How to Foreclose on a Land Note in Texas: The Full Process

Understanding how to foreclose on a land note in Texas is essential knowledge for every note holder, even if you hope you never have to use it. Foreclosure is the legal process through which a note holder enforces their security interest in real property when the borrower fails to meet their obligations under the promissory note. In Texas, the foreclosure process is generally faster and more straightforward than in most other states, thanks to the state's well-established non-judicial foreclosure framework. However, "straightforward" does not mean "simple" — there are specific legal requirements, strict timelines, and important decisions at every stage that can affect the outcome. This guide provides a comprehensive, step-by-step walkthrough of the entire foreclose on a land note in Texas process, from the first signs of default through the foreclosure sale and beyond.

Texas is one of the fastest foreclosure states in the country, and that speed is a direct benefit to note holders. While some states require judicial foreclosure — a process that goes through the courts and can take a year or more — Texas allows non-judicial foreclosure through the power of sale clause contained in the deed of trust. This means the foreclosure can be conducted by the trustee without court involvement, dramatically reducing the time and cost of the process. For note holders who have a borrower in default and need to recover their collateral, this efficient process is one of the significant advantages of holding notes secured by Texas real estate.

That said, the process must be followed exactly. Texas courts have consistently held that strict compliance with the statutory notice and procedural requirements is necessary for a valid foreclosure. Cutting corners, missing deadlines, or failing to follow the prescribed steps can result in the foreclosure being challenged and potentially voided, which would send you back to square one with additional costs and delays. This is why most experienced note holders either hire a foreclosure attorney or work with a title company experienced in foreclosures to ensure every step is handled correctly. Let us walk through the entire process so you know what to expect.

Step One: Confirming the Default and Reviewing Your Documents

Verifying the Default

Before initiating the foreclose on a land note in Texas process, you need to confirm that a default has actually occurred as defined by the terms of your promissory note and deed of trust. This may seem obvious, but it is an essential first step. Review the note carefully to identify the specific default provisions — what constitutes a default, how the grace period works, and whether there are any cure provisions that must be satisfied before enforcement action can be taken. Common defaults include missed payments, failure to pay property taxes, failure to maintain insurance, unauthorized transfer of the property, and failure to maintain the property in reasonable condition.

Once you have confirmed that a default has occurred, document it thoroughly. Note the date the payment was due, the date the grace period expired, the amount of the missed payment or payments, and any communications you have had with the borrower regarding the default. If the default involves something other than a missed payment — such as delinquent property taxes — gather documentation of that as well. This documentation will be important throughout the foreclosure process and may be needed if the borrower later challenges the foreclosure. A strong paper trail showing a clear, undisputed default is the foundation of a successful foreclosure.

Reviewing the Deed of Trust and Note

Next, pull out the original deed of trust and promissory note and review them carefully. Confirm that the deed of trust contains a power of sale clause, which is the provision that authorizes non-judicial foreclosure. Virtually all Texas deeds of trust include this clause, but it is important to verify. Identify the trustee named in the deed of trust — this is the person or entity authorized to conduct the foreclosure sale. If the original trustee is unavailable or you prefer to use a different trustee, you have the right to appoint a substitute trustee, which is a common practice. The substitute trustee appointment must be recorded in the county where the property is located before the foreclosure sale.

Also review the deed of trust for any specific notice requirements that may go beyond the statutory minimums. Some deeds of trust require additional notices, longer cure periods, or specific methods of communication that must be followed. While the Texas Property Code sets the minimum notice requirements, your deed of trust may impose additional obligations that are equally binding. Failing to comply with the deed of trust's specific requirements can be just as problematic as failing to comply with the statutory requirements, so a thorough review of both is essential before proceeding.

Step Two: Sending the Notice of Default and Intent to Accelerate

The 20-Day Demand Letter

Under Section 51.002(d) of the Texas Property Code, before a note holder can proceed with a foreclosure sale, they must send the borrower a written notice giving them at least 20 days to cure the default. This notice is often referred to as the "demand letter" or "notice of default and intent to accelerate." The notice must be sent by certified mail to the borrower's last known address and should clearly state the nature of the default, the specific amount required to cure the default, the deadline by which the cure must be made, and a statement that if the default is not cured, the note holder intends to accelerate the note and proceed with foreclosure.

The language of this notice matters. Texas courts have been particular about the distinction between a notice of intent to accelerate and an actual acceleration. The notice must clearly communicate that acceleration will occur if the default is not cured — it should not read as though acceleration has already occurred. If the notice is ambiguous or fails to clearly state the intent to accelerate, a court may find that the acceleration was defective, which can derail the entire foreclosure. Many foreclosure attorneys use carefully drafted template notices that have been tested in Texas courts to ensure they meet all legal requirements.

What Happens If the Borrower Cures

If the borrower cures the default within the 20-day period — meaning they bring all payments current, pay all late fees, and resolve any other default conditions — the foreclosure process stops. The note continues on its original terms, and the borrower resumes making regular payments. This is actually the best outcome for most note holders, because it preserves the note as a performing asset and avoids the costs and complications of foreclosure. However, if the borrower cures the default but then defaults again in the future, you will need to go through the notice process again from the beginning before you can foreclose. Each default is treated as a separate event requiring its own compliance with the statutory notice requirements.

Step Three: Sending the Notice of Acceleration and Notice of Sale

Accelerating the Note

If the borrower does not cure the default within the 20-day period, the next step is to actually accelerate the note — formally declaring the entire remaining balance immediately due and payable. This is typically done through a written notice of acceleration sent to the borrower, which states that the default was not cured, the note has been accelerated, and the full balance is now due. Some practitioners combine the acceleration notice with the notice of sale (described below), while others send them as separate communications. Either approach can work, but the key requirement is that the borrower must receive clear notice that the note has been accelerated before the foreclosure sale occurs.

