Notice of Foreclosure Sale
§ 12.1Introduction to Notice of Sale
In order to pursue the remedy of a nonjudicial foreclosure sale, upon a default in the payment of the note or other obligations secured by the deed of trust, the lender (beneficiary of the deed of trust) and/or trustee or substitute trustee must give the requisite notices set out in the loan documents, including notice of the foreclosure sale in accordance with the deed of trust and chapter 51 of the Texas Property Code. This chapter addresses notice of the foreclosure sale in accordance with the deed of trust and chapter 51 of the Texas Property Code.
Section 51.0001 of the Texas Property Code provides definitions that address the Mortgage Electronic Registration Systems, Inc., and the securitization of mortgages, both residential and nonresidential. Section 51.0001 definitions include “book entry system,” “debtor’s last known address,” “mortgage servicer,” “mortgagee,” “mortgagor,” “security instrument,” “substitute trustee,” and “trustee.” See Tex. Prop. Code § 51.0001.
Before addressing the Tex. Prop. Code § 51.002 notice provisions, a review of the definitions set out in Tex. Prop. Code § 51.0001 would be helpful. The definition of “mortgage servicer” is significant:
“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 the security instrument. A mortgagee may be the mortgage servicer.
Tex. Prop. Code § 51.0001(3). This definition is significant because the mortgagee or lender may be identified as the “mortgage servicer” in the Texas Property Code and in this chapter.
A mortgage servicer may administer a foreclosure on behalf of a mortgagee if two requirements are met. First, there must be an agreement between the mortgagee and the mortgage servicer granting the current mortgage servicer authority to service the mortgage. Second, the notice of sale must disclose the following information: (1) that the mortgage servicer is representing a mortgagee under a servicing agreement, (2) the name of the mortgagee, and (3) the address of the mortgagee or the address of the mortgage servicer if there is an agreement granting the mortgage servicer the authority to service the mortgage. Tex. Prop. Code § 51.0025.
§ 12.1:2Appointment of Substitute Trustee in Notice of Sale
The notice of sale can include an appointment of a substitute trustee to be effective upon date of the notice. Tex. Prop. Code § 51.0076. The notice must (1) comply with Texas Property Code sections 51.002 and 51.075(e), (2) be signed by an attorney or agent for the mortgagee or mortgage servicer, and (3) contain the following statement:
THIS INSTRUMENT APPOINTS THE SUBSTITUTE TRUSTEE(S) IDENTIFIED TO SELL THE PROPERTY DESCRIBED IN THE SECURITY INSTRUMENT IDENTIFIED IN THIS NOTICE OF SALE THE PERSON SIGNING THIS NOTICE IS THE ATTORNEY OR AUTHORIZED AGENT OF THE MORTGAGEE OR MORTGAGE SERVICER.
Tex. Prop. Code § 51.0076. See chapter 11 of this manual for more information on trustees and substitute trustees.
§ 12.2Contractual Requirements of Notice of Sale
Notice of a foreclosure sale, to be effective, must comply with all the requirements set forth in the deed of trust and Tex. Prop. Code § 51.002. Similar to the deed of trust published as form 8-1 in the Texas Real Estate Forms Manual, most deeds of trust provide:
If directed by Lender to foreclose this lien, Trustee will—
D.1.either personally or by agent give notice of the foreclosure sale as required by the Texas Property Code as then in effect;
1 State Bar of Texas, Texas Real Estate Forms Manual, ch. 8, form 8-1 (2024 ed.).
Attorneys representing lenders directing the trustee to foreclose should review the deed of trust and all the loan documents to confirm that there are no additional requirements to be complied with.
The most common instance where the deed of trust imposes procedural requirements in addition to the minimum statutory requirements in chapter 51 of the Texas Property Code is when an “out of date” deed of trust incorporates notice requirements imposed by amended statutes. If the deed of trust requires that the notice be posted in three public places, the notice must satisfy the requirements of Texas Property Code chapter 51 and be posted in three public places. Harwath v. Hudson, 654 S.W.2d 851, 853–54 (Tex. App.—Dallas 1983, writ ref’d n.r.e.). If the deed of trust requires that the notice be published in a newspaper, the notice must satisfy the requirements of Texas Property Code chapter 51 and be published in a newspaper. See Rudolph v. Hively, 188 S.W. 721, 723 (Tex. App.—Amarillo 1916, writ ref’d) (sheriff’s sale voided; if mortgage required notice by publication in county newspaper, it was no excuse that county had no newspaper, and mortgagee’s only resort was to an action in a court of equity).
