Foreclosures in Texas are usually non-judicial, meaning they are conducted “on the steps of the courthouse”. The effect of foreclosure is to reduce and eliminate minor liens, except for those related to unpaid taxes. If you purchase a property at a foreclosure auction and later discover that there is a government lien or lien that survives the auction, you will be responsible for paying it off. Once the foreclosure deed is recorded and interested parties (lien holders) are notified, you will need to act quickly.
The county may impose many liens on other properties owned by you when you are the lien holder. If you were to sell your personal home, you would have to pay off the lien before you issue title insurance. In the worst case, they can foreclose on another property you own to pay off this debt, although this rarely happens. There are several different types of property liens where foreclosure can be used to collect debt owed.
Some of the most common ones are mortgage sale of residential property, notices of default, notices of sale, and notices of foreclosure. Notices of the mortgage sale must be filed with the county clerk and posted at least 21 calendar days before the expected foreclosure date. However, the lender or their lawyer can report the default, expedite the debt and even process the foreclosure in less time, but the foreclosure sale itself should not take place until the 30-day debt verification period has expired. Buying property after foreclosure is a popular form of investment, but it contains traps for the unwary.
The advantage of foreclosure versus eviction is that there are no effective defenses against the foreclosure process, unless the borrower blocks it with a temporary restraining order or files for bankruptcy. It's a fact that foreclosure can be stopped, but the only sure way to do so is to file a lawsuit and convince the judge to issue a temporary restraining order before the foreclosure sale. In general, if you buy a property auctioned for foreclosure and contact the lien holder to explain the situation, it is possible that it reduces or nullifies their right of retention applied to the property. Private lenders who pay property taxes usually wait for tax authorities to begin the foreclosure process and then file a request to intervene in the lawsuit brought by municipal law firm.
Under Section 32.065 (c) of Texas Tax Code, private property tax lenders “are prohibited from exercising a remedy of foreclosure or judicial sale when the transferred tax unit is prohibited from foreclosure or judicial sale”. Real estate attorneys (or anyone else) who send foreclosure notices and carry out foreclosures are considered debt collectors when it comes to communicating with a debtor in order to attempt to collect or reinstate a delinquent real estate note. In larger metropolitan areas, foreclosure advertising services publish a monthly list of properties advertised for foreclosure.
