Not later than the 15th calendar day after the date of a foreclosure sale, a mortgagee, trustee, or substitute trustee may rescind the sale under this section if:
(1) the statutory requirements for the sale were not satisfied;
(2) the default leading to the sale was cured before the sale;
(3) a receivership or dependent probate administration involving the property was pending at the time of sale;
(4) a condition specified in the conditions of sale prescribed by the trustee or substitute trustee before the sale and made available in writing to prospective bidders at the sale was not met;
(5) the mortgagee or mortgage servicer and the debtor agreed before the sale to cancel the sale based on an enforceable written agreement by the debtor to cure the default; or
(6) at the time of the sale, a court-ordered or automatic stay of the sale imposed in a bankruptcy case filed by a person with an interest in the property was in effect. Texas Property Code § 51.016(a).
For real estate investors who purchase Texas residential foreclosure properties, this law has the effect of delaying — and making uncertain — the finality of purchased foreclosure properties for the duration of the 15 day rescission period.
For lenders, this law has the effect of providing a “safe harbor” for the correction of mistakes; for borrowers, the law creates one last opportunity to retain ownership of the foreclosed property.
Lapin Law Offices assists real estate investors and real estate professionals with a wide range of real estate and business law matters.