A provision in a deed of trust requiring that the notice of foreclosure sale be filed of record “in the deed records in the county in which the mortgaged property is located as required by law” may be disregarded as imposing no duty to take any action beyond that required by Tex. Prop. Code § 51.002. See Thompson v. Chrysler First Business Credit Corp., 840 S.W.2d 25, 31–32 (Tex. App.—Dallas 1992, no writ).
§ 12.3Statutory Requirements to Post, File, and Mail Notice of Sale
Section 51.002(b) of the Texas Property Code requires that—
(b)Except as provided by Subsection (b–1), 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.
(b–1)If the courthouse or county clerk’s office is closed because of inclement weather, natural disaster, or other act of God, a notice required to be posted at the courthouse under Subsection (b)(1) or filed with the county clerk under Subsection (b)(2) may be posted or filed, as appropriate, up to 48 hours after the courthouse or county clerk’s office reopens for business, as applicable.
Tex. Prop. Code § 51.002(b), (b–1). The day on which the notice of sale is given is included, and the day of the foreclosure sale is excluded, in computing the twenty-one-day notice period. Tex. Prop. Code § 51.002(g). Notice properly posted, filed, and mailed three weeks before the foreclosure sale date is timely.
§ 12.3:1Posting at Courthouse Door
The notice of sale must be posted at the courthouse door of each county in which the property is located. Tex. Prop. Code § 51.002(b)(1). The term courthouse door is defined in Tex. R. Civ. P. 648 as meaning “either of the principal entrances to the house provided by the proper authority for the holding of the district court.” The customary bulletin boards, located near the courthouse door for posting notices of sheriff’s execution sales, have been approved for posting. Howard v. Fulton, 14 S.W. 1061, 1062 (Tex. 1891); Micrea, Inc. v. Eureka Life Insurance Co. of America, 534 S.W.2d 348, 358 (Tex. App.—Fort Worth 1976, writ ref’d n.r.e.); Matson v. Federal Farm Mortgage Corp., 151 S.W.2d 636, 640 (Tex. App.—Waco 1941, no writ); Heiner v. Homeland Realty Co., 100 S.W.2d 793, 794–95 (Tex. App.—Waco 1936, no writ). As practices vary across Texas counties as to where a foreclosure sale notice is to be posted, counsel for the mortgage servicer and trustee should determine the proper location in the respective county to direct the person posting the notice of sale. The trustee or substitute trustee can designate someone to post the notice of sale at the courthouse door and file the notice of sale with the county clerk. If the trustee or substitute trustee does not personally accomplish this requirement, the individual posting the notice should sign an affidavit certifying as to the time, date, place, and manner of the posting. If the courthouse or county clerk’s office is closed because of inclement weather, natural disaster, or other act of God, the notice may be posted or filed up to forty-eight hours after the courthouse or county clerk’s office reopens for business. Tex. Prop. Code § 51.002(b–1).
The notice of sale posted at the courthouse door does not have to remain intact and visible throughout the posting period. The trustee is not required to ensure that the notices are kept posted or are visible on the posting board. First State Bank v. Keilman, 851 S.W.2d 914, 923 (Tex. App.—Austin 1993, writ denied); Chambers v. Lee, 566 S.W.2d 69, 73 (Tex. App.—Texarkana 1978, no writ). A substitute trustee does not need to repost the notice after the original trustee has already done so. Koehler v. Pioneer American Insurance Co., 425 S.W.2d 889, 891 (Tex. App.—Fort Worth 1968, no writ); see also In re Davis Chevrolet, Inc., 135 B.R. 29, 34 (N.D. Tex. 1992).
§ 12.3:2Filing with County Clerk
A copy of the notice of sale must be filed in the office of the county clerk for each county in which the property is located. Tex. Prop. Code § 51.002(b–2). The county clerk is required to keep all such notices in a convenient file available to the public for examination during normal business hours until after the date of sale specified in the notice has passed. The clerk shall receive a fee of $2 for each notice filed. Tex. Prop. Code § 51.002(f). These notices are typically disposed of by the county clerk following the date of the sale stated in the notices. Attorneys representing lenders should retain the county clerk’s receipt for payment of the filing fee and a file-stamped copy of the notice of sale as evidence of filing. The person who files the notice with the county clerk should sign an affidavit as to the date and time of filing the notice. See form 11-4 in this manual for an affidavit of filing and posting of the notice of foreclosure sale.
The county must post notices of sale filed with its county clerk on its website on a page where the county posts other auction information and that is publicly available for viewing without charge or registration. The county must post the date, time, and location of the sale on the same website page as the posted notice. Tex. Prop. Code § 51.002(f–1).
