Third Edition
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International Standard Book Number: 978-1-938873-06-5
International Standard Book Number: 978-1-938873-34-8 (2015 Supplement)
International Standard Book Number: 978-1-938873-53-9 (2018 Supplement)
International Standard Book Number: 978-1-938873-75-1 (2019 Supplement)
Library of Congress Control Number: 2014935946
© 1991, 2006, 2008, 2010, 2012, 2014, 2015,2018, 2019 State Bar of Texas
Austin, Texas 78711
All rights reserved. Permission is hereby granted for the copying of any part of this publication by a photocopy or other similar process or by manual transcription, by or under the direction of licensed attorneys for use in the practice of law. No other use is permitted that will infringe the copyright without the express written consent of the State Bar of Texas.
Printed in the United States of America
Third Edition, 2014
WILLIAM H. LOCKE, JR.
RALPH MARTIN NOVAK, JR.
G. TOMMY BASTIAN
2013-2014
Lisa M. Tatum, President
Cindy Tisdale, Chair of the Board
Gary Nickelson Chair, Board Professional Development Subcommittee
Deborah J. Bullion, Chair, Committee on Continuing Legal Education
Michelle Hunter, Executive Director
TexasBarBooks
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Roger Siebert, Editor
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While representing numerous clients during the savings and loan and foreclosure crisis of the late 1980s and early 1990s, Bill Locke and Marty Novak recognized the need for a lawyers’ guide to Texas foreclosure practice. For the last twenty-three years, beginning in 1991, Mr. Locke and Mr. Novak have devoted countless hours to writing, editing, and supplementing two editions of the State Bar’s Texas Foreclosure Manual. Except from a harried lawyer who knew little about foreclosure but breathed a sigh of relief and a silent “thank you” when discovering the treasure trove of materials in the Texas Foreclosure Manual, Mr. Locke and Mr. Novak have worked on the manual with little fanfare or recognition.
Because securitization has radically changed mortgage banking and brought with it radical changes to foreclosure practices, Mr. Locke and Mr. Novak recognized the need for a new edition of the Texas Foreclosure Manual that melded the still relevant presecuritization materials from the first two editions of the manual with the new developments in foreclosure law caused by the mortgage banking meltdown and foreclosure crisis that began in 2008. The mechanics of conducting a foreclosure (that is, the demand, cure, acceleration, notice of sale, and public sale process outlined in the previous two editions) have remained the same. But the answers to questions like who has the authority to foreclose, whether the law pertaining to the note or the deed of trust controls the foreclosure process, the effect of the mortgage servicer replacing the owner or beneficiary of the note in foreclosure, the role of MERS in the foreclosure process, and the merits of new legal theories and defenses have changed significantly since the second edition of the manual was published.
This new third edition of the Texas Foreclosure Manual updates the current body of foreclosure law and practice and continues the tradition of serving as one of the premier guides on how to conduct a Texas foreclosure.
While Mr. Locke and Mr. Novak remain active as editors and contributors to the production of a new edition of the manual, the authorship and format of the third edition have changed significantly..
Adopting the motto that “a team that divides its tasks multiplies its success,” twenty-one lawyers with hands-on, down-in-the-trenches experience in prosecuting or defending foreclosures on a daily basis agreed to contribute their foreclosure expertise by updating and drafting new chapters for the third edition of the Texas Foreclosure Manual. Consequently, anyone using the new edition of the manual will be guided by lawyers whose contribution to the manual is the result of actually handling hundreds of matters related to their area of foreclosure specialization.
Besides the introduction of new contributing authors to the manual, the format of the third edition has also changed. The first seventeen chapters provide a general overview of the various elements that are important to consider in conducting a foreclosure. The subsequent chapters compose the “how-to-do” section of the manual. In the final eighteen chapters, subject matter experts guide the reader through how to conduct a residential or commercial foreclosure and the more esoteric foreclosure areas like property owners association liens, reverse mortgages, and property tax loan foreclosures, and they address changes in specific areas of law, such as environmental issues affecting foreclosure, the Servicemembers Civil Relief Act, and the role of Mortgage Electronic Registrations Systems, Inc.
The objective of the third edition of the Texas Foreclosure Manual is to make it the best source of foreclosure expertise available. Lawyers—being lawyers—may not agree with the editors’ and contributors’ opinions on the law or how to handle certain aspects of a foreclosure. In this regard, we believe Thomas Jefferson’s maxim: “An error in opinion can be tolerated if reason or methodology is free to correct the opinion.” With this premise in mind, any reader may contact the editors with a written rejoinder so that any necessary clarification or correction can be made at TexasBarBooks, State Bar of Texas, P.O. Box 12487, Austin, Texas 78711-2487, books@texasbar.com..
Tommy Bastian, General Editor
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The Texas Foreclosure Manual, third edition, is more than a form book. It is a practice guide for attorneys in Texas who handle foreclosure matters. This third edition of the manual reflects major changes in organization and adds a significant amount of new content not available in the previous edition, with many improvements for the user. The online subscription version of the Texas Foreclosure Manual is internally hyperlinked and fully word-searchable, allowing quick and easy launching of a desired form into word-processing software.
The practice notes are short synopses of the law, designed to serve as a primer to the very basic matters involved in a particular chapter. These notes are, at most, black-letter law and do not try to resolve questions in controversial areas. For the attorney experienced with foreclosure matters, these notes should serve as a reminder of some of the basics; for the attorney not so experienced, they should provide an orientation to the major matters with which the attorney needs to be concerned when contemplating a particular cause of action.
Each chapter has a detailed table of contents at its beginning to aid in finding material.
