Foreclosure Process

REAL ESTATE

In many states, you must go through the judicial system (the courts) to conduct a real estate foreclosure. In Texas, however, you typically do not need to involve a court or a judge. As such, Texas is considered a non-judicial foreclosure state.

If you have loaned money to an individual to purchase real estate or owner financed the sale of your real estate, you should have obtained a promissory note from the buyer as well as a deed of trust (sometimes referred to as a mortgage). The promissory note outlines the terms of payment and the deed of trust gives the lender a lien. If your loan was documented properly and you are not getting paid in accordance with the promissory note, the deed of trust trustee (or substitute trustee) can sell the property to repay the note. This process is commonly referred to as the foreclosure process.

Unless the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, the non-judicial foreclosure is typically carried out as follows:

Prior to proceeding with a foreclosure, Texas laws state that the lender must mail the borrower a notice of default (aka demand letter) informing the borrower that he/she has twenty (20) days to pay the delinquent payments (the cure period) or the debt will be declared due and foreclosure proceedings will begin.
At some point after the twenty (20) day cure period has expired, a Notice of Acceleration will be mailed to the borrower via certified mail. This letter will be accompanied by a notice of foreclosure.
At least twenty one (21) days before the foreclosure sale, a foreclosure notice must be: (a) filed with the county clerk; (b) mailed to the borrower at their last known address; and (c) posted at the county courthouse.
The foreclosure sale must take place on the first Tuesday of any month, even if said Tuesday falls on a legal holiday, but only after the proper preliminary notices have been given. The sale is typically conducted on the courthouse steps by auction to the highest bidder for cash. Anyone may bid, including the lender, who bids by canceling out the balance due on the note, or some part of it.
The trustee will transfer the property to highest bidder via a trustee’s deed. The highest bidder/new owner will own property free and clear of any junior liens, but subject to any superior liens (superior liens typically include ad valorem real property taxes and liens recorded prior to the date of the deed of trust).

Contact our Dallas office to speak with a foreclosure attorney about the foreclosure process or other debt collection stragtegies.