Practice Tip: Before filing and posting a notice of foreclosure sale, the attorney for the mortgage servicer should check with the mortgage servicer to verify that (1) the loan has not been paid and (2) no reinstatement has been granted or other forbearance arrangements entered into by the mortgage servicer.
Practice Tip: Especially in a case where the collateral to be foreclosed is in a county or counties geographically remote from the person handling the foreclosure and a foreclosure posting service is being used for the filing and posting, it is advisable to arrange for the filing and posting to be accomplished no later than the Monday that is twenty-two days before the foreclosure sale date, leaving the mailing of the notice (although not required, a file-stamped copy) to the debtor to be accomplished as early as possible the next day (but no later than the Tuesday twenty-one days before the foreclosure sale date).
§ 12.3:3Serving Notice on Debtor
Notice of the sale must be served by certified mail on each debtor who, according to the records of the mortgage servicer of the debt, is obligated to pay the debt. Tex. Prop. Code § 51.002(b)(3). Neither the term debtor nor the phrase each debtor who . . . is obligated to pay the debt is defined in Texas Property Code chapter 51. Although the party who signs the promissory note as a maker and a party who assumes liability to pay the promissory note as an assumptor are “obligated to pay the debt,” a guarantor of the debt has been held not to be entitled to the statutory notice of a nonjudicial foreclosure sale. See Bishop v. National Loan Investors, L.P., 915 S.W.2d 241, 245 (Tex. App.—Fort Worth 1995, writ denied) (citing Long v. NCNB–Texas National Bank, 882 S.W.2d 861, 866 (Tex. App.—Corpus Christi–Edinburg 1994, no writ)). Notwithstanding the case authority cited above, it is advisable to serve a notice of foreclosure sale on a guarantor in the same manner as the notice is served on the debtor(s) who, according to the records of the mortgage servicer, is obligated to pay the debt.
Other parties held not entitled to the statutory notice of a nonjudicial foreclosure sale (absent a contractual agreement to do so) include:
(1)a junior lienholder (see Hampshire v. Greeves, 143 S.W. 147, 150 (Tex. 1912); Chandler v. Orgain, 302 S.W.2d 953, 956 (Tex. App.—Fort Worth 1957, no writ));
(2)an owner of the property who is not the borrower, including an owner who purchases subject to the debt (see Lawson v. Gibbs, 591 S.W.2d 292, 295 (Tex. App.—Houston [14th Dist.] 1979, writ ref’d n.r.e.));
(3)a purchaser who assumes a secured seller’s debt in an agreement with the seller but does not obtain the mortgagee’s approval in violation of a due-on-sale clause (Saravia v. Benson, 433 S.W.3d 658 (Tex. App.—Houston [14th Dist.] 2014, no pet.));
(4)a maker of a separate note that is cross-defaulted and cross-collateralized with the defaulted note (see National Commerce Bank v. Stiehl, 866 S.W.2d 706, 708 (Tex. App.—Houston [1st Dist.] 1993, no writ)); and
(5)a purchaser under contract for deed with the mortgagor (see In re Riviera, 358 B.R. 688, 693 (Bankr. S.D. Tex. 2007)).
There may be good reasons for the mortgage servicer’s counsel to serve the notice of sale on parties known to have an interest in the property, but without a legal or contractual right to receive the notice. For instance, a party with an interest in the property but not a debtor, especially a junior lienholder, may be motivated to purchase the property at foreclosure.
Service of a foreclosure notice by certified mail is complete when the notice is deposited in the U.S. mail, postage prepaid, and addressed to the debtor at the debtor’s last known address. Tex. Prop. Code § 51.002(e); Stanley v. CitiFinancial Mortgage Co., 121 S.W.3d 811, 817–18 (Tex. App.—Beaumont 2003, pet. denied). The “debtor’s last known address” for a debt secured by the debtor’s residence is the debtor’s residence address unless the debtor has provided a written change of address to the mortgage servicer before the date the mortgage servicer mailed the notice of sale. Tex. Prop. Code § 51.0001(2)(A). For property other than a debtor’s residence, “debtor’s last known address” means the debtor’s last known address as shown by the records of the mortgage servicer unless the debtor provided a written change of address to the mortgage servicer before the date the mortgage servicer mailed the notice of sale. Tex. Prop. Code § 51.0001(2)(B). A debtor is obligated to inform the mortgage servicer in a reasonable manner of any change of the debtor’s address “for purposes of providing notice to the debtor under Section 51.002.” Tex. Prop. Code § 51.0021.
