Sec. 51.003. DEFICIENCY JUDGMENT. (a) If the price at which real property is sold at a foreclosure sale under Section 51.002 is less than the unpaid balance of the indebtedness secured by the real property, resulting in a deficiency, any action brought to recover the deficiency must be brought within two years of the foreclosure sale and is governed by this section.
(b) Any person against whom such a recovery is sought by motion may request that the court in which the action is pending determine the fair market value of the real property as of the date of the foreclosure sale. The fair market value shall be determined by the finder of fact after the introduction by the parties of competent evidence of the value. Competent evidence of value may include, but is not limited to, the following: (1) expert opinion testimony; (2) comparable sales; (3) anticipated marketing time and holding costs; (4) cost of sale; and (5) the necessity and amount of any discount to be applied to the future sales price or the cashflow generated by the property to arrive at a current fair market value.
(c) If the court determines that the fair market value is greater than the sale price of the real property at the foreclosure sale, the persons against whom recovery of the deficiency is sought are entitled to an offset against the deficiency in the amount by which the fair market value, less the amount of any claim, indebtedness, or obligation of any kind that is secured by a lien or encumbrance on the real property that was not extinguished by the foreclosure, exceeds the sale price. If no party requests the determination of fair market value or if such a request is made and no competent evidence of fair market value is introduced, the sale price at the foreclosure sale shall be used to compute the deficiency.
(d) Any money received by a lender from a private mortgage guaranty insurer shall be credited to the account of the borrower prior to the lender bringing an action at law for any deficiency owed by the borrower. Notwithstanding the foregoing, the credit required by this subsection shall not apply to the exercise by a private mortgage guaranty insurer of its subrogation rights against a borrower or other person liable for any deficiency.
Added by Acts 1991, 72nd Leg., ch. 12, Sec. 1, eff. April 1, 1991.
Notes of Decisions
Plainscapital Bank v. William Martin, 459 S.W.3d 550 (Tex. 2015).
· cites it 22× “Martin sued the bank, asserting, in part, that the property’s fair market value on the date of foreclosure was in excess of the foreclosure sales price and Texas Property Code § 51.003 required the bank to offset the excess against his debt.”
Donald W. Sowell v. Int'l Interests, LP, 416 S.W.3d 593 (Tex. App. 2013).
· cites it 10× “Notwithstanding the foregoing, the credit required by this subsection shall not apply to the exercise by a private mortgage guaranty insurer of its subrogation rights against a borrower or other person liable for any deficiency.”
Vill. Place LTD & Bob Yari v. VP Shopping, LLC, 404 S.W.3d 115 (Tex. App. 2013).
· cites it 8× “We further conclude that Village Place is entitled under Texas Property Code section 51.003 to have the property’s fair market value determined and offset against VPS’s claim.”
Nancy & Stjepan Sostaric v. Sally Marshall, 766 S.E.2d 396 (W. Va. 2014).
· cites it 4× “§ 21-47-16 (“fair and reasonable value”); Tex. Prop. Code Ann. § 51.003 (“fair market value” as of sale date); Utah Code Ann.”
W.-S. Life Asuc Co. v. George Kaleh, 879 F.3d 653 (5th Cir. 2018).
· cites it 4× “dy's trepidation arose from the advent of Tex. Prop. Code § 51.003, a 1993 anti-deficiency statute discussed in some detail below.”
Lairsen v. Slutzky, 80 S.W.3d 121 (Tex. App. 2002).
· cites it 4× “See Tex. Prop.Code Ann. § 51.003 (West 1995).”
Pirani v. Baharia (In Re Pirani), 824 F.3d 483 (5th Cir. 2016).
· cites it 2× “” Tex. Prop. Code § 51.003(b). “If the court determines that the fair market value is greater than the sale price of the real property at the foreclosure sale, then the persons against whom recovery of the deficiency is sought are entitled to an offset against the deficiency”…”
In Re Perry, 425 B.R. 323 (Bankr. S.D. Tex. 2010).
· cites it 8× “Does Perry have a right to setoff as a result of the foreclosure sale of the Hidden Lakes Property ? The Plaintiffs contend that Perry, as guarantor of the loan between UDF III and Hidden Lakes, is entitled to a setoff under Tex. Prop.Code § 51.003 because the fair market value…”
Segal v. Emmes Capital, L.L.C., 155 S.W.3d 267 (Tex. App. 2004).
· cites it 2× “2002) (applying same reasoning to hold that guarantor could validly waive any offset rights under Texas Property Code section 51.003). Furthermore, this Court’s decision in Chase Manhattan Bank, N.”
— Tex. Prop. Code § 51.003(a) — 30 cases
Donald W. Sowell v. Int'l Interests, LP, 416 S.W.3d 593 (Tex. App. 2013).
“Notwithstanding the foregoing, the credit required by this subsection shall not apply to the exercise by a private mortgage guaranty insurer of its subrogation rights against a borrower or other person liable for any deficiency.”
Plainscapital Bank v. William Martin, 459 S.W.3d 550 (Tex. 2015).
“Martin sued the bank, asserting, in part, that the property’s fair market value on the date of foreclosure was in excess of the foreclosure sales price and Texas Property Code § 51.003 required the bank to offset the excess against his debt.”
W.-S. Life Asuc Co. v. George Kaleh, 879 F.3d 653 (5th Cir. 2018).
“dy's trepidation arose from the advent of Tex. Prop. Code § 51.003, a 1993 anti-deficiency statute discussed in some detail below.”
— Tex. Prop. Code § 51.003(b) — 25 cases
Plainscapital Bank v. William Martin, 459 S.W.3d 550 (Tex. 2015).
“Martin sued the bank, asserting, in part, that the property’s fair market value on the date of foreclosure was in excess of the foreclosure sales price and Texas Property Code § 51.003 required the bank to offset the excess against his debt.”
Pirani v. Baharia (In Re Pirani), 824 F.3d 483 (5th Cir. 2016).
“” Tex. Prop. Code § 51.003(b). “If the court determines that the fair market value is greater than the sale price of the real property at the foreclosure sale, then the persons against whom recovery of the deficiency is sought are entitled to an offset against the deficiency”…”
— Tex. Prop. Code § 51.003(b)(3) — 1 case
Plainscapital Bank v. William Martin, 459 S.W.3d 550 (Tex. 2015).
“Martin sued the bank, asserting, in part, that the property’s fair market value on the date of foreclosure was in excess of the foreclosure sales price and Texas Property Code § 51.003 required the bank to offset the excess against his debt.”
— Tex. Prop. Code § 51.003(b)(5) — 2 cases
Plainscapital Bank v. William Martin, 459 S.W.3d 550 (Tex. 2015).
“Martin sued the bank, asserting, in part, that the property’s fair market value on the date of foreclosure was in excess of the foreclosure sales price and Texas Property Code § 51.003 required the bank to offset the excess against his debt.”
— Tex. Prop. Code § 51.003(c) — 22 cases
Lairsen v. Slutzky, 80 S.W.3d 121 (Tex. App. 2002).
“See Tex. Prop.Code Ann. § 51.003 (West 1995).”
In Re Perry, 425 B.R. 323 (Bankr. S.D. Tex. 2010).
“Does Perry have a right to setoff as a result of the foreclosure sale of the Hidden Lakes Property ? The Plaintiffs contend that Perry, as guarantor of the loan between UDF III and Hidden Lakes, is entitled to a setoff under Tex. Prop.Code § 51.003 because the fair market value…”
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