Texas foreclosure auctions explained

Three kinds of forced sale

How a trustee's sale works

1. Default and notice to cure. For property used as the debtor's residence, the servicer must send a certified-mail notice of default and give at least 20 days to cure before the sale can be noticed (§51.002(d)).
2. Notice of sale, at least 21 days before. The notice is posted at the courthouse door, filed with the county clerk, and sent by certified mail to each debtor. It states the earliest time the sale will begin (§51.002(b)).
3. The sale day. The auction is held between 10 a.m. and 4 p.m. on the first Tuesday of the month, in the area the commissioners court has designated. If the first Tuesday is January 1 or July 4, the sale moves to the first Wednesday. It must begin at the time stated in the notice or within three hours after it.
4. Bidding. The trustee or substitute trustee calls the sale. The lender often opens with a credit bid. Third-party bidders must meet the trustee's payment terms, which commonly require certified funds or cash equivalents on the day of the sale.
5. The deed. The winning bidder receives a trustee's deed. It typically contains no warranty of title, and the property is taken as is.
6. Possession. If anyone is living there, the buyer must follow the eviction process to recover possession. The buyer cannot remove occupants personally.

A borrower can cure, refinance, sell or file for bankruptcy before the sale, and a posted property can be withdrawn up to the last minute, so a notice is no assurance that a sale will happen.

What the buyer gets, and what survives

• Junior liens are generally wiped out by the foreclosure of a senior lien, subject to notice requirements.
• Senior liens survive. If the loan being foreclosed is a second lien, the buyer takes the property subject to the first mortgage.
• Property taxes are a priority lien. Unpaid taxes stay with the property.
• Federal tax liens can give the United States a right to redeem for 120 days after the sale, under federal law.
• HOA assessments may remain owed, depending on the association's lien priority and the documents.
• Condition is unknown. There is usually no interior inspection, no seller's disclosure (foreclosure sales are exempt from §5.008), and no option period.

Title insurance on an auction purchase can be limited or delayed. Many buyers order a title search before the sale for this reason. The title insurance guide explains policies and exceptions.

Tenants in a foreclosed property

Texas law requires a buyer at a trustee's or tax foreclosure sale under a lien superior to a residential lease to give a tenant who is current on rent at least 30 days' written notice to vacate, if the buyer does not continue the lease (§24.005). The federal Protecting Tenants at Foreclosure Act gives bona fide tenants in residential property at least 90 days' notice and, in many cases, the right to finish the lease term. The eviction itself follows the steps in the eviction process guide.

Tax sales

When property taxes go unpaid, taxing units can sue, obtain a judgment and have the property sold by the sheriff or constable (Tax Code ch. 34). Commissioners courts may authorize online auctions. Key differences from a trustee's sale:

• The former owner can redeem: within two years for a residence homestead or land designated for agricultural use, with a redemption premium of 25% in the first year and 50% in the second, or within 180 days for other property, with a premium of no more than 25% (Tax Code §34.21).
• The buyer's deed is subject to that redemption period, which affects when you can safely improve or resell the property.
• Unsold property may be bid off to a taxing unit and resold later.

HOA foreclosures

Chapter 209 of the Property Code restricts association foreclosures on residential property. An association may not foreclose if the debt is only fines, or attorney's fees tied only to fines (§209.009). Foreclosure generally requires a court order (§209.0092), and the owner or a lienholder can redeem within 180 days after the association mails notice of the sale (§209.011). A buyer at an HOA sale may not transfer the property to anyone but a redeeming owner during that period. See HOA rules for landlords.

A pre-auction research checklist

• Read the notice of sale: legal description, time window, trustee and lender.
• Search the county records for the deed of trust being foreclosed and every other lien.
• Check the appraisal district and tax office for value and unpaid taxes.
• Look for federal tax liens, judgments, mechanic's liens and HOA liens.
• Drive by to judge occupancy and exterior condition, without entering or disturbing occupants.
• Confirm the trustee's payment terms and have funds ready in the required form.
• Budget for eviction time, repairs, insurance, taxes and holding costs.
• Plan how you'll hold title, before you bid. See LLCs for rental property.

Common questions

When are foreclosure auctions held in Texas?

Trustee's sales are held on the first Tuesday of each month between 10 a.m. and 4 p.m., at the place the county commissioners court designates. If that Tuesday is January 1 or July 4, the sale is on the first Wednesday.

Is there a right of redemption after a Texas mortgage foreclosure?

Texas law gives no statutory redemption right after a trustee's sale on a mortgage. Redemption rights do exist after tax sales and HOA sales, and a federal tax lien can create a federal right to redeem.

Can I inspect a property before the auction?

Usually not. The occupant is under no obligation to let you in, and entering without permission is trespassing.

Where are sale notices posted?

At the courthouse and with the county clerk of the county where the property is located. Many county clerks publish the notices online.

Related guides

• The Texas eviction process and timeline
• Title insurance in Texas
• Texas seller's disclosure notice rules

The Texas State Law Library's foreclosure guide links the statutes and court resources.