If properly mailed, a debtor’s failure to receive the notice of sale does not render invalid the notice of sale. Hausmann v. Texas Savings & Loan Ass’n, 585 S.W.2d 796, 799–800 (Tex. App.—El Paso 1979, writ ref’d n.r.e.). One letter addressed to both spouses and mailed to the spouses’ shared address was sufficient notice of the foreclosure sale to meet statutory requirements. Forestier v. San Antonio Savings Ass’n, 564 S.W.2d 160, 163 (Tex. App.—El Paso 1978, writ ref’d n.r.e.). The spouse, asserting that the statute required a separate notice of the foreclosure sale to be mailed to her, admitted to having actual notice of the foreclosure sale. Forestier, 564 S.W.2d at 163. If the mortgage servicer’s records indicate husband and wife debtors have the same residence, a single letter to both spouses is sufficient. Martinez v. Beasley, 616 S.W.2d 689 (Tex. App.—Corpus Christi–Edinburg 1981, no writ); see also Santiago v. Bank of New York Mellon, No. 05-17-00144-CV, 2017 WL 4946095, at * 6–7 (Tex. App.—Dallas Nov. 1, 2017, no writ) (mem. op.). Separate enclosures containing the required statutory notice are not required to be sent to obligors having the same address. Hausmann, 585 S.W.2d at 799–800; Forestier, 564 S.W.2d at 163.
The affidavit of a person knowledgeable of the facts stating that service of notice was completed is prima facie evidence of service. Tex. Prop. Code § 51.002(e). This statute has resulted in the use of affidavits affirming the foreclosure procedures followed for posting and delivery of notice of sale. Not only are such affidavits often attached to the foreclosure sale deed, title companies often require them when insuring title at or after a foreclosure sale. In Ackley v. FDIC, 981 F. Supp. 457, 460 (S.D. Tex. 1997), the court held that affidavits of the mortgagee’s employee and attorney who actually mailed notice of acceleration and notice of foreclosure sale established proof of notice being given.
See form 11-5 in this manual for an affidavit of mailing of the notice of foreclosure sale. See also 2 State Bar of Texas, Texas Real Estate Forms Manual, ch. 14, forms 14-8 (Affidavit of Posting and Filing) and 14-9 (Affidavit of Mailing) (2024 ed.).
Practice Tip: See section 8.11:3 in this manual for recommended procedures to follow in mailing notices. These procedures are useful to counter the argument that the debtor did not receive notice. See Hensley v. Lubbock National Bank, 561 S.W.2d 885, 891 (Tex. App.—Amarillo 1978, no writ) (sworn denial of receipt of notice is some evidence of non-notification of sale); see also WTFO, Inc. v. Braithwaite, 899 S.W.2d 709, 720 (Tex. App.—Dallas 1995, no writ).
See form 12-1 for a letter to the debtor that advises of the maturity of the secured indebtedness and transmits the notice of foreclosure sale. See form 12-2 for a letter to the debtor that advises the debtor that the maturity of the secured indebtedness has been accelerated and transmits the notice of foreclosure sale. Note that form 12-3, referenced below at the end of section 12.4, must be included with either of these letters.
§ 12.4Contents of Notice of Sale
The cases construing the relevant sections of Texas Property Code chapter 51 and its predecessor statutes tend to impose only general descriptive requirements and have upheld notices of sale deemed to have sufficiently informed the public of the nature and condition of the property to attract bidders. See Hutson v. Sadler, 501 S.W.2d 728, 732 (Tex. App.—Tyler 1973, no writ); Stone v. Watt, 81 S.W.2d 552, 555 (Tex. App.—Eastland 1935, writ ref’d).
The object of a notice of sale is to inform the public of the nature and condition of the property to be sold, and of the time, place and terms of the sale. Notices are given for the purpose of securing bidders, and to prevent a sacrifice of the property. If these objects are attained, immaterial errors and mistakes will not affect the sufficiency of the notice; but if any mistakes or omissions occur in the notices of sale, which are calculated to deter or mislead bidders, to depreciate the value of the property, or to prevent it from bringing a fair price, such mistakes or omissions will be fatal to the validity of the notice, and also to the sale made pursuant thereto.
Hutson v. Sadler, 501 S.W.2d 728, 731–32 (Tex. App.—Tyler 1973, no writ).
The notice of sale must—
state the name and address of the sender of the notice and contain, in addition to any other statements required under this section, a statement that is conspicuous, printed in boldface or underline type, substantially similar to the following: “Assert and protect your rights as a member of the armed forces of the United States. If you are or your spouse is serving on active military duty, including active military duty as a member of the Texas National Guard or the National Guard of another state or as a member of a reserve component of the armed forces of the United States, please send written notice of the active duty military service to the sender of this notice immediately.”
