Texas Foreclosure Laws

Texas foreclosure laws support judicial and non-judicial processes to satisfy the borrower’s debt. Typical foreclosure timeline is about 3 months since this would depend on the timing of notices and court schedules. In addition, delays can occur especially when the borrower contests the lawsuit or files for bankruptcy.

Judicial And Non-Judicial Foreclosure Information

Since foreclosure laws in Texas allows for both in-court and non-judicial methods, the presence or absence of a Power of Sale clause, which is signed by the borrower, determines the method of foreclosure to be used. A non-judicial foreclosure applies when a loan document contains a Power of Sale clause which authorizes the lender to satisfy the borrower’s debt by selling a property in question through a public auction. This type of legal action does not need a court appearance.

On the other hand, a Texas foreclosure is administered through the court system when the Power of Sale clause is not signed in the mortgage agreement. The court issues a final judgment of foreclosure. To begin with this type of foreclosure, the lender has to file a complaint or lis pendens against the defaulted borrower. A lis pendens serves as a recorded document which contains information on a property to be foreclosed upon. If the court finds sufficient against the defendant, such as payment defaults or failure to respond to the lawsuit, a foreclosure sale is scheduled.

A Texas foreclosure sale is final; hence, the state does not have a statutory right of redemption. Unlike other states that supports redemption rights, a homeowner whose property has just been recently foreclosed can reclaim that property by paying off the sum of the unpaid loan plus any applicable costs.

Under Texas foreclosure laws, deficiency judgment may be obtained by the lender. Deficiency can be claimed when the income of the sale does not satisfy the mortgage loan. When deficiency is bestowed upon the lender, the borrower should make a payment for the difference between the amount of the property sold for at the sale and the amount of the original loan.

The sale is held in the county courthouse and is presided over by the Sheriff. The foreclosure sale is carried out in a form of a public auction where the Sheriff auctions off the property to the highest bidder. Once the winning bidder has made a payment, the property ownership will be transferred.

Notice Of Sale Texas

Under Texas foreclosure laws, a Notice of Sale is required and should be published 21 days before the date of the auction. The Notice should be delivered and received by the homeowner at least 21 days before the date of the auction. In addition, a copy of this Notice should be posted at the courthouse door.