Foreclosure is an important legal matter in which creditors need to balance their rights under the law and with realistic options. Craig Lesok has handled thousands of foreclosures over 20 years throughout the state of Texas. Below are the nuts and bolts of foreclosures:
A judicial foreclosure requires the lienholder to file a civil lawsuit against the homeowner. They must obtain a judgment from the court before they are allowed to sell the property. This is most commonly observed during the repossession of a manufactured home (See Repossession of Manufactured Homes), foreclosure of a tax lien (See Property Tax Lenders), or in the case of complex foreclosure where a title company would prefer a judgment as opposed to a non-judicial foreclosure.
In accordance with Section 51.002 of the Texas Property Code, a non-judicial foreclosure allows the lienholder to sell the property without having to file a civil lawsuit against the homeowner. Section 51.002 of the Texas Property Code mandates that the lienholder must have a deed of trust with a “power of sale” clause, giving them the authority to sell the property. It is crucial that the lender complies with state law and the terms of the individual deed of trust. In most cases, Texas law affords the lender an expedient method to foreclose its lien, without court interference, in about two-three months, exclusive of issues that a title search may present (See Title Issues).
Under Texas Rules of Civil Procedure, 735 and 736, home equity loans, reverse mortgages, or assessment liens by a property owners association require a quasi-judicial foreclosure whereby a judgment is required to proceed with a non-judicial foreclosure.
Deed in Lieu of Foreclosure
In order to avoid foreclosure altogether, the Lender and Borrower may reach an agreement to execute a Deed in Lieu of Foreclosure. As the name suggests, the Debtor agrees to deed/ convey the property back to the Lender in lieu of foreclosure. This is advantageous to the Lender because it avoids foreclosure and can benefit the Borrower to avoid further credit issues resulting from foreclosure.