Additionally, the notice of sale should contain the following: (1) a description of the security instrument, including recording information, the matured debt, and the legal description of the property to be sold at foreclosure, including any personal property in which a security interest is granted in the deed of trust; (2) a statement that a default under the secured debt exists; (3) a statement that the mortgage servicer has authorized the enforcement of the power of sale granted in the deed of trust; (4) a statement of the earliest time and date for, and the location of, the foreclosure sale; (5) the name and street address (and signature) of the trustee or substitute trustee; (6) a statement that the described property will be sold by public auction to the highest bidder for cash; (7) for any security instrument that also constitutes a security agreement, a statement that, under the authority of section 9.604(a) of the Texas Business and Commerce Code, the foreclosure sale will cover both real property and personal property in which a security interest is granted under the security instrument; (8) if the security instrument is being serviced by a mortgage servicer, disclosure of the existence of a servicing agreement between the mortgagee and the mortgage servicer, the name of the mortgagee, and either the address of the mortgagee or the address of the mortgage servicer if there is a servicing agreement for the security instrument; and (9) an open-beach disclosure, if the property is located in the covered area along the Gulf Coast.
See form 12-3 in this chapter for a notice of foreclosure sale (which is designed to be used whether the sale is being administered by the mortgagee or by the mortgage servicer pursuant to a written servicing agreement with the mortgagee). See also 2 State Bar of Texas, Texas Real Estate Forms Manual, ch. 14, forms 14-12 (Notice of Trustee’s Sale [Mortgagee]) and 14-13 (Notice of Trustee’s Sale [Mortgage Servicer]) (2024 ed.).
§ 12.4:1Descriptions of Security Instrument, Secured Debt, and Property to Be Sold
There is no statutory requirement for describing the security instrument in the notice of sale. Customarily, the notice of sale includes a description of the security instrument by title, date, parties, and recording information, and a description of any modifications thereof, recorded or not. Form 12-3 in this chapter contemplates a complete legal description of the real property to be sold by including the recording information for the deed of trust, a legal description of the real property initially covered by the deed of trust, and a legal description of any released property, resulting in an accurate description of the real property to be sold at foreclosure.
A description of the security instrument with reference to the applicable recording information has been upheld. See Miller v. Gibraltar Savings & Building Ass’n, 132 S.W.2d 606, 608 (Tex. App.—Beaumont 1939, writ dism’d). Inclusion of the recording information of the deed of trust was held not to be mandatory if the notice otherwise sufficiently described the lien. See Mortimer v. Williams, 262 S.W. 123, 125 (Tex. App.—Dallas 1924, no writ). A notice of sale was sufficient because it identified the trustee and the land, even though the notice identified the deed of trust with a wrong date and recording data. See Mercer v. Bludworth, 715 S.W.2d 693, 700 (Tex. App.—Houston [1st Dist.] 1986, writ ref’d n.r.e.), disapproved on other grounds, Shumway v. Horizon Credit Corp., 801 S.W.2d 890 (Tex. 1991).
A description of the secured debt merely by reference to the deed of trust has been upheld. See Mortimer, 262 S.W. at 125. The balance of the debt is not required. See Gooch v. Addison, 35 S.W. 83 (Tex. App. 1896, writ ref’d).
The description in the notice of sale of the property to be sold at foreclosure is legally sufficient if it refers to records that contain information sufficient to apprise interested parties of the property that will be sold at foreclosure. See Miller, 132 S.W.2d at 608 (recording data on deed of trust held sufficient). The Myrad case discussed in section 12.5 below is an important case for the significance of a sufficient description of the property in the notice of sale. This case highlights the importance of the attorney for the mortgage servicer paying careful attention to including in each notice of sale a complete and sufficient description of the property.
After the attorney for the mortgage servicer has verified that at least one provable default exists under the governing loan documents (that has not been waived by the mortgage servicer either expressly or by course of conduct), it is advisable to include a statement that default exists and the foreclosure has been authorized by the mortgage servicer as a consequence of the default. See Gooch v. Addison, 35 S.W. 83 (Tex. App. 1896, writ ref’d).
§ 12.4:3Authorization to Foreclose
After the attorney for the mortgage servicer has verified that the mortgagee or the mortgage servicer (if different) has sufficient ownership of the lien to be foreclosed and the indebtedness secured thereby or the right to administer the foreclosure on behalf of the mortgagee, as applicable, it is advisable to include in the notice of sale a recitation of the requisite authority to direct the foreclosure. The recitation may include a description of relevant transfers of the secured indebtedness and liens so that constructive notice is afforded to those interested in confirming the requisite authority, especially title companies called upon to insure title to the foreclosed property.
