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Real Estate Foreclosure Laws in Texas

Texas is a title theory state. This means that the title for the property stays in trust pending the complete payment of the deed of trust, note or security agreement in the case of a commercial transaction. The mortgage may be combined with the security agreement. Otherwise, it must be filed to show the terms of repayment and the amount of the borrower’s remaining indebtedness. If the borrower fails to complete the obligation to pay the loan, Sugar Land real estate law has strict rules governing the foreclosure of the property. If you are a buyer or if you hold the deed of trust, it is critical that you understand the Texas foreclosure laws.

In the majority of cases, Katy real estate law follows the rules of nonjudicial foreclosure, which does not require any court action. The deed of trust specifies that a trustee may sell the property to satisfy the unpaid loan. This is normally accomplished by an auction with the trustee acting on behalf of the lender. Since this is a nonjudicial solution, the legal documents regarding the sale must be stipulated in the deed of trust. There are also very rigid notification requirements that must be followed to enforce this kind of foreclosure.

To begin a foreclosure, a demand letter must be sent by the deed holder to the borrower stating that past due payments must be paid within 20 days. If the payments that are in arrears are not made current before the end of that period, the foreclosure may commence. However, it may not begin for 21 days from the time the original 20-day grace period ended. A Sugar Land small business attorney has to follow these rules.

1. The deed holder or the deed holder’s legal representative has to file a notice of foreclosure with the county clerk of the county where the property is located.

2. That notice of foreclosure has to be mailed to the borrower and any other creditors that may have placed liens against the property.

3. The notice must also be posted at the county court where the sale will take place.

The actual non-judicial foreclosure sale will occur at the courthouse on the first Tuesday of the month between the hours of 10 a.m. and 4 p.m., even if that date is a legal holiday. Then, the trustee auctions the property to the highest bidder. The deed holder may also bid on the property and will receive credit for the remaining balance on the loan.

In the event that the deed of trust does not contain the required power of sale language, the deed holder must go to court to obtain a final judgment of foreclosure. This is called judicial foreclosure. After receiving that judgment, the property will be sold at a publicly noticed sale. Before it can be sold, a legal notice must be filed along with a complaint that announces to the public that the property is being foreclosed.

It usually takes around 60 days to foreclose a property under Texas law if it is an uncontested nonjudicial matter. The timing largely depends on the timing of the required notices. If the 21-day notice period ends after the first Tuesday of a month, the sale cannot proceed until the next month. The owner may postpone the proceedings by contesting the foreclosure in court, by filing for bankruptcy or by seeking an adjournment or delay. Texas does not offer the defaulting party the right of redemption, which would allow the repurchase of the property by paying the loan in full along with the court costs.

If you are facing a foreclosure, contact The Law Office of Henry Jakob at 713.640.5700. We can mount an aggressive defense against foreclosure proceedings.


  • Gregory Ruehlen
    Posted March 11, 2019 9:46 pm

    I teach Real Estate Finance at a local community college. Whether Texas practices Lien Theory or Title Theory has become a hot topic of discussion. Your article states Texas is a Title Theory state, as do many other internet sources. There are several that state Texas is a Lien Theory state as well. The Texas Supreme Court specifically states “Texas follows the lien theory of mortgages” (Taylor v. Brennan, 621 S.W.2d 592 (Tex. 1981)). The Texas Southern District Court in Bryant v. The CIT Group/Consumer Finance, Inc. et al, Case 4:16-cv-01840 reaffirms this position. Can you explain the contradiction?

    • Gregory Ruehlen
      Posted March 11, 2019 9:51 pm

      Also, let me explain that I fully understand the definition of both theories and I am not trying to be argumentative. I am sincerely seeking clarity for myself and my students. Any help you could offer in that regard would be greatly appreciated.

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