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Texas foreclosure law allows lenders to follow either a Non-Judicial or Judicial Foreclosure process. If the loan documents do not contain a “power of sale” clause, the lender must use the Judicial Foreclosure process. In this process, the lender sues the borrower in court to obtain an order to foreclose.
If the original loan documents contain a “power of sale” clause, then the lender can use a Non-Judicial Foreclosure process. This clause authorizes the lender to sell the property in the event of the borrower defaulting. If the loan documents specify the place, time, and terms of the sale, then those details will be adhered to.
To begin the foreclosure process in Texas, the lender must send a letter to the borrower demanding payment within twenty (20) days of the amount delinquent. If the borrower can not cure the delinquency within that period, the lender must record a notice of sale with the county clerk. The notice must be recorded at least twenty-one (21) days before the scheduled sale date. Copies of the notice must be posted on the courthouse door and mailed to the last known address of the borrower.
The sale is conducted on the first Tuesday or each month, even if the day is a legal holiday. The place of sale is the courthouse steps in the county in which the property is located and is conducted as a public auction. The lender may take title to the property if there are no higher bids by canceling all or part of the outstanding loan balance.
The borrower in Texas does not have a right to redeem the property after the sale date, and the lender may sue the borrower for a deficiency judgment. The amount of the judgment is limited to the difference between the fair market value or sale amount and the loan balance due. |
