PROPERTY CODE
SUBTITLE B. LIENS
CHAPTER 51. PROVISIONS GENERALLY APPLICABLE TO LIENS
§ 51.0001. DEFINITIONS. In this chapter:
(1) "Book entry system" means a national book entry
system for registering a beneficial interest in a security
instrument that acts as a nominee for the grantee, beneficiary,
owner, or holder of the security instrument and its successors and
assigns.
(2) "Debtor's last known address" means:
(A) for a debt secured by the debtor's residence,
the debtor's residence address unless the debtor provided the
mortgage servicer a written change of address before the date the
mortgage servicer mailed a notice required by Section 51.002; or
(B) for a debt other than a debt described by
Paragraph (A), the debtor's last known address as shown by the
records of the mortgage servicer of the security instrument unless
the debtor provided the current mortgage servicer a written change
of address before the date the mortgage servicer mailed a notice
required by Section 51.002.
(3) "Mortgage servicer" means the last person to whom
a mortgagor has been instructed by the current mortgagee to send
payments for the debt secured by a security instrument. A mortgagee
may be the mortgage servicer.
(4) "Mortgagee" means:
(A) the grantee, beneficiary, owner, or holder of
a security instrument;
(B) a book entry system; or
(C) if the security interest has been assigned of
record, the last person to whom the security interest has been
assigned of record.
(5) "Mortgagor" means the grantor of a security
instrument.
(6) "Security instrument" means a deed of trust,
mortgage, or other contract lien on an interest in real property.
(7) "Substitute trustee" means a person appointed by
the current mortgagee or mortgage servicer under the terms of the
security instrument to exercise the power of sale.
(8) "Trustee" means a person authorized to exercise
the power of sale under the terms of a security instrument.
Added by Acts 2003, 78th Leg., ch. 554, § 1, eff. Jan. 1, 2004.
§ 51.001. EFFECT ON OTHER LIENS. Except as provided by
Chapter 59, this subtitle does not affect:
(1) the right to create a lien by special contract or
agreement; or
(2) a lien that is not treated in this subtitle,
including a lien arising under common law, in equity, or under
another statute of this state.
Acts 1983, 68th Leg., p. 3525, ch. 576, § 1, eff. Jan. 1, 1984.
§ 51.002. SALE OF REAL PROPERTY UNDER CONTRACT
LIEN. (a) A sale of real property under a power of sale conferred
by a deed of trust or other contract lien must be a public sale at
auction held between 10 a.m. and 4 p.m. of the first Tuesday of a
month. The sale must take place at the county courthouse in the
county in which the land is located, or if the property is located
in more than one county, the sale may be made at the courthouse in
any county in which the property is located. The commissioners
court shall designate the area at the courthouse where the sales are
to take place and shall record the designation in the real property
records of the county. The sale must occur in the designated area.
If no area is designated by the commissioners court, the notice of
sale must designate the area at the courthouse where the sale
covered by that notice is to take place, and the sale must occur in
that area.
(b) Notice of the sale, which must include a statement of
the earliest time at which the sale will begin, must be given at
least 21 days before the date of the sale:
(1) by posting at the courthouse door of each county in
which the property is located a written notice designating the
county in which the property will be sold;
(2) by filing in the office of the county clerk of each
county in which the property is located a copy of the notice posted
under Subdivision (1); and
(3) by the mortgage servicer of the debt to which the
power of sale is related serving written notice of the sale by
certified mail on each debtor who, according to the records of the
mortgage servicer of the debt, is obligated to pay the debt.
(c) The sale must begin at the time stated in the notice of
sale or not later than three hours after that time.
(d) Notwithstanding any agreement to the contrary, the
mortgage servicer of the debt shall serve a debtor in default under
a deed of trust or other contract lien on real property used as the
debtor's residence with written notice by certified mail stating
that the debtor is in default under the deed of trust or other
contract lien and giving the debtor at least 20 days to cure the
default before notice of sale can be given under Subsection (b).
The entire calendar day on which the notice required by this
subsection is given, regardless of the time of day at which the
notice is given, is included in computing the 20-day notice period
required by this subsection, and the entire calendar day on which
notice of sale is given under Subsection (b) is excluded in
computing the 20-day notice period.
(e) Service of a notice under this section by certified mail
is complete when the notice is deposited in the United States mail,
postage prepaid and addressed to the debtor at the debtor's last
known address. The affidavit of a person knowledgeable of the facts
to the effect that service was completed is prima facie evidence of
service.
