Changes to Practice Notes
Chapter 1Attorney-Client Relations in the Foreclosure Process
§ 1.1Introduction
Added clarification that forms in this chapter are for
general advice only.
§ 1.1:2Duty to Report Ethical Violation; Peer Assistance Program Alternative
This section has been revised to reflect new language in Tex. Disciplinary Rules Prof’l Conduct R. 8.03.
§ 1.2Sources of Interpretation of Rules
Added paragraph about Tex. Disciplinary Rules Prof’l Conduct R. 1.05(c)(9).
§ 1.4:2Areas of Concern When Consulting Potential Client
Added paragraph reminding that an attorney is not required to represent everyone who seeks advice.
§ 1.5:1Disclosure of Conflicts
Added discussion about Tex. Disciplinary Rules Prof’l Conduct R. 1.12.
§ 1.5:3Trustee as Witness
Added sentence at end of section providing additional clarification.
§ 1.5:4Legal Fees
This section has been revised to reflect new language in Tex. Disciplinary Rules Prof’l Conduct R. 1.04.
Added discussion about Rohrmoos Venture v. UTSW DVA Healthcare, LLP.
§ 1.5:7Record Retention and Destruction
Added reference to form 1-2.
Added discussion about digital and sensitive record retention.
§ 1.6:2Confidentiality
Added discussion about new Tex. Disciplinary Rules Prof’l Conduct R. 1.16.
Added discussion about ABA Model Rules of Professional Conduct compared to Texas Disciplinary Rules of Professional Conduct.
§ 1.6:3Duty to Clarify Nonrepresentation
Added reference to new form.
§ 1.8Technological Competence
This is a new section addressing new comment to Tex. Disciplinary Rules Prof’l Conduct R. 1.01.
Chapter 2Getting Started—Information Required
§ 2.4Collecting Necessary Information
Added several new examples of documents that the attorney should review.
§ 2.5:1Loan Documents
Added sentence regarding guaranty agreements.
Chapter 3Evaluating the Options for Collecting the Debt
§ 3.3:2Statute of Frauds and Written Loan Agreements
Added citation to Padilla v. LaFrance.
Added discussion about written memorandums and rule 11 agreements.
Added citation to Adams v. Abbott.
Added citation to 1001 McKinney Ltd. v. Credit Suisse First Boston Mortgage Capital.
Added citation to Williams v. Wells Fargo Bank, N.A.
§ 3.3:3Limitations and Reinstatement Agreements
Added citation to In re Academy, Ltd.
Added citation to Godoy v. Wells Fargo Bank, N.A.
§ 3.4:3Deed in Lieu of Foreclosure
Added discussion about Tex. Civ. Prac. & Rem. Code § 16.035(a).
Added discussion about U.S. Bank N.A. v. Lamell.
§ 3.5:3Nonjudicial Foreclosure
Added discussion about Steptoe v. JPMorgan Chase Bank, N.A.
Chapter 4Preforeclosure Title Concerns
§ 4.2:3Foreclosure of Ad Valorem Tax Liens
Added case summary for Smart v. Tower Land & Investment Co.
§ 4.3:1Introduction to Federal Tax Liens
Added further discussion about United States v. Brosnan and numerous other cases involving federal tax liens.
Added section regarding 26 U.S.C. § 6323(b).
§ 4.8Constitutional Mechanic’s and Materialman’s Liens
Added reference to Tex. Prop. Code § 53.101.
§ 4.9:6Removables
Added further discussion on removables.
§ 4.13Leases as Junior Encumbrances
This section has been substantially rewritten.
§ 4.14Affirmation of Leases After Foreclosure
This section has been retitled.
Added discussion about junior encumbrances.
Chapter 5The Note in Foreclosure
§ 5.4Ownership and Negotiation of Promissory Note
Replaced citation to Tex. Bus. & Com. Code § 3.201(c) with case citation to Northwestern National Insurance Co. v. Crockett.
Chapter 6The Deed of Trust
§ 6.1Introduction—Deed of Trust as Contract
Added citation to Benbrook Economic Development Corp. V. National Bank of Texas.
§ 6.1:1Contract between Parties
Added citation to Greenville v. Bills.
Added discussion about Edwards v. Fannie Mae.
§ 6.2Enforcement Is Independent of Note and Vendor’s Lien
Added citation to Stephens v. LPP Mortgage, Ltd.
§ 6.3:5Mortgage Electronic Registration Systems, Inc.
Added discussion regarding Harris County v. MERSCORP, Inc.
§ 6.3:6Trustee
Added citation for Zanfordino v. Jeffus.
