Texas Law on Foreclosure
Texas laws on foreclosure are found in Title 5, Chapter 51 of the Texas Property Code. Both judicial and non-judicial foreclosures are allowed, and their applicability to a given situation depends on the terms of the deed of trust.
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Judicial Foreclosure
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Judicial foreclosure occurs when the deed of trust does not contain specific language granting the lender power of sale. The lender must petition the court for a final judgment of foreclosure, and the property will be auctioned to the highest bidder.
Non-Judicial Foreclosure
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Non-judicial foreclosure is permitted where power-of-sale language is included in the deed of trust. Such language allows the lender to institute foreclosure proceedings without a court judgment.
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Time Frame
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Most uncontested Texas foreclosures are processed in 60 days. Borrowers must be given 20 days to cure the default before the notice of sale can be posted. The notice of sale must be posted at the courthouse door at least 21 days before the date of sale.
Deficiency Judgment
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If sale proceeds are insufficient to satisfy the mortgage, action must be taken within two years of the sale to recover the deficit. Foreclosed borrowers may request that the court determine the fair market value of the property as of the sale date and use the excess of the fair market value over the sales price to offset the deficiency.
Redemption
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Texas allows no statutory right of redemption, which would permit the borrower to reclaim the foreclosed property by paying in full the loan and costs.
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References
Resources
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