Texas Commercial Law Firm
Foreclosure
4. Valuation of property. When there is doubt as to the value of property to be sold by private sale, an appraisal is recommended. An appraisal by a reliable and credible appraiser will help in proving that you conducted a “commercially reasonable” sale by establishing some indication of the market value of the collateral. If the collateral is sold at, near or above the appraised value, you will have substantially protected yourself against claims that the sale was not “commercially reasonable”. You should always remember as well that proceeds from the sale (public or private) that exceed the amount owed to you are to be turned over to the debtor. 5. Retention of collateral in satisfaction of debt. An alternative to public or private sale is also available. You can, under the UCC, simply retain the collateral in satisfaction of the obligation. Written notice of your proposal to do so must be sent to the debtor and any other party secured by the same collateral. Such notice should be sent certified mail, return receipt requested. If you receive an objection in writing to your retention of the collateral from the debtor or a secured party within twenty-one (21) days after notice is sent, you must then proceed to sell the collateral by private or public sale using the procedures for those sales outlined above. If you receive no written objection within twentyone (21) days, you may simply retain the collateral in satisfaction of the debtor's obligation.
6. Notification is essential. The importance of the UCC notification requirements cannot be over-emphasized. If one entitled to receive notification is not notified, he has a right to recover from the party conducting the sale any loss they have suffered as a result of the lack of notification, up to the amount of the value of their security interest in the collateral. To protect yourself against an action for wrongful disposition of property, extra care should be taken to document your satisfaction of the notice requirements and your efforts to conduct a “commercially reasonable” sale of the property.
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