§ 6.6:2Improvements
Added citations for Bunch v. Woodlands Land Development Co. and Piranha Partners v. Neuhoff.
§ 6.6:3Fixtures
Added citation for State v. Clear Channel Outdoor, Inc.
§ 6.6:4Appurtenances
Added citations for Henry v. Smith and Aery v. Hoskins.
§ 6.6:6Manufactured Homes
Updated citations ffrom 12 C.F.R. § 590.4 to 12 C.F.R. § 190.4.
§ 6.6:7Crops, Crop Rent, and Farm Tenants
Added citation for Brown v. Leath.
§ 6.6:9Personal Property
Added citations for Airpro Mobile Air, LLC v. Prosperity Bank and Cantu v. Falcon International Bank.
§ 6.7:1Failure to Pay
Added citation for Perry v. Cam XV Trust.
§ 6.7:3Bankruptcy or Insolvency
Added citation for Browning Seed, Inc. v. Bayles.
§ 6.7:5Maintenance of Insurance
Added citations for Roberts v. Wells Fargo Bank, N.A. and Lewis v. Wells Fargo Home Mortgage, Inc.
§ 6.7:10Properties in Receivership
Added citation for Pratt v. Amrex, Inc.
Chapter 7Consumer Debt Collection Laws
§ 7.2:4The Debt Validation Notice
Removed references to “mini-Miranda” notice.
§ 7.2:5Basic Validation and Mini-Miranda Notices
Removed section and renumbered subsequent sections.
Chapter 10Borrower Challenges to Foreclosure and Lender Responses
§ 10.2:4Diversity Jurisdiction
Added discussion about Durbois v. Deutsche Bank National Trust Co.
§ 10.3:7Economic Loss Doctrine
Added discussion regarding multiple new cases.
§ 10.4Statute of Frauds
Added discussion regarding multiple new cases.
Chapter 11Trustees and Substitute Trustees
§ 11.7Trustee—Natural Person or Entity
This section has been substantially revised.
§ 11.20Conducting Foreclosure Sale
Added a common practices note.
Chapter 12Notice of Foreclosure Sale
§ 12.1Introduction
This entire section has been substantially revised.
§ 12.2Contractual Requirements of Notice of Sale
This entire section has been substantially revised.
§ 12.3Statutory Requirements to Post, File, and Mail Notice of Sale
This entire section has been substantially revised.
§ 12.4Contents of Notice of Sale
This entire section has been substantially revised.
§ 12.5Immaterial Errors in Notice
This entire section has been substantially revised.
Chapter 13Bid Evaluation
§ 13.1Introduction
Added mention of third-party bidders.
§ 13.9Limitations on Purchaser’s Right to Possession of Property
Removed first paragraph.
§ 13.10:1Mortgagee vs. Third-Party Bidder
This entire section has been substantially revised.
§ 13.10:2Due Diligence
This entire section has been substantially revised.
§ 13.10:3Bidding
This entire section has been substantially revised.
Chapter 14Conducting the Sale
§ 14.1Presale Considerations
Added mention of third-party bidders.
Added discussion regarding avoiding void foreclosures.
§ 14.1:1Statutes of Limitation
This is a new section.
§ 14.1:2Effect upon Title
This is a new section, replacing the previous section.
§ 14.1:3Third-Party Purchasers from Foreclosure Sale Grantee
This is a new section, replacing the previous section.
§ 14.3Person Conducting Sale
This entire section has been substantially revised.
Added citation to Slaughter v. Qualls.
Added discussion regarding power to appoint a substitute trustee.
Added discussion regarding McClure v. Casa Claire Apartments for when a trustee enters a bid for the mortgagee.
§ 14.4Manner of Sale
Added citation to Pentad Joint Venture v. First National Bank of La Grange and accompanying discussion.
§ 14.4:1Language at Sale
Added statement about the attorney for the mortgagee often being the trustee that conducts the foreclosure sale.
§ 14.4:2Open-Beach Disclosures
Added statement about disclosures being in a separate written statement.
§ 14.4:3Terms of Sale
This entire section has been substantially revised.
§ 14.6Chilling Bidding
This entire section has been substantially revised with numerous cases and discussions added.
§ 14.7Sale in Parcels or as Whole
Added reference to the Texas Real Estate Forms Manual’s form 8-1.
Added to discussion on Stanglin v. Keda Development Corp.
§ 14.8:1Adequate Consideration
Removed discussion about Tex. Prop. Code § 51.003.
§ 14.8:2Grossly Inadequate Consideration Coupled with Irregularity
This entire section has been substantially revised.
