2005 Texas Property Code CHAPTER 51. PROVISIONS GENERALLY APPLICABLE TO LIENS

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.  Except 
as provided by Subsection (h), 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 
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 by:
		(1)  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)  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)  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.
	(h)  For the purposes of Subsection (a), the commissioners 
court of a county may designate an area other than an area at the 
courthouse where sales under this section will take place that is in 
a public place within a reasonable proximity of the county 
courthouse and in a location as accessible to the public as the 
courthouse door.  The commissioners court shall record that 
designation in the real property records of the county.  The posting 
of the notice required by Subsection (b)(1) of a sale designated 
under this subsection to take place at an area other than an area of 
the courthouse remains at the courthouse door of the appropriate 
county.

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;  Acts 2005, 
79th Leg., ch. 533, § 1, eff. June 17, 2005;  Acts 2005, 79th 
Leg., ch. 555, § 1, eff. Sept. 1, 2005.


	§ 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 notices required under Section 51.002(b) 
disclose                  
			that the mortgage servicer is representing the 
mortgagee under a servicing agreement with the mortgagee and
			the name of the mortgagee and:                                               
			(A)  the address of the mortgagee;  or                                       
			(B)  the address of the mortgage servicer, if 
there is an agreement granting a mortgage servicer the authority to 
service the mortgage.

Added by Acts 2003, 78th Leg., ch. 554, § 1, eff. Jan. 1, 2004.  
Amended by Acts 2005, 79th Leg., ch. 555, § 2, eff. Sept. 1, 
2005.


	§ 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)  Notwithstanding any agreement to the contrary, a 
mortgagee may appoint or may authorize a mortgage servicer to 
appoint a substitute trustee or substitute trustees to succeed to 
all title, powers, and duties of the original trustee.  A mortgagee 
or mortgage servicer may make an appointment or authorization under 
this subsection by power of attorney, corporate resolution, or 
other written instrument.
	(d)  A mortgage servicer may authorize an attorney to appoint 
a substitute trustee or substitute trustees on behalf of a 
mortgagee under Subsection (c).
	(e)  The name and a street address for a trustee or 
substitute trustees shall be disclosed on the notice required by 
Section 51.002(b).

Added by Acts 2003, 78th Leg., ch. 554, § 1, eff. Jan. 1, 2004.  
Amended by Acts 2005, 79th Leg., ch. 1231, § 1, eff. Sept. 1, 
2005.


	§ 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.