§ 12.4:4Date, Time, and Location of Sale
Foreclosure sales must be conducted on the first Tuesday of the month unless the first Tuesday is January 1 or July 4, and then the sale must be held on the first Wednesday of the month. See Tex. Prop. Code § 51.002(a), (a–1); Tex. Civ. Prac. & Rem. Code § 34.041(c); Tex. Tax Code § 34.01(r–1), (r–2). A sale not held on the first Tuesday or Wednesday of the month is void. McLaren v. Jones, 33 S.W. 849, 850 (Tex. 1896); Durkay v. Madco Oil Co., 862 S.W.2d 14, 17 (Tex. App.—Corpus Christi–Edinburg 1993, writ denied).
Except for January 1 or July 4, the sale may be conducted on a courthouse holiday. Koehler v. Pioneer American Insurance Co., 425 S.W.2d 889, 891 (Tex. App.—Fort Worth 1968, no writ); Stewart v. Stewart, 357 S.W.2d 492, 493–94 (Tex. App.—Texarkana 1962, no writ); Tex. Prop. Code § 51.002(a–1).
In Behrens Lofts, Ltd. v. Martinez, W-03-CA-176 (W.D. Tex. Feb. 12, 2004), the federal district court held that a foreclosure on the second Wednesday of the month, instead of the first Tuesday as required under Texas law at the time, was proper when the Department of Housing and Urban Development (HUD) was the mortgagee and foreclosed under the procedures set out in the Multifamily Mortgage Foreclosure Act, 12 U.S.C. §§ 3701–3717; 24 C.F.R. § 27.2(a); 24 C.F.R. pt. 207; see also United States v. Victory Village, Inc., 662 F.2d 488, 497–98 (8th Cir. 1981).
A foreclosure sale must take place between 10:00 a.m. and 4:00 p.m. Tex. Prop. Code § 51.002(a). The notice of sale must include a statement of the earliest time at which the sale will begin. Tex. Prop. Code § 51.002(b). The sale must begin at the time stated in the notice or not later than three hours after that time. Tex. Prop. Code § 51.002(c).
Real estate foreclosure sales typically take place at the county courthouse of the county in which the real property is located. Tex. Prop. Code § 51.002(a); see Wylie v. Hays, 263 S.W. 563, 569 (Tex. 1924). If the land is located in more than one county, the sale may take place at the county courthouse in any county in which land is located. Tex. Prop. Code § 51.002(a). The commissioners court of each county must designate an area at the county courthouse where foreclosure sales are to take place and must record the designation in the real property records of the county. The sale is required to occur in the designated area. If no area is designated by the commissioners court, the notice of sale must designate the area at the courthouse where the sale covered by the notice is to take place, and the sale must occur in that area. Tex. Prop. Code § 51.002(a).
Texas Property Code section 51.002(h) provides that the commissioners court may designate an area other than the county courthouse where foreclosure sales can take place provided it is a public place within a reasonable proximity of the county courthouse. Real estate foreclosure sales in that county must be held at the designated area if the sales are held on or after the ninetieth day after the date the designation is recorded. See Tex. Prop. Code § 51.002(a), (h).
Notice of the sale must be filed and posted in all counties in which the real property is located. Tex. Prop. Code § 51.002(b). The foreclosure sale for land located in more than one county may take place in any county where the property is located. Tex. Prop. Code § 51.002(a). See Bateman v. Carter-Jones Drilling Co., 290 S.W.2d 366, 370 (Tex. App.—Texarkana 1956, writ ref’d n.r.e.) (where multiple noncontiguous tracts in Gregg and Rusk counties, which are contiguous counties, sale of land in different county from that in which land located upheld, even though land not contiguous to tract in county of sale) (interpreting language of 1915 version of foreclosure statute, Tex. Rev. Civ. Stat. art. 3759); Dall v. Lindsey, 237 S.W.2d 1006, 1009–1010 (Tex. App.—Amarillo 1951, writ ref’d n.r.e.) (where land in Hale County and Lubbock County, which are contiguous counties, sale in Lubbock County upheld, although deed of trust designated Hale County as place of sale); Lewis v. Dainwood, 130 S.W.2d 456, 457 (Tex. App.—San Antonio 1939, writ ref’d) (where part of land in Nueces County and part in Jim Wells County, which are contiguous counties, sale in either county authorized).
§ 12.4:5Name and Street Address of Trustee; Signature of Trustee
A notice of sale must contain the street address and name of the trustee. Tex. Prop. Code § 51.0075(e).
