Texas foreclosure laws not only lay out the rules entities must follow in order to foreclose on your property, they also explain your rights, giving you the tools you need to take back control of your finances, stopping foreclosure, or allowing foreclosure to happen if that’s better for your financial situation.
Too many people think they have no recourse as delinquency notices, bills, and menacing letters start showing up in their mailbox, but there is a way out. Working with an experienced attorney well-versed in bankruptcy and Texas home foreclosures can help you regain your financial footing.
Under Texas foreclosure statutes, there are two types of foreclosure:
- Nonjudicial Foreclosure – Most foreclosures will fall under this category. In a property’s mortgage or deed of trust, there is often a “Power of Sale” clause. This allows a lender to foreclose on and sell a delinquent property under certain circumstances. This is included to protect the lender’s interest when they loan you the money for the property and allow them an easier option than the court system if a borrower doesn’t or can’t make their payments.
- Judicial Foreclosure – The judicial foreclosure process is used when there’s not an applicable Power of Sale clause in force. This applies not only to mortgages or Deed of Trust that lack the clause, but also liens entered for delinquent property tax or other reasons. This system does require the courts in order to complete the foreclosure process.
Both types of foreclosure under Texas Statute seek to allow an entity who holds a security interest or lien on your property the right to sell your property to fulfil delinquent financial obligations. The first step to protecting your property is understanding Texas foreclosure laws.
Nonjudicial Foreclosure Process
Nonjudicial foreclosure law is straightforward and has a relatively quick time frame you’ll need to navigate.Once the process begins, only two notices are required before your property can be sold. Before the foreclosure process can start, however, there are some communication requirements the lender has to meet.
Once you miss a payment on your property, you are considered delinquent. At 36 or fewer days delinquent, the lender must notify you of your missed payment and delinquent status. This notice must be repeated for each subsequent missed payment no later than 36-days from its due date. This is so that you know payments have not been received in case it’s an oversight and to advise you of steps the company lender may be taking.
After no more than 45 days of delinquency, the lender will send you a notice of loss mitigation options that may be available to you. These programs may be beneficial under certain circumstances to help you get caught back up on your property’s payments.
Under federal law, the nonjudicial foreclosure process can begin at 120-days delinquent, or about 4 months. By Texas foreclosure law, it starts with a Notice of Default and intent to Accelerate that gives you 20 days to cure the delinquency by paying all past due amounts owed.
If not cured by the due date, you’ll receive a Notice of Acceleration and Posting for Foreclosure, at which point the debt will be accelerated, meaning the entire unpaid amount of the note becomes due, and a foreclosure sale scheduled no less than 21 days from the date listed. Up until the sale you can still retain your property by paying the past due amount and any fees associated with the foreclosure and sale process.
Judicial Foreclosure Process
The judicial foreclosure process in Texas is used when there is no Power of Sale involved. It is most frequently seen in the case of unpaid property taxes, but can also occur pursuant to an HOA action, technical default on the loan contract, or a mechanics lien placed on a property by a contractor. The plaintiff will file a lawsuit in court. If the judge finds for the plaintiff, a foreclosure sale will be scheduled to satisfy the judgement.
Foreclosure Sale Under Texas Laws
In Texas, foreclosure sales are conducted by the county trustee the first Tuesday of the month from 10 AM to 4 PM. The trustee will read the Notice of Sale and open the bidding. If the seller has stipulated a minimum bid that’s not reached, the trustee may enter that bid on the seller’s behalf, allowing them to retain the property for a traditional sale at a later date. Otherwise, the property ownership is transferred to the highest bidder.
Eviction After Foreclosure
If you still occupy the property after the sale, you’ll receive a 3-day notice to vacate. A forcible detainer petition may be filed in the Justice Court for the county, then a notice to vacate posted by the local constable after a judgement, after which you’re subject to arrest.
Under Texas foreclosure laws, there is no right to redeem the property except under very specific circumstances. Foreclosures for unpaid taxes allow that right for two years, in which case you can redeem the first year by paying the costs of the new owner and a 25% redemption premium or the second year by paying their costs and a 50% redemption premium.
Under an HOA foreclosure of an assessment lien, you also have a right of redemption for 180 days, but other lien holders may have that same right. So it is best to consult an experienced attorney about the particulars of your case.
How Bankruptcy Impacts Foreclosure
For many people facing foreclosure under Texas laws, bankruptcy is often the best way to help them regain control of their finances. When you file bankruptcy, all foreclosure proceedings are automatically stayed. How the process works from there depends on whether you file for Chapter 7 vs. Chapter 13 bankruptcy:
- Chapter 13 – Chapter 13 bankruptcy restructures your mortgage debt to allow you to protect your house and get caught up on the payments. Debt payments are made through the court for a 3 to 5-year repayment plan and then disbursed to creditors.
- Chapter 7 – Under Chapter 7 bankruptcy, unsecured debts are legally discharged (wiped-out), but it doesn’t solve the problem of someone behind on mortgage payment if they want to keep the house. However, if someone is current on house and car payments they will continue paying them as normal.
- Our debt and bankruptcy attorneys have decades of experience helping clients navigate Texas foreclosure laws and the bankruptcy process. We’re ready to help you regain the financial
Get Help From Experienced Texas Foreclosure Lawyers stability your family needs.
Contact Leinart Law Firm now to get a free consultation with one of our bankruptcy attorneys. They’ll talk to you about your unique financial situation and help you understand your options.