Legal Question in Real Estate Law in Texas
The first lien holder foreclosed and sold property (s) in Texas without notifying or attempting to notify the junior lien holder protecting only their own interest. The junior lien holder has a deed of trust that was filed with the county clerks office 2 years before the foreclosures took place. Can the junior lien holder sue the first lien holder (banks) for deficiency or deceptive practices under the texas law? Since then the first lien holder have sold the properties with substitute deeds of trust to different individuals. What recourse does the second lien holder have in this situation?
Thank you.
1 Answer from Attorneys
There is no duty to notify junior lienholders. However, if the house sells for more that the first lienholder's loan amount (plus expenses) then the overage should go to junior lienholders. Also, junior lienholders have the option of suing the borrowers (assuming the loan is a recourse loan.)