(f) Each county clerk shall keep all notices filed under
Subdivision (2) of Subsection (b) in a convenient file that is
available to the public for examination during normal business
hours. The clerk may dispose of the notices after the date of sale
specified in the notice has passed. The clerk shall receive a fee
of $2 for each notice filed.
(g) The entire calendar day on which the notice of sale is
given, regardless of the time of day at which the notice is given,
is included in computing the 21-day notice period required by
Subsection (b), and the entire calendar day of the foreclosure sale
is excluded.
Acts 1983, 68th Leg., p. 3525, ch. 576, § 1, eff. Jan. 1, 1984.
Amended by Acts 1984, 68th Leg., 2nd C.S., ch. 18, § 3(b), eff.
Oct. 2, 1984; Acts 1987, 70th Leg., ch. 540, § 1, eff. Jan. 1,
1988; Acts 1993, 73rd Leg., ch. 48, § 5, eff. Sept. 1, 1993;
Acts 2003, 78th Leg., ch. 554, § 2, eff. Jan. 1, 2004.
§ 51.0021. NOTICE OF CHANGE OF ADDRESS REQUIRED. A
debtor shall inform the mortgage servicer of the debt in a
reasonable manner of any change of address of the debtor for
purposes of providing notice to the debtor under Section 51.002.
Added by Acts 2003, 78th Leg., ch. 554, § 1, eff. Jan. 1, 2004.
§ 51.0025. ADMINISTRATION OF FORECLOSURE BY MORTGAGE
SERVICER. A mortgage servicer may administer the foreclosure of
property under Section 51.002 on behalf of a mortgagee if:
(1) the mortgage servicer and the mortgagee have
entered into an agreement granting the current mortgage servicer
authority to service the mortgage; and
(2) the mortgage servicer discloses in the notice
required under Section 51.002:
(A) that the mortgage servicer is representing
the mortgagee under a servicing agreement with the mortgagee; and
(B) the name and address of the mortgagee.
Added by Acts 2003, 78th Leg., ch. 554, § 1, eff. Jan. 1, 2004.
§ 51.003. DEFICIENCY JUDGMENT. (a) If the price at
which real property is sold at a foreclosure sale under Section
51.002 is less than the unpaid balance of the indebtedness secured
by the real property, resulting in a deficiency, any action brought
to recover the deficiency must be brought within two years of the
foreclosure sale and is governed by this section.
(b) Any person against whom such a recovery is sought by
motion may request that the court in which the action is pending
determine the fair market value of the real property as of the date
of the foreclosure sale. The fair market value shall be determined
by the finder of fact after the introduction by the parties of
competent evidence of the value. Competent evidence of value may
include, but is not limited to, the following: (1) expert opinion
testimony; (2) comparable sales; (3) anticipated marketing time
and holding costs; (4) cost of sale; and (5) the necessity and
amount of any discount to be applied to the future sales price or
the cashflow generated by the property to arrive at a current fair
market value.
(c) If the court determines that the fair market value is
greater than the sale price of the real property at the foreclosure
sale, the persons against whom recovery of the deficiency is sought
are entitled to an offset against the deficiency in the amount by
which the fair market value, less the amount of any claim,
indebtedness, or obligation of any kind that is secured by a lien or
encumbrance on the real property that was not extinguished by the
foreclosure, exceeds the sale price. If no party requests the
determination of fair market value or if such a request is made and
no competent evidence of fair market value is introduced, the sale
price at the foreclosure sale shall be used to compute the
deficiency.
(d) Any money received by a lender from a private mortgage
guaranty insurer shall be credited to the account of the borrower
prior to the lender bringing an action at law for any deficiency
owed by the borrower. Notwithstanding the foregoing, the credit
required by this subsection shall not apply to the exercise by a
private mortgage guaranty insurer of its subrogation rights against
a borrower or other person liable for any deficiency.
Added by Acts 1991, 72nd Leg., ch. 12, § 1, eff. April 1, 1991.
§ 51.004. JUDICIAL FORECLOSURE--DEFICIENCY. (a) This
section applies if:
(1) real property subject to a deed of trust or other
contract lien is sold at a foreclosure sale under a court judgment
foreclosing the lien and ordering the sale; and
(2) the price at which the real property is sold is
less than the unpaid balance of the indebtedness secured by the real
property, resulting in a deficiency.
