Can the lender come after you for the rest? Deficiency judgments in Texas

Deficiency rules in Texas, point by point

• A deficiency is allowed after a trustee's sale, with limits

  After a nonjudicial sale

  If a trustee's sale brings less than the unpaid balance, the lender can bring a lawsuit for the difference. Texas Property Code section 51.003 controls that lawsuit, including the deadline and the fair market value credit.

  Tex. Prop. Code § 51.003(a)

• The lender has two years to sue

  Within 2 years of the foreclosure sale

  Any action to recover a deficiency after a trustee's sale must be brought within two years of the sale. If you are sued, check the date the case was filed against the sale date on the trustee's deed.

  Tex. Prop. Code § 51.003(a)

• Ask the court for a fair market value credit

  In the deficiency lawsuit

  You can ask the court to decide what the home was worth on the sale date, using evidence such as expert opinions and comparable sales. If that value is higher than the sale price, you get a credit for the difference. If no one asks, or no value evidence is offered, the sale price is used.

  Tex. Prop. Code § 51.003(b), (c)

• After a court foreclosure, a 90-day window applies

  Within 90 days after a court-ordered sale

  If the home was sold under a court judgment, anyone who owes the debt can file a separate suit in the district court of the county where the home is to set its fair market value. That suit must be filed within 90 days after the sale.

  Tex. Prop. Code § 51.004(b), (c)

• Home equity and reverse mortgages are non-recourse

  Applies for the life of the loan

  A Texas home equity loan made under the constitution must be without recourse for personal liability against each owner and spouse, unless the loan was obtained by actual fraud. A Texas reverse mortgage must also be made without recourse for personal liability. If your loan is one of these, the lender's remedy is the home, not a deficiency judgment against you.

  Tex. Const. art. XVI, § 50(a)(6)(C), (k)(3)

• Short sale or deed in lieu: get the waiver in writing

  Before you sign

  The two-year limit and fair market value credit in section 51.003 apply to foreclosure sales. We did not find a Texas statute that sets deficiency rules for a short sale or deed in lieu, so your written agreement with the lender controls. Ask for a written statement that the lender waives any remaining balance.

  Tex. Prop. Code § 51.003(a)

• How long a judgment lasts and what it can reach

  10 years, renewable

  A Texas judgment becomes dormant if no writ of execution is issued within 10 years, but it can be kept alive or revived. Current wages cannot be garnished for this kind of debt, and your homestead is exempt from seizure by ordinary creditors.

  Tex. Civ. Prac. & Rem. Code § 34.001; Tex. Const. art. XVI, § 28; Tex. Prop. Code § 41.001

The short answer in Texas

Common questions in Texas