Right to a fair-market-value credit against a deficiency
Tex. Prop. Code § 51.003(a)–(c)
In plain words
If your home sells at foreclosure for less than you owe, the lender has only two years to sue you for the difference (the deficiency). In that suit you can ask the court to decide the home’s fair market value on the sale date. If the value was higher than the sale price, the deficiency is reduced by the difference.
Who is protected
Anyone sued for a deficiency after a Texas nonjudicial foreclosure sale.
When it applies
- Only in Texas.
- Only after the foreclosure sale.
What you can do
Gather proof of your home’s value
Collect appraisals, comparable sales and photos showing the value on the sale date.
Deadline: Ask for the value finding in the deficiency suit
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Honest limits
- If no one asks for a value finding, or no competent value evidence is offered, the sale price is used.
- Home-equity loans under art. XVI, § 50(a)(6) are non-recourse: no deficiency at all (see the home-equity right).
- This is general education, not legal advice. Laws change and details matter — check the current official text or talk to a legal aid lawyer or HUD-approved housing counselor.
The law
- State lawDeficiency judgment and fair-market-value offset
Tex. Prop. Code § 51.003(a)–(c)
Exact part: (a)–(c)
What it says: A deficiency suit must be brought within two years; the debtor may ask the court to find fair market value and get an offset.
Read the official texthttps://statutes.capitol.texas.gov/Docs/PR/htm/PR.51.htm#51.003
Court cases
- Homeowner wonSame topicSauceda v. GMAC Mortgage Corp.
Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135 (Tex. App.—Corpus Christi–Edinburg 2008)
a wrongful-foreclosure claim requires a defect in the sale proceedings, a grossly inadequate selling price, and a causal connection between them, and that homeowners who offer evidence of each are entitled to a trial
- Homeowner wonSame topicCharter National Bank-Houston v. Stevens
Charter Nat'l Bank-Houston v. Stevens, 781 S.W.2d 368 (Tex. App.—Houston [14th Dist.] 1989)
when a mortgagee deliberately chills the bidding at a foreclosure sale, the injured owner seeking damages need not also prove a grossly inadequate selling price
- Homeowner lostSame topicRice v. Pinney
Rice v. Pinney, 51 S.W.3d 705 (Tex. App.—Dallas 2001)
an eviction after foreclosure may proceed while a wrongful-foreclosure suit is pending, because the eviction court decides only the right to immediate possession and not title
- Homeowner wonSame topicOgden v. Gibraltar Savings Ass'n
Ogden v. Gibraltar Sav. Ass'n, 640 S.W.2d 232 (Tex. 1982)
when a note holder has the option to accelerate on default, equity demands notice of the intent to exercise that option before foreclosing, and a homeowner sold out without it may recover damages
- Homeowner lostSame topicMartins v. BAC Home Loans Servicing, L.P.
Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249 (5th Cir. 2013)
a mortgage servicer acting for a properly assigned mortgagee may foreclose in Texas without possessing the original note, and an oral promise to modify a large loan is not enforceable
- Homeowner lostSame topicMilton v. U.S. Bank National Ass'n
Milton v. U.S. Bank Nat'l Ass'n, 508 F. App'x 326 (5th Cir. 2013) (per curiam) (unpublished)
an agreement to delay a Texas foreclosure falls within the statute of frauds and must be in writing to be enforced
Related rights
Home-equity loan protections: court order first, no personal liability
Tex. Const. art. XVI, § 50(a)(6)(C), (D)
A Texas home-equity loan (cash-out loan on your homestead) can be foreclosed only with a court order, usually through the expedited Rule 736 process. You get a citation and can file a response — due the first Monday after 38 days from mailing. The loan is also non-recourse: the lender cannot sue you personally for any shortfall unless you got the loan by actual fraud.
Read this rightThe government cannot keep your home equity beyond the tax debt
U.S. Const. amend. VTakings Clause
If your home is taken or sold to pay property taxes, the government may collect what you owe, but it may not keep the extra value. Keeping the surplus is a "taking" of your property without just compensation, which the Fifth Amendment forbids (Tyler v. Hennepin County, 2023). You may be able to claim the surplus, but you usually must follow your state's claim process and deadlines.
Read this rightAfter a discharge, creditors cannot collect the wiped-out debt from you
11 U.S.C. § 524(a)(2)
A bankruptcy discharge wipes out your personal liability for most debts in the case. After that, the law forbids creditors from suing, calling or otherwise trying to collect a discharged debt from you personally. A court can hold a creditor in contempt if there was no fair doubt that its conduct was barred.
Read this rightRenters get at least 90 days' notice after a foreclosure
12 U.S.C. § 5220 note(Pub. L. 111-22, div. A, § 702(a)–(b))
If you rent a home that goes through foreclosure, the new owner must give you a notice to move at least 90 days before you have to leave. If you have a real (bona fide) lease signed before the foreclosure notice, you can usually stay until the lease ends. The exception is when the new owner will live in the home; even then you still get the 90 days' notice.
Read this rightRight to buy back your home after an HOA foreclosure
Tex. Prop. Code § 209.011(b)–(d)
Texas has no redemption after a mortgage foreclosure. But if your homeowners association (HOA) forecloses its assessment lien, you can redeem (buy back) the property within 180 days after the HOA mails you notice of the sale. The buyer cannot transfer the home to anyone else during that time.
Read this rightRight to redeem your home after a property-tax sale
Tex. Tax Code § 34.21(a), (e)
If your residence homestead (or agricultural land) is sold at a tax sale, you can buy it back within two years after the buyer’s deed is recorded. You repay the bid and certain costs plus a premium: 25% in the first year, 50% in the second. For other property the window is 180 days. Owners 65+, disabled owners and disabled veterans can also stop a tax suit or sale on their homestead by filing a deferral affidavit.
Read this right