The forms in this manual (except those promulgated by the Texas Supreme Court or the Internal Revenue Service) are based on those the authors have originated for use in their own practice. The style should not be regarded as superior to others; however, an effort has been made to avoid ambiguous, cumbersome, or unnecessary wording. Many attorneys may prefer their own style for certain forms—for example, in closings and signature blocks for letters—or may want to add language or revise some forms, especially if local practice warrants such change. Some forms may be copied verbatim. For example, chapter 2 contains forms, such as the attorney’s foreclosure checklist, that may be duplicated for use in the attorney’s office.
Within major sections of the text of forms, optional paragraphs or items are usually identified by boxed instructions. Because the manual can cover only relatively common situations in foreclosure cases, language needed to address an atypical issue in a particular case may not appear in the form. The user must take care both to eliminate language appearing in the form that is not appropriate for the particular case and to add any language needed for the particular case that does not appear in the form.
Two typefaces are used in the forms. Material in Times Roman (like most of this page) is appropriate for inclusion in a finished form. In contrast, Arial type is used for boxed instructions. When Arial type is used within the form itself (rather than in a box), it appears in boldface for emphasis.
Several types of bracketed material appear in the forms.
Choice of terms. In a bracketed statement such as “[trustee/substitute trustee],” the user must choose between the terms or phrases within the brackets. The choices are separated by forward slash marks.
Optional words. In a phrase such as “Note [and Security Agreement],” the user must determine whether to include the phrase “and Security Agreement.”
Substitution of terms. In a bracketed statement such as “[name of noteholder],” the user is to substitute the name of the noteholder rather than type the bracketed material verbatim.
Instructions for use. Material such as “[include if applicable: . . . ]” provides instructions for completing the finished form and should not be typed verbatim in the document. Bracketed instructions at the beginning of almost all the forms refer the user to section 3 of this introduction for instructions about composing the caption of the form.
Signature lines appear as blank lines. Spaces for dates, times, and amounts that would be filled in after the document is prepared also appear as blank lines. (If an actual date, time, or amount should be inserted in the form when it is prepared, “[date],” “[time],” or “$[amount]” appears instead.)
Language in boxes is not to be typed in the finished document but constitutes instructions, usually either telling the user whether to use the form language following the box, describing what information should be included at that point in the finished document or attached to it, or providing cautionary reminders about use of the form language.
Forms are numbered in sequence within each chapter. All forms begin with the number of the chapter, which is followed by a hyphen and the number of the form within the chapter. This system is used to permit future expansion of any chapter without requiring the rearrangement of the entire book.
An example of the caption that should precede the form title is not reprinted in the forms that require it. Typical case styles are discussed in section 3 below.
The online subscription version of the Texas Foreclosure Manual contains the entire text of the manual and is searchable and hyperlinked to allow for easy, rapid navigation to topics of interest. Also included are electronic versions of all State Bar of Texas–copyrighted forms from the manual as editable Word files as well as printable or downloadable PDF files of forms available from the IRS or the Texas Supreme Court, all linked from online subscription web pages for easy retrieval.
Applicable Texas and federal case and statute citations in the practice notes and forms instructions are linked to case reports and main code sections cited via Casemaker online.
Caveat: Note that the word-processing forms included in the online subscription contain instructional language as hidden text. Be aware that this language will be included in your completed forms unless you specifically delete it.
1. Court Designations for Caption of Petition
Although no statute or rule prescribes the form for identifying in the caption the state court in which the petition is filed, the court and county should be named. If one of several courts may hear the case, as in counties with several district courts and county courts at law, the caption should have a blank on which the clerk can write the appropriate number when the petition is filed. The court designations set out below are recommended for captions.
District Court
IN THE DISTRICT COURTOF __________ COUNTY, TEXAS__________ JUDICIAL DISTRICT
Constitutional County Court
IN THE COUNTY COURTOF __________ COUNTY, TEXAS
Unnumbered County Court at Law
IN THE COUNTY COURT AT LAWOF __________ COUNTY, TEXAS
Numbered County Court at Law
IN THE COUNTY COURT AT LAWNUMBER _____ OF_________ COUNTY, TEXAS
Justice Court
IN THE JUSTICE COURTFOR PRECINCT NUMBER _____OF __________ COUNTY, TEXAS
The generally accepted appearance for captions in Texas pleadings has the cause number at the top center of the first page, the parties on the left, the court designation on the right, and a dividing line between the two, as set out below. Some counties may reverse the appearance of the court and cause number.
No. 00–12345
PAUL PAYNE § IN THE DISTRICT COURT
Plaintiff §
§ OF TRAVIS COUNTY, TEXAS
v. §
§
DON DAVIS §
Defendant § 345th JUDICIAL DISTRICT
For probate-related pleadings, see the following example.
No. 00–12345
In re Estate of §
§
[Name of debtor] § [Court designation]
§
Deceased §
Page numbers are consecutive for both practice notes and forms within each chapter. Practice notes begin with the number of the chapter, followed by the number of the page within the chapter. Forms begin with the number of the form, followed by the number of the page within the form. This system is used to permit revisions within any chapter or form without renumbering the pages in the remaining chapters.
In drafting the manual, the authors devoted a great deal of effort to making it error free, but it undoubtedly contains some errors. We would appreciate your pointing out any errors you find in the manual as well as any revisions you believe are advisable. Please mail any corrections or suggestions to the following address:
Director, TexasBarBooks
State Bar of Texas
P.O. Box 12487
Austin, TX 78711-2487
books@texasbar.com
Periodic updating of the manual is planned to reflect changes in the law. It is also expected that, over time, additional topics will be covered and the scope of coverage of existing topics will be expanded. We welcome your suggestions about new topics that you would find helpful. Please send your suggestions to the address shown above.