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Texas Foreclosure Law Summary
Quick Facts
- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available: Yes
- Primary Security Instruments: Deed
of Trust, Mortgage
- Timeline: Typically 60 days
- Right of Redemption: No
- Deficiency Judgments Allowed: Yes
In Texas, lenders may foreclose on deeds of trusts or
mortgages in default using either a judicial or non-judicial
foreclosure process.
Judicial Foreclosure
The judicial process of foreclosure, which involves filing
a lawsuit to obtain a court order to foreclose, is used
when no power of sale is present in the mortgage or deed
of trust. Generally, after the court declares a foreclosure,
the property will be auctioned off to the highest bidder.
Non-Judicial Foreclosure
The non-judicial process of foreclosure is used when
a power of sale clause exists in a mortgage or deed of
trust. A "power of sale" clause is the clause
in a deed of trust or mortgage, in which the borrower
pre-authorizes the sale of property to pay off the balance
on a loan in the event of the their default. In deeds
of trust or mortgages where a power of sale exists, the
power given to the lender to sell the property may be
executed by the lender or their representative, typically
referred to as the trustee. Regulations for this type
of foreclosure process are outlined below in the "Power
of Sale Foreclosure Guidelines".
Power of Sale Foreclosure Guidelines
If the deed of trust or mortgage contains a power of
sale clause and specifies the time, place and terms of
sale, then the specified procedure must be followed. Otherwise,
the non-judicial power of sale foreclosure is carried
out as follows:
- Prior to proceeding with a foreclosure, Texas laws
state that the lender must mail the borrower a letter
of demand, informing the buyer he has twenty (20) days
to pay the delinquent payments or foreclosure proceedings
will begin.
- At some point after the borrowers twenty (20) days
have expired, but at least twenty one (21) days before
the foreclosure sale, a foreclosure notice must be:
1) filed with the county clerk; 2) mailed to the borrower
at their last known address; and 3) posted on the county
courthouse door.
- 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 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.
Lenders may obtain deficiency judgments, but they are
limited to the difference between the fair market value
of the property at the time of sale and the balance of
the loan in default.
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