Sep
6
2023
Tips To Foreclose On A Real Estate Lien
You are the lender on an owner-financed sale of real estate, carrying the note secured by a lien on the property. The borrower is not complying with the terms of the note. You are now faced with the daunting prospect of foreclosure on your lien.
Here are some tips to foreclose your real estate lien successfully in Texas.
1: Get An Attorney
A foreclosure is not a do-it-yourself procedure. Nowadays, you can Google just about any legal procedure online and get guidance. However, unless you have very little money at stake, trying to meet at least ten legal requirements to conduct a foreclosure without the guidance of an attorney is not a smart move.
If you don't do the foreclosure correctly, the borrower could even get the property back, and you would have wasted a lot of time and money.
2: Listen To Your Attorney
I have seen foreclosures go awry for the lender because he or she did not follow the attorney's advice. If you try to insert yourself into the procedure and have a miscommunication with the borrower about any of the legal steps in the foreclosure procedure, you can screw the whole thing up. Trying to be sympathetic to the borrower can give them the impression that you are not serious about going through with the foreclosure.
Once you have retained an attorney, leave everything to the attorney. Do not continue dealing with the borrower yourself. If the borrower tries to bargain with you, refer them to your attorney.
3: Be Patient
The foreclosure procedure takes a long time. As a result, you may be frustrated that the borrower has not paid you for months, and you may have to continue to pay legal fees and expenses to foreclose the lien before you realize the benefit of the foreclosure.
Just keep in mind that every step in the foreclosure requires a certain notice period for the borrower that must be allowed. The whole procedure can take several months. Failure to observe the required notice periods can cause the foreclosure to be set aside.
4: Be Prepared To Resell The Property
The most likely result of a foreclosure is that you, as the lender, will bid the amount owed to you on the note at the foreclosure sale. Seldom does a third-party buyer bid more than the amount due on the note to purchase the property outright at a foreclosure sale.
The result if you are the successful bidder is that the title of the property is restored to your name. Then, in order to realize any gain from the procedure, you will need to resell the property. Once again, be patient. Depending on market conditions, you may want to hold onto the property before trying to sell it again.
If You Need Help With A Foreclosure
If you need to foreclose on a real estate lien in Texas, please Contact Adair M. Buckner using the button below to schedule a free initial consultation.*
With years of experience guiding lenders through the foreclosure process, Adair can help you avoid costly mistakes so you can correctly foreclose on your lien and make the best of a bad situation.
*The free consultation does not cover actual review of documents or giving legal advice on a specific situation.
**This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, specific tax, legal, or accounting advice. We can only give specific advice upon consulting directly with you and reviewing your exact situation.
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