Texas Commercial Law Firm

M. Other Thorny Problems

1. Death of mortgagor. Without question, one of the most perplexing and confusing situations to lenders is when a mortgagor has died. A lenders' options under these circumstances are controlled by the type of probate proceeding, if any, which ensues. What follows is a discussion concerning the possible scenarios that may arise upon a mortgagor's death prior to foreclosure and a lender's options for foreclosing under each scenario. The scenarios are discussed in order of ease of resolution, beginning with the simplest.

The simplest situation to deal with is where a mortgagor has been dead for more than four years and no probate proceeding has been opened. Under these circumstances, the statute of limitations bars the opening of probate proceedings. Consequently, four years after a mortgagor's death, if no probate proceeding has been opened, a properly conducted foreclosure sale will pass good title. Weiner v. Sweib, 105 Tex 62, 141 S.W. 771 (Tex. 1911).

The next easiest situation to resolve occurs when a deceased mortgagor's will appoints an independent executor and the independent executor has been approved by the court and is acting in that capacity. After the will is probated, if it is approved by the court and the independent executor accepts the appointment, “letters testamentary” are issued by the court. Letters testamentary serve as evidence of the authority of the independent executor to act on behalf of the estate. Upon issuance of letters testamentary, foreclosure may proceed. The only additional requirement in these circumstances beyond those of a typical foreclosure is to provide notice to the independent executor. Neither of these first two scenarios involve substantial delay or require additional legal fees.

Next Page>>> |Previous Page>>>