(b) Any person obligated on the indebtedness, including a
guarantor, may bring an action in the district court in the county
in which the real property is located for a determination of the
fair market value of the real property as of the date of the
foreclosure sale. The suit must be brought not later than the 90th
day after the date of the foreclosure sale unless the suit is
brought by a guarantor who did not receive actual notice of the sale
before the date of sale, in which case the suit must be brought by
the guarantor not later than the 90th day after the date the
guarantor received actual notice of the sale. The fair market value
shall be determined by the finder of fact after the introduction by
the parties of competent evidence of the value. Competent evidence
of value may include:
(1) expert opinion testimony;
(2) comparable sales;
(3) anticipated marketing time and holding costs;
(4) cost of sale; and
(5) the necessity and amount of any discount to be
applied to the future sales price or the cash flow generated by the
property to arrive at a fair market value as of the date of the
foreclosure sale.
(c) If the finder of fact determines that the fair market
value is greater than the sale price of the real property at the
foreclosure sale, the persons obligated on the indebtedness,
including guarantors, are entitled to an offset against the
deficiency in the amount by which the fair market value, less the
amount of any claim, indebtedness, or obligation of any kind that is
secured by a lien or encumbrance on the real property that was not
extinguished by the foreclosure, exceeds the sale price. If no
competent evidence of fair market value is introduced, the sale
price at the foreclosure sale shall be used to compute the
deficiency.
(d) Any money received by a lender from a private mortgage
guaranty insurer shall be credited to the account of the borrower
before the lender brings an action at law for any deficiency owed by
the borrower. However, the credit required by this subsection does
not apply to the exercise by a private mortgage guaranty insurer of
its subrogation rights against a borrower or other person liable
for any deficiency.
Added by Acts 1991, 72nd Leg., ch. 361, § 1, eff. June 5, 1991.
§ 51.005. JUDICIAL OR NONJUDICIAL FORECLOSURE AFTER
JUDGMENT AGAINST GUARANTOR--DEFICIENCY. (a) This section
applies if:
(1) the holder of a debt obtains a court judgment
against a guarantor of the debt;
(2) real property subject to a deed of trust or other
contract lien securing the guaranteed debt is sold at a foreclosure
sale under Section 51.002 or under a court judgment foreclosing the
lien and ordering the sale;
(3) the price at which the real property is sold is
less than the unpaid balance of the indebtedness secured by the real
property, resulting in a deficiency; and
(4) a motion or suit to determine the fair market value
of the real property as of the date of the foreclosure sale has not
been filed under Section 51.003 or 51.004.
(b) The guarantor may bring an action in the district court
in the county in which the real property is located for a
determination of the fair market value of the real property as of
the date of the foreclosure sale. The suit must be brought not
later than the 90th day after the date of the foreclosure sale or
the date the guarantor receives actual notice of the foreclosure
sale, whichever is later. The fair market value shall be determined
by the finder of fact after the introduction by the parties of
competent evidence of the value. Competent evidence of value may
include:
(1) expert opinion testimony;
(2) comparable sales;
(3) anticipated marketing time and holding costs;
(4) cost of sale; and
(5) the necessity and amount of any discount to be
applied to the future sales price or the cash flow generated by the
property to arrive at a fair market value as of the date of the
foreclosure sale.
(c) If the finder of fact determines that the fair market
value is greater than the sale price of the real property at the
foreclosure sale, the persons obligated on the indebtedness,
including guarantors, are entitled to an offset against the
deficiency in the amount by which the fair market value, less the
amount of any claim, indebtedness, or obligation of any kind that is
secured by a lien or encumbrance on the real property that was not
extinguished by the foreclosure, exceeds the sale price. If no
competent evidence of fair market value is introduced, the sale
price at the foreclosure sale shall be used to compute the
deficiency.
(d) Any money received by a lender from a private mortgage
guaranty insurer shall be credited to the account of the borrower
before the lender brings an action at law for any deficiency owed by
the borrower. However, the credit required by this subsection does
not apply to the exercise by a private mortgage guaranty insurer of
its subrogation rights against a borrower or other person liable
for any deficiency.
Added by Acts 1991, 72nd Leg., ch. 361, § 1, eff. June 5, 1991.
§ 51.006. DEED-OF-TRUST FORECLOSURE AFTER DEED IN LIEU
OF FORECLOSURE. (a) This section applies to a holder of a debt
under a deed of trust who accepts from the debtor a deed conveying
real property subject to the deed of trust in satisfaction of the
debt.