Added clarification about situations where cases are found or not found to contribute to grossly inadequate sale prices.
§ 14.8:3Bids Less Than “Reasonably Equivalent Value” and Review of Bankruptcy
Elaborated on BFP v. RTC.
§ 14.8:5Overbidding
Added reference to section 14.3 in this manual for additional discussion.
§ 14.9:2Commercially Reasonable Sale and Bid Price
Clarified discussion about Tex. Bus. & Com. Code § 9.610(b) and the code’s lack of a definition of “commercially reasonable.”
§ 14.9:6Description of Collateral
This is a new section.
§ 14.10Warranties and Title Delivered at Sale
Added reference to the Texas Real Estate Forms Manual’s form 14-16.
§ 14.10:1Delivery of Trustee’s Deed
Updated section title.
§ 14.10:3Warranties of Title Binding Mortgagor
Added reference to the Texas Real Estate Forms Manual’s form 8-1.
§ 14.10:4Foreclosure Sale Purchaser Neither Consumer Nor Bona Fide Purchaser for Value
Updated section title.
Clarified definitions of terms.
Added discussion on Sandel v. Burney.
Added practice note.
§ 14.10:5UCC Warranties
Added reference to the Texas Real Estate Forms Manual’s form 14-16.
§ 14.11Reforeclosure and Correcting Defective Trustee’s Deed
Added discussion about Tex. Prop. Code § 5.027(b).
Added discussion about Tex. Prop. Code § 5.029(a).
Added reference to form 14-9 in this manual.
Added discussion about Myrad Properties, Inc. v. LaSalle Bank N.A.
§ 14.11:3Equitable Remedy
Added discussion about mistakes apparent on the face of the deed.
§ 14.12Recording Trustee’s Deed
Added discussion about bona fide purchasers and creditors for value.
Added discussion on binding on the parties and those with knowledge.
§ 14.14:3Rescissions Incident to Residential Foreclosures
This is a new section.
Chapter 15Postsale Considerations
§ 15.3Receipt and Distribution of Sale Proceeds
Added discussion regarding Canfield v. Foxworth-Galbraith Lumber Co.
§ 15.3:4Any Amounts Required by Law to Be Paid before Mortgagor
This entire section has been substantially revised.
§ 15.4Claim on Private Mortgage Insurance
This entire section has been substantially revised.
§ 15.9Foreclosure Purchaser’s Right of Possession
This entire section has been substantially revised.
Chapter 16Consequences of Wrongful Foreclosure
§16.3Measure of Damages
Retitled section.
§ 16.3:3Proving Fair Market Value of Property
Retitled section.
Chapter 17Suits for Deficiency
§ 17.3Statute of Limitations
This entire section has been substantially revised.
§ 17.4Waiver of Two-Year Limitations Period
This is a new section. Subsequent sections have been renumbered.
§ 17.6:1Request for Determination of Fair Market Value
Added discussion about Tex. Prop. Code § 51.003.
Chapter 20Judicial Foreclosure
§ 20.1Introduction
This section has been substantially revised.
Chapter 21Residential Foreclosure Process
§ 21.2:1Unique Requirements in Loan Documents
Added discussion about Fannie Mae deed of trust form.
§ 21.6120 Days Delinquent before Foreclosure Referral
This section has been added.
Chapter 22Commercial Foreclosure Process
§ 22.1Introduction
Removed references to outdated sections of the Texas Property Code.
§ 22.2:1Identification of All Loan Documents
Removed discussion about Ford v. Emerich.
§ 22.10:1Lienholders
Removed discussion about foreclosure proceeds.
Added discussion about deeds of trust.
Chapter 24Foreclosures Resulting from Ad Valorem Taxation
§ 24.2:2Notice of Appraised Value and Protests
Added item 5 in list from Tex. Tax Code § 41.44(a).
§ 24.2:5Appeals to Courts
Added item 3 in list from Tex. Tax Code § 42.08(b).
Chapter 26Deceased Mortgagor Foreclosure Process
§ 26.2Probate Overview
Added discussion about Tex. Est. Code §§ 256.003(a), 301.002(a).
§ 26.3Notice of Mortgagor’s Death
Added several citations to the Texas Estates Code.
§ 26.6Efforts by Survivors to Thwart Foreclosure by Delaying Probate
Added discussion about Mohensi v. Hartman.
Chapter 28HEL/HELOC Foreclosure Process
§ 28.1Introduction
This section has been substantially revised.
§ 28.2Background
This section has been substantially revised.
§ 28.3Type of Foreclosure Sale
Added discussion about Tex. R. Civ. P. 735.3.