Chapter 51 of the Texas Property Code does not expressly require the notice of foreclosure to be executed or acknowledged by the trustee or substitute trustee.
§ 12.4:6Sale at Auction for Cash
Chapter 51 of the Texas Property Code does not require that a foreclosure sale be for cash. However, most Texas deeds of trust require that the sale be to the “highest bidder for cash.” This contractual requirement has been upheld. See Kirkman v. Amarillo Savings Ass’n, 483 S.W.2d 302, 308–09 (Tex. App.—Amarillo 1972, writ ref’d n.r.e.). 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. Tex. Prop. Code § 51.0075(a). The foreclosure sale purchase price is due and payable without delay on acceptance of the bid or within such reasonable additional time as may be agreed upon by the purchaser and the trustee if the purchaser makes such request for additional time. Tex. Prop. Code § 51.0075(f).
The foreclosing lienholder as purchaser at foreclosure is entitled at common law and typically under the deed of trust to apply the purchase price as a credit against its secured debt. See Thomason v. Pacific Mutual Life Insurance Co. of California, 74 S.W.2d 162, 164 (Tex. App.—El Paso 1934, writ ref’d).
§ 12.4:7Sale of Real and Personal Property
If the deed of trust includes a security agreement granting a security interest in personal property, the real property foreclosure sale can include the personal property. See Tex. Bus. & Com. Code § 9.604(a). The commercially reasonable standard of chapter 9 of the Texas Business and Commerce Code does not govern the sale of personal property in connection with the foreclosure sale of real property. Huddleston v. Texas Commerce Bank–Dallas, 756 S.W.2d 343 (Tex. App.—Dallas 1988, writ denied).
§ 12.4:8Servicing Agreement; Information About Mortgage Servicer
If the foreclosure is being administered by a mortgage servicer, section 51.0025 of the Texas Property Code requires that the notice of sale disclose (1) that the mortgage servicer is representing a mortgagee under a servicing agreement, (2) the name of the mortgagee, and (3) the address of the mortgagee or the address of the mortgage servicer if there is an agreement granting the mortgage servicer the authority to service the mortgage. Tex. Prop. Code § 51.0025(2).
§ 12.4:9Statutory Notice of Servicemember Rights
All foreclosure notices served on a debtor under section 51.002 must include a military rights disclosure that is substantially similar to the promulgated language set forth in section 12.4 above. Tex. Prop. Code § 51.002(i). The prescribed notice is included in forms 12-1 through 12-3 in this chapter.
§ 12.4:10Open-Beach Disclosure
An open-beach disclosure must be included if the real property to be foreclosed is located seaward of the Gulf Intracoastal Waterway to its southernmost point and then seaward of the longitudinal line also known as 97 degrees, 12′, 19″ which runs southerly to the international boundary from the intersection of the centerline of the Gulf Intracoastal Waterway and the Brownsville Ship Channel. This disclosure is required in all executory contracts for conveyance. Tex. Nat. Res. Code § 61.025. The Texas attorney general opined that this notice requirement is applicable to foreclosure sales and requires the trustee to give the statutory notice to third-party purchasers and to mortgagee-purchasers. Tex. Att’y Gen. Op. No. JM-834 (1987). This disclosure should be included in the publicly posted notice of foreclosure sale, in the foreclosure sale deed, and in a separate written statement, the receipt of which is acknowledged by each bidder at the foreclosure sale before bidding. See 1 State Bar of Texas, Texas Real Estate Forms Manual, ch. 4, form 4-14 (Notice to Purchaser of Property Seaward of Gulf Intracoastal Waterway) (2024 ed.).
§ 12.5Immaterial Errors in Notice
Certain errors in notices of foreclosure sale have been held to be immaterial. See RTC v. Summers & Miller Gleneagles Joint Venture, 791 F. Supp. 653 (N.D. Tex. 1992) (transposition in notice of foreclosure sale of “save and except” clauses as to two mortgaged properties being foreclosed not a defect sufficient to set aside foreclosure sale if no evidence introduced that bidding chilled or bidders misled other than evidence that less than fair market value of property bid at sale and no evidence offered causally connecting defect and bid); Maupin v. Chaney, 163 S.W.2d 380 (Tex. 1942) (error in data of deed incorporated by reference in describing property being sold found to be immaterial, as false part of reference could be rejected and effect given to remainder); Alkas v. United Savings Ass’n of Texas, 672 S.W.2d 852 (Tex. App.—Corpus Christi–Edinburg 1984, writ ref’d n.r.e.) (court reformed deed of trust, notices of foreclosure sale, and foreclosure sale deed to add 2.1467-acre tract erroneously omitted from deed of trust but contained in prior deed of trust renewed by deed of trust being foreclosed); Diversified Developers, Inc. v. Texas First Mortgage REIT, 592 S.W.2d 43 (Tex. App.—Beaumont 1979, writ ref’d n.r.e.) (notice of foreclosure sale including previously released land with property still available to be foreclosed held to be insufficient to set sale aside because trustee explained that released tract not included in sale, and nobody misled as result); Hutson v. Sadler, 501 S.W.2d 728 (Tex. App.—Tyler 1973, no writ) (error in mortgagee’s name found to be immaterial); Wilson v. Armstrong, 236 S.W. 755 (Tex. App.—Beaumont 1921, no writ) (error in date of notice of sale found to be immaterial).
