37, said. "I didn't understand how anybody could do that."
The Heritage Lake Homeowners Association, as Clauer would come to learn, had exercised its rights under Texas law to sell the home after the Clauers fell behind on their association dues by about $800. Now, Clauer and his wife May are suing the homeowners association, the investors who bought the home at foreclosure and sold it, and the home's current owner.
The Clauers, who reached an agreement with the current owner to continue to live in the home with their two young daughters until their lawsuit is resolved, either want to get their house back or be paid damages by the people they're suing. They'd prefer, of course, the former.
"We want it back the way it was," Clauer said.
The case, which was first reported by ABC affiliate WFAA and has gotten increasing attention in recent weeks, has made the Heritage Lake Homeowners Association an object of public scorn, with some association employees and board members receiving threatening phone calls and e-mails, an association spokesman said.
The spokesman, who asked not to be identified for fear of also becoming a target of threats, told ABCNews.com that the association hopes the Clauers succeed in getting their house back. But it's not up to them to return ownership of the home to the Clauers, he said, because they don't own it.
At the time of the foreclosure, he said, the association hadn't been informed that Clauer was serving with the military.
"We would be thrilled if he got his house back," he said, but, "at this point, it's going to take the courts to do that."
Clauers Say Federal Law Protects Military From Foreclosure
The Clauers might not have any hope of getting their home back at all if not for the Servicemembers Civil Relief Act (SCRA), a federal law that prohibits foreclosure on a military service member unless the foreclosure is ordered by a court.
The law dates back to World War I and is designed to "provide protections for service members against certain civil obligations" while they're on active duty, said John Odom, a retired U.S. Air Force judge advocate general and an expert on the SCRA.
But the homeowners' association spokesman said that, at the time of the foreclosure in May, 2008, the association didn't know that Clauer was serving with the military.
"They're not mind readers and the fact of the matter is nobody told them," he said.
In their lawsuit, the Clauers conceded that the homeowners association sent them four letters between October 2007 and April 2008 notifying them of their delinquent dues. But May Clauer was suffering such "severe depression and anxiety" over her husband's deployment that she didn't read the letters, according to the Clauers' complaint.
The Clauers didn't learn of the foreclosure sale until June, 2009, when the home's new owner sent a letter demanding rent, the complaint said.
"The most important thing that would have solved this problem is if somebody would have communicated with the homeowners association," the Heritage Lake spokesman said.
He said that, in March of 2008, the association even checked a Defense Department online database and requested information about Clauer's military status with the U.S. Army Enlisted Records and Evaluation Center. The center sent them a certificate, dated March 27, 2008, saying that Clauer was "not in the military service of the U.S. Army."
"They did the due dilligence," said Heritage Lake lawyer Patrick Whitaker.
Clauer and his lawyer, Barbara Hale, reply that another record that shows Clauer was, in fact, on duty when the foreclosure happened: his "Certificate of Release or Discharge From Active Duty" lists his service start date as Feb. 15, 2008.
What accounts for the apparent discrepancy is unclear. The Defense Department did not immediately answer a request for comment from ABCNews.com.
Odom had one possible explanation: Some military records, he said, may list Clauer's start date as the date that he was officially put on the military payroll. But the protections of the SCRA, he said, apply to the date when Clauer officially received his active duty orders, which was Feb. 15, 2008, according to the Clauers' lawsuit.
The home's current owner, Jad I. Aboul-Jibin, initially tried to evict the Clauers.
But now, Roland Love, a lawyer for Aboul-Jibin, said his client would be "happy for Captain Clauer and his family to have the house back."
"Obviously, my client supports the military and wants service members to be protected," he said.
Too Much Power for Texas Homeowners Associations?
If the court decides the home should go back to the Clauers, Love said, Aboul-Jibin would like to be reimbursed by the homeowners association or the people who bought the home at foreclosure and sold it to him for $135,000.
Aboul-Jibin "paid good money for it," Love said.
As the case progresses -- a jury trial is set for January of 2011 -- Clauer said he hopes his story will help force a change in how homeowners associations in Texas are allowed to initiate foreclosures. Few other states, he said, allow associations as much power as Texas does.
"I think that's just morally wrong to do to anybody, regardless of whether they're serving (in the military) or not," he said.
But the Heritage Lake spokesman said that court isn't the appropriate place to determine whether homeowners associations powers are indeed to broad.
"The Texas legislature is the right venue to ask that question," he said.
Some Texas legislators have, in fact, pursued the issue, but with little success. Texas State Rep. Burt Solomons and State Sen. Royce West have repeatedly introduced bills in the Texas legislature to reform state law governing homeowners' association. The bills, thus far, have failed to win legislative approval.
Sen. West said he plans to introduce another reform bill. He said he's heard several stories about Texas homeowners associations foreclosing over minor issues, including one "outrageous" case in which a woman claimed an association tried to foreclose on her after she used black duct tape to cover an exposed pipe. The association, he said, had requested she use silver duct tape.
"I think (homeowners associations) do have too much power and we need to balance it out a little bit more," West said.