Wrongful foreclosure is a claim a borrower can bring in a Texas court to challenge a foreclosure sale that was conducted improperly. We mention it here not to help borrowers, since our primary business is representing creditors, but because understanding what a wrongful foreclosure claim looks like is the best way to understand why we are so careful about procedure.
Every rule we follow exists for a reason. The consequences of getting it wrong can be serious.
What Makes a Foreclosure “Wrongful”
A foreclosure sale in Texas can be challenged if the creditor failed to follow the required procedures. The most common complaints we see include the following:
- The notices were not sent to the correct address.
- The foreclosure sale was held on the wrong date or at the wrong location.
- The debt was accelerated without the required pre-acceleration notice.
- A partial payment was accepted after the debt was accelerated, which a borrower can argue abandoned the foreclosure.
- The substitute trustee was not properly appointed before the sale.
- The person who signed the substitute trustee appointment lacked authority to do so.
Any one of these can give a borrower grounds to ask a Texas court to set aside the sale.
The Borrower’s Big Obstacle
Even when a borrower has a legitimate complaint about procedure, Texas courts generally will not hand the property back without requiring the borrower to do something significant in return. As a practical matter, courts expect a borrower seeking to set aside a completed sale to demonstrate that they can actually pay what they owe, or at least the amount that was in default.
Courts do not set aside foreclosure sales as a windfall. The idea is that the borrower should not benefit from a procedural error if they have no intention of making the creditor whole.
Even so, a creditor who cuts corners gives a borrower an opening. Litigation is expensive, time-consuming, and unpredictable. A TRO obtained on the morning of the sale, sometimes with only a few hours’ notice, can set a foreclosure back by 60 days and cost the creditor in legal fees even if the creditor ultimately prevails.
How We Avoid a Wrongful Foreclosure Claim
Do the procedure right the first time. That is our approach.
We follow every notice requirement, verify every deadline, confirm every address, and prepare every document correctly before we take a single step toward the courthouse. We have handled foreclosures across every county in Texas, and we know where the traps are.
If a borrower makes a claim against one of our clients, we respond. But our goal is to give them nothing to claim in the first place.
If you are concerned about a foreclosure that was handled without counsel, or that you believe was improperly challenged, contact us and we will review the situation.
In this section: ABCs of Foreclosure · Step 1: Default · Step 2: Notice · Step 3: Lien Search · Step 4: Sale · Step 5: Cleaning Up
Frequently Asked Questions
What is the most common basis for a wrongful foreclosure claim in Texas?
The most common complaints are defective notice, either sent to the wrong address, sent too late, or sent without proper certification, and acceptance of a partial payment after acceleration that the borrower argues waived the foreclosure. Both are entirely preventable with careful process management.
Can a borrower stop a sale at the last minute based on a wrongful foreclosure claim?
Yes. A borrower can seek a temporary restraining order from a Texas district court based on an alleged procedural defect. A TRO can be issued on the morning of the sale, sometimes with only a few hours' notice to the creditor. This is why we prepare every notice and every document well in advance of the sale date, so there is nothing for a borrower to point to as a defect.
If the sale is set aside, what happens?
If a Texas court sets aside a foreclosure sale, the sale is treated as if it never happened. The property goes back to the borrower, the trustee's deed is voided, and the foreclosure process must restart from the beginning. The creditor may also be required to pay the borrower's attorney fees and any actual damages caused by the wrongful sale.
Can a borrower get a wrongful foreclosure claim dismissed if they owe the money?
Generally yes, Texas courts typically require a borrower seeking to set aside a completed foreclosure to tender the amount owed or demonstrate the ability to pay. Courts do not award equitable relief to borrowers who want to avoid paying what they owe. A legitimate procedural defect still needs to be accompanied by a showing that the borrower can make the creditor whole.