Texas Foreclosure Laws

According to Texas foreclosure laws it is a title theory state and these processes are mostly conducted on a non-judicial basis. The legal agreement which secures the underlying loan is a Deed of Trust, but may be referred to as being a mortgage, for a non-judicial foreclosure to take place the title deed must contain a power of sale clause. Effectively the property is held in trust until the loan has been repaid in full.

A power of sale foreclosure entitles the trustee over the property to issue the necessary notice of sale without having to approach the courts. This is however a strict process and has to be followed to the letter of the law. If it is not the foreclosure could be cancelled as it will bee deemed to have been unfair to the borrower.

The borrower in default has to be issued with a letter of demand requesting that the default amount must be paid. The letter gives the borrower 20 days to affect this, if the money is not paid to the lender the foreclosure proceedings start. Once the foreclosure process starts a notice of sale has to be issued to the defaulting borrower, the county clerk, and must be posted at the courthouse. The sale of the property takes place at the county courthouse on the first Tuesday of the month between 10am and 4pm. Foreclosure auctions are regularly delayed and if this continues a new notice is compelled to be issued and the process started over.

An uncontested non-judicial foreclosure can take as little as 60 days to finalize in Texas, there are no statutory rights of redemption and deficiency judgments are allowed. A deficiency judgment means the lender has recourse to sue the borrower for any further outstanding debt after the sale of the property has taken place.

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