Chapter 29Manufactured Housing Unit Foreclosure Process
§ 29.2Definition of Manufactured Home
Removed reference to recreational vehicles.
§ 29.6Notice of Default
Removed references to reserved statutes.
Chapter 30Property Owners’ Association Foreclosure Process
§ 30.2:1Alternative Payment Schedule
Added reference to Tex. Prop. Code § 209.0062(e).
§ 30.2:2Opportunity to Cure
Added practice tip.
§ 30.3:2Location and Style
Added practice tip.
§ 30.3:3Contents of Application for POA Expedited Foreclosure
Added practice tip.
§ 30.3:5Response
Added practice tips.
Added discussion of Tex. Civ. Prac. & Rem. Code § 17.031.
§ 30.3:9Order
Added practice tip.
§ 30.3:11Independent Suit against POA
Added practice tip.
§ 30.4:3Secured Charges per POA Declaration
Added discussion about judicial foreclosures.
Chapter 31Reverse Mortgage Foreclosure Process
§ 31.2Reverse Mortgage Defined
Added reference to Washington-Jarmon v. OneWest Bank, FSB.
§ 31.4:1Death of All Borrowers
This section has been substantially revised.
§ 31.5Secretary Approval
This section has been substantially revised.
§ 31.7:1:Cause of Action Accrual
This is a new section.
§ 31.10Additional Case Law
Removed section.
Chapter 32USDA Farm, Ranch, and Housing Loan Foreclosures
§ 32.3:6Lender Service Default
This section has been removed.
Chapter 33Servicemembers Civil Relief Act
§ 33.1Introduction
Added paragraph at end of section.
Chapter 36Federal and State Foreclosure Assistance Programs
§ 36.3:2Notice to Homeowner
Updated URL.
Chapter 37Miscellaneous Topics
§ 37.4Texas Fraudulent Conveyance Statute
This section has been substantially revised.
§ 37.4:3Avoiding a Foreclosure Sale as a Fraudulent Transfer
This section has been retitled and substantially revised.
Changes to Forms—2023
Chapter 1Attorney-Client Relations in the Foreclosure Process
Form 1-2Engagement Letter
Added discussion about digital security.
Form 1-3Terms of Engagement for Legal Services
Updated language about termination of representation.
Form 1-5Letter for Completion of Attorney-Client Relationship
Amended language about file retention.
Form 1-6Letter Detailing Basic Engagement Agreement and Fee Agreement
This form has been added.
Form 1-7Letter Detailing Ongoing Engagement Agreement and Fee Agreement
This form has been added.
Form 1-8Letter Detailing Basic Engagement Agreement and Fee Agreement for Simple Matters
This form has been added.
Form 1-9Nonrepresentation Letter When Representing Lender or Title Company
This form has been added.
Form 1-10Letter Detailing Basic Engagement Agreement and Fee Agreement for Local Counsel in Financing Transaction
This form has been added.
Chapter 2Getting Started—Information Required
Form 2-1Loan Referral Questionnaire
Added to loan documents to Section B.
Chapter 3Evaluating the Options for Collecting the Debt
Form 3-2Foreclosure Forbearance Agreement
Added sections regarding indemnity, effect on existing loan documents, inducement, and final agreement.
Chapter 4Preforeclosure Title Concerns
Form 4-1IRS Publication 786—Instructions for Preparing a Notice of Nonjudicial Sale of Property and Application for Consent to Sale
This form has been updated.
Form 4-2IRS Form 14497—Notice of Nonjudicial Sale of Property
This form has been updated.
Form 4-3IRS Form 14498—Application for Consent to Sale of Property Free of the Federal Tax Lien
This form has been updated.
Form 4-4IRS Publication 487—How to Prepare an Application Requesting the United States to Release Its Right to Redeem Property Secured by a Federal Tax Lien
This form has been updated.
Form 4-6IRS Publication 783—Instructions on How to Apply for Certificate of Discharge from Federal Tax Lien
This form has been updated.
Chapter 15Postsale Considerations
Form 15-1IRS Form 1099-A—Acquisition or Abandonment of Secured Property
This form has been updated.
Chapter 23Tax Consequences of the Foreclosure Process
Form 23-1IRS Form 1099-C—Cancellation of Debt
This form has been updated.
Form 23-2IRS Instructions for Forms 1099-A and 1099-C
This form has been updated.
Form 23-3IRS Form 982—Reduction of Tax Attributes Due to Discharge of Indebtedness
This form has been updated.
Form 23-4IRS Instructions for Form 982
This form has been updated.