Notice of Sale Failed to Include Both Properties: In Myrad Properties, Inc. v. LaSalle Bank N.A., 300 S.W.3d 746 (Tex. 2009), the notice of substitute trustee’s sale omitted one of two apartment complexes in its definition of the real property secured by the deed of trust. At the sale, the trustee read aloud the description of only one of the complexes and subsequently executed and recorded a foreclosure sale deed for only one of the complexes. The court of appeals found that the notice provided adequate notice of sale of both complexes and that the foreclosure sale foreclosed the mortgagee’s lien on both complexes. Myrad, 252 S.W.3d 605 (Tex. App.—Austin 2008). The court of appeals based its holding in part on the fact that the notice of foreclosure sale included a statement that the mortgagee could proceed against both real and personal property described in the deed of trust:
The Deed of Trust may encumber both real and personal property. Notice is hereby given of Holder’s election to proceed against and sell both the real property and any personal property described in the Deed of Trust in accordance with the Holder’s rights and remedies under the Deed of Trust and Section 9.604 of the Texas Business and Commerce Code.
Myrad, 252 S.W.3d at 616 (emphasis added). The court of appeals noted that the notice of foreclosure sale did not fail to provide any notice that both complexes would be sold but, rather, contained an internal inconsistency regarding what property would be sold. Myrad, 252 S.W.3d at 617.
The Texas Supreme Court reversed and rendered the holding of the court of appeals. First, the supreme court held that a correction deed that purports “to convey additional, separate properties not described in the original deed” is void as a matter of law, as a correction deed is appropriate in only limited circumstances to correct defects and imperfections in the original deed. Myrad, 300 S.W.3d at 750–51. The supreme court went on, however, to equitably rescind the original trustee’s deed for mutual mistake of the trustee and the mortgagee (but not of the borrower). While the supreme court based this rescission on the borrower’s failure to present contrary evidence in the lower courts, the supreme court also noted “[w]e are not blind to the equities of this dispute[,]” and indeed the effect of the court’s decision in voiding the correction deed and rescinding the original trustee’s deed was to restore the status quo ante foreclosure and allow the lender to reforeclose on the deed of trust. Myrad, 300 S.W.3d at 752–53.
Subsequent to the decision in the Myrad case, the 2011 legislature added Texas Property Code sections 5.027 through 5.031 concerning correction deeds. Section 5.027(b) expressly provides:
A correction instrument may not correct an ambiguity or error in a recorded original instrument of conveyance to transfer real property or an interest in real property not originally conveyed in the instrument of conveyance for purposes of a sale of real property under a power of sale under Chapter 51 unless the conveyance otherwise complies with all requirements of Chapter 51.
See form 14-9 in this manual, which is to be used for an “immaterial correction” of a trustee’s deed when the foreclosure sale complied with all the requirements of chapter 51 of the Texas Property Code.
Bastian, G. Tommy. “Texas Foreclosures: Myths and Reality.” In Advanced Real Estate Law Course, 2011. Austin: State Bar of Texas, 2011.
Tapley, Katherine A. “Distressed Loans and Drafting Issues Related to Workouts and Foreclosures.” In Advanced Real Estate Drafting Course, 2024. Austin: State Bar of Texas, 2024.
———. “Loan Workouts.” In Advanced Real Estate Law Course, 2024. Austin: State Bar of Texas, 2024.
———. “Practice Tips Related to Loan Defaults and Workouts.” In Advanced Real Estate Strategies Course, 2022. Austin: State Bar of Texas, 2022.
Tomek, David W. “Documenting and Conducting Nonjudicial Real Estate Foreclosure Sales; and Deficiency Actions.” In Advanced Real Estate Law Course, 2023. Austin: State Bar of Texas, 2023.