Filing and Posting the Notice of Sale

Once the note has been accelerated, the trustee (or substitute trustee) must prepare and file a notice of sale. Under Section 51.002(b) of the Texas Property Code, the notice of sale must meet three requirements at least 21 days before the foreclosure sale date. First, the notice must be posted at the courthouse door of the county where the property is located. Second, the notice must be filed with the county clerk of that county. Third, the notice must be sent to the borrower by certified mail at the borrower's last known address. The notice must include a description of the property sufficient to identify it, the date, time, and place of the sale, and the name of the trustee conducting the sale.

The timing of these requirements is critical. The 21-day period is measured from the date of the last of the three required actions — posting, filing, and mailing. If any of the three is done less than 21 days before the sale date, the sale cannot proceed on the scheduled date and must be postponed to a future date with new notices. Keeping careful track of dates and maintaining proof of each action — certified mail receipts, filing receipts, and documentation of the courthouse posting — is essential. These records will be needed to defend the validity of the foreclosure if it is ever challenged.

Step Four: The Foreclosure Sale

When and Where Sales Occur in Texas

Foreclosure sales in Texas occur on the first Tuesday of each month. If the first Tuesday falls on a state holiday, the sale is held on the following day. The sale takes place at the county courthouse, in the area designated by the county commissioners court for conducting foreclosure sales. In some counties, this is the courthouse steps; in others, it is a specific room or area within the courthouse complex. The sale must occur between 10 a.m. and 4 p.m. These requirements are non-negotiable — a sale conducted on the wrong day, at the wrong location, or outside the permitted hours can be voided.

Conducting the Sale

The trustee conducts the sale by public auction, offering the property to the highest bidder. The trustee will typically read a prepared statement describing the property, the authority under which the sale is being conducted, and the terms of the sale. Bidders at the sale must be prepared to pay cash or cashier's check for their bid amount (the specific terms may vary by county and trustee practice). The note holder has the right to bid at the sale and can "credit bid" up to the amount owed on the note — meaning the note holder can bid without bringing cash, because their bid is offset against the debt. This is a significant advantage that often results in the note holder acquiring the property at the foreclosure sale, particularly when the remaining note balance is close to or exceeds the property's market value.

After the Sale

After the foreclosure sale, the trustee executes a trustee's deed conveying the property to the winning bidder. The trustee's deed should be recorded in the county where the property is located to complete the transfer of title. If the note holder purchased the property at the sale through a credit bid, they now own the property and can dispose of it as they see fit — hold it, improve it, or sell it on the open market. If a third party purchased the property, the sale proceeds are distributed according to Texas law: first to the costs of the sale, then to the outstanding balance on the note (including accrued interest, late fees, and authorized foreclosure costs), and any remaining surplus to the borrower or junior lienholders.

Special Considerations for Foreclosing on a Land Note in Texas

Foreclosing on a Contract for Deed

If your land note is secured by a contract for deed rather than a deed of trust, the foreclosure process differs depending on the borrower's payment status. As discussed in our article on borrower default options for Texas land notes, if the borrower has paid less than 40 percent of the purchase price and made fewer than 48 monthly payments, you can cancel the contract with 30 days' written notice rather than going through formal foreclosure. If the borrower has exceeded either threshold, you must follow a formal foreclosure process. In either case, strict compliance with the Texas Property Code requirements is essential. Contract for deed foreclosures can be legally complex due to the additional protections afforded to buyers under Chapter 5 of the Texas Property Code, and working with an experienced attorney is particularly important in these situations.

Properties with Junior Liens or Tax Delinquencies

If the property subject to your note has junior liens — such as a second deed of trust, mechanic's liens, or judgment liens — the foreclosure of your senior lien will typically extinguish those junior liens. However, you need to be aware of any superior liens that would survive the foreclosure, such as property tax liens. In Texas, property tax liens take priority over virtually all other liens, including first-position deeds of trust. If the property has delinquent property taxes, those taxes will need to be paid either before or after the foreclosure sale, and the existence of a significant tax delinquency can affect the economics of the foreclosure. Before proceeding with foreclosure, a title search should be ordered to identify all liens and encumbrances on the property so there are no surprises.

The Borrower's Right of Redemption

Unlike some states that provide borrowers with a statutory right of redemption after a foreclosure sale — allowing them to reclaim the property by paying the full amount within a certain period — Texas generally does not provide a post-sale right of redemption for most foreclosures. This is another advantage of the Texas foreclosure system for note holders: once the sale is conducted and the trustee's deed is recorded, the transfer is final (subject to any successful legal challenges). The borrower's opportunity to prevent the foreclosure is limited to the pre-sale period, when they can cure the default, negotiate a workout, or file legal action to halt the process. Once the gavel falls at the foreclosure sale, the property belongs to the winning bidder.

Costs of Foreclosing on a Land Note in Texas

Attorney and Trustee Fees

The cost of foreclosing on a Texas land note varies depending on the complexity of the situation and the professionals involved. Attorney fees for a straightforward non-judicial foreclosure typically range from 1,500 to 3,500 dollars, although complex situations with title issues, borrower challenges, or contract for deed complications can cost more. Trustee fees are typically in the range of 500 to 1,500 dollars. If you need to appoint a substitute trustee, there may be additional recording fees. These costs are generally recoverable from the foreclