After a person dies, real property is immediately owned by the heirs-at-law if there is no will or by the beneficiaries in a will if the person left a last will and testament. Tex. Estates Code §§ 101.001(a), 201.001, 201.002, 201.003. Many properties that are inherited by heirs or given to devisees under a will are also subject to mortgages. While the heirs or beneficiaries are not personally liable for the mortgage debt, a mortgage will continue to encumber (through a recorded deed of trust) property in Texas. Failing to make payments on a mortgage may result in a lender beginning the foreclosure process. In many cases, the probate process in Texas can assist heirs or beneficiaries in a will in stopping foreclosure. This article will explore different scenarios and provide a brief overview of when an estate administration may be helpful in stopping or delaying foreclosure.
Foreclosure When There is No Probate (Estate Administration)
With limited exceptions, a probate must be started within four years of a decedent’s death. If four years have elapsed after death, a foreclosure sale will be absolute. Wiener v. Zweib, 147 S.W. 867 (Tex. 1912).
Dependent Administrations
A dependent (as opposed to independent) administration is a type of probate that requires court supervision. If a foreclosure is conducted prior to the opening of a dependent administration, a later appointed administrator may seek to have a court cancel the foreclosure. See Pearce v. Stokes, 291 S.W.2d 309, 310–11 (Tex. 1956). If a foreclosure is a pending, the opening of a dependent administration will suspend the lender’s right to foreclose. A foreclosure sale under a deed of trust is void during a dependent administration unless the lender complies with the process outlined in the Texas Estates Code. Pearce v. Stokes, 291 S.W.2d 309, 310–11 (Tex. 1956).
Independent Administrations
An independent administration is a type of probate where the administrator (sometimes called the executor if there is a will) has broad authority to act on his own without much supervision from the court. There is some uncertainty under the law as to whether the opening of an independent administration would affect the validity of a foreclosure sale that occurred after death but before the independent administration is open. Texas Estates Code sections 403.001 and 403.051 through 403.0585 require secured creditors to make certain elections, restrict foreclosure timing, and allow an independent administrator to make payments on the mortgage. These statutory provisions that were codified in 2011 may change the old rule that subsequent independent administrations would not alter a properly conducted foreclosure sale.
Additionally, statutory changes in 2011 outlined in the Texas Estates Code changes the old law that a foreclosure during an independent administration would be valid. Under the new law, the lender must elect to have its claim treated as a preferred debt and lien, wait six months, and comply with the necessary provisions in Texas Property Code section 51.002.
Conclusion
Texas probate administration can be an effective tool in delaying or stopping the foreclosure of a decedent’s property. However, probate is a complex process, and a competent attorney should be employed achieve the desired goals.
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