(b) The holder of a debt may void a deed conveying real
property in satisfaction of the debt before the fourth anniversary
of the date the deed is executed and foreclosed under the original
deed of trust if:
(1) the debtor fails to disclose to the holder of the
debt a lien or other encumbrance on the property before executing
the deed conveying the property to the holder of the debt in
satisfaction of the debt; and
(2) the holder of the debt has no personal knowledge of
the undisclosed lien or encumbrance on the property.
(c) A third party may conclusively rely upon the affidavit
of the holder of a debt stating that the holder has voided the deed
as provided in this section.
(d) If the holder elects to void a deed in lieu of
foreclosure as provided in this section, the priority of its deed of
trust shall not be affected or impaired by the execution of the deed
in lieu of foreclosure.
(e) If a holder accepts a deed in lieu of foreclosure, the
holder may foreclose its deed of trust as provided in said deed of
trust without electing to void the deed. The priority of such deed
of trust shall not be affected or impaired by the deed in lieu of
foreclosure.
Added by Acts 1995, 74th Leg., ch. 1020, § 1, eff. Aug. 28, 1995.
§ 51.007. TRUSTEE UNDER DEED OF TRUST, CONTRACT LIEN OR
SECURITY INSTRUMENT. (a) The trustee named in a suit or
proceeding may plead in the answer that the trustee is not a
necessary party by a verified denial stating the basis for the
trustee's reasonable belief that the trustee was named as a party
solely in the capacity as a trustee under a deed of trust, contract
lien, or security instrument.
(b) Within 30 days after the filing of the trustee's
verified denial, a verified response is due from all parties to the
suit or proceeding setting forth all matters, whether in law or
fact, that rebut the trustee's verified denial.
(c) If a party has no objection or fails to file a timely
verified response to the trustee's verified denial, the trustee
shall be dismissed from the suit or proceeding without prejudice.
(d) If a respondent files a timely verified response to the
trustee's verified denial, the matter shall be set for hearing. The
court shall dismiss the trustee from the suit or proceeding without
prejudice if the court determines that the trustee is not a
necessary party.
(e) A dismissal of the trustee pursuant to Subsections (c)
and (d) shall not prejudice a party's right to seek injunctive
relief to prevent the trustee from proceeding with a foreclosure
sale.
(f) A trustee shall not be liable for any good faith error
resulting from reliance on any information in law or fact provided
by the mortgagor or mortgagee or their respective attorney, agent,
or representative or other third party.
Added by Acts 1999, 76th Leg., ch. 1304, § 1, eff. Sept. 1, 1999.
§ 51.0075. AUTHORITY OF TRUSTEE OR SUBSTITUTE
TRUSTEE. (a) A trustee or substitute trustee may set reasonable
conditions for conducting the public sale if the conditions are
announced before bidding is opened for the first sale of the day
held by the trustee or substitute trustee.
(b) A trustee or substitute trustee is not a debt collector.
(c) A mortgagee may appoint or may authorize a mortgage
servicer to appoint a perpetual substitute trustee by power of
attorney or other written instrument. The power of attorney or
written instrument must be signed by the mortgagee's
representative, acknowledged, and sworn to with a jurat.
Added by Acts 2003, 78th Leg., ch. 554, § 1, eff. Jan. 1, 2004.
§ 51.008. CERTAIN LIENS ON REAL PROPERTY. (a) A lien
on real property created under this code or another law of this
state in favor of a governmental entity must be recorded as provided
by Chapters 11 and 12 in the real property records of the county in
which the property or a portion of the property is located unless:
(1) the lien is imposed as a result of failure to pay:
(A) ad valorem taxes; or
(B) a penalty or interest owed in connection with
those taxes; or
(2) the law establishing the lien expressly states
that recording the lien is not required.
(b) Any notice of the lien required by law must contain a
legal description of the property.
(c) This section does not apply to:
(1) a lien created under Section 89.083, Natural
Resources Code;
(2) a state tax lien under Chapter 113, Tax Code; or
(3) a lien established under Chapter 61 or 213, Labor
Code.
Added by Acts 2001, 77th Leg., ch. 827, § 1, eff. Sept. 1, 2001.
§ 51.009. FORECLOSED PROPERTY SOLD "AS IS". A purchaser
at a sale of real property under Section 51.002:
(1) acquires the foreclosed property "as is" without
any expressed or implied warranties, except as to warranties of
title, and at the purchaser's own risk; and
(2) is not a consumer.
Added by Acts 2003, 78th Leg., ch. 554, § 1, eff. Jan. 1, 2004.
