The Mortgage Limitations Statute in Texas

Statutes of limitations are laws that prohibit a creditor from suing to collect a debt after a period of time has elapsed. Statutes of limitations vary from state to state and depending on the type of debt. In Texas, the statute of limitations on mortgaged property is two years after foreclosure is complete.

Foreclosure Process in Texas

When a debtor misses a scheduled mortgage payment, the lender can consider the full amount of the note due. After written notice is received the debtor has 20 days to make the past due payments and avoid the acceleration of the full amount.

Texas Property Code Chapter 51 governs the foreclosure process. If the debtor does not remedy the past due situation, the lender may file a notice with the Texas courts to sell the property. 21 days after the lender files the notice the property will be sold at public auction.

Deficiency Judgment

If the foreclosed property does not draw a high enough price at auction to fully cover the debtor's mortgage obligation, the debtor remains personally liable for the balance. The lender may file for a deficiency judgment against the debtor to collect the unpaid debt.

Statute of Limitations on Deficiency

Texas Property Code Section 51.003 requires that a lender file its lawsuit to recover the deficiency balance within two years from the date of the foreclosure auction. If the lender does not file an action within the prescribed time frame, it will lose its right to pursue legal action to collect the amount. Before 1991, deficiency balances were considered written contracts and subject to a four-year statute of limitations.

Credit Reporting

Texas law does not control how long the debt may appear on your credit report. Delinquent and charged-off accounts can remain on a credit report for seven years from the date of last payment or charge-off. If the original lender sells the account to a collection agency, it may appear for an additional seven years from date of sale.

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