Foreclosure Basic Rules

[Nicholas Lilly]

The lienholder is required to provide 21-day notices of foreclosure sales of a residential homestead. This notice must also be filed with the county clerk and posted at the courthouse. The Statute of limitation is four years for lienholders to start the foreclosure process after default. After the statute of limitation expires, the lienholders cannot collect, with a few exceptions.

All lienholders must send a demand letter to debtors with the intent to foreclose on the property, the demand letter must be sent by certified mail. Debtors have 20 days to cure a homestead property, unless the deed of trust states otherwise. If the debtor is able to cure the default then a reinstatement agreement should be executed unless the terms of the debt have been changed, such as a modification agreement or a replacement note.

If the debtor or tenant has paid more than 40% of the amount due or made 48 or more monthly payments, then pursuant to the equity protection provisions of Tex. Prop. Code Sec. 5.066, the seller or landlord must give a 60-day notice of default and opportunity to cure the default. If debt has not been cured, then the trustee may start the foreclosure process.

All superior liens will extinguish subordinate liens. After the sale, any excess proceeds from the foreclosure sale may be distributed to the subordinate lien holders.

Notice must be given to the IRS and U.S. Attorney (if any) 25 days or more prior to the sale. The IRS has 120 days to redeem the property after the sale. The U.S. Attorney has 60 days.

If you are a property owner or lienholder and need assistance with the foreclosure process, be sure to review the deed of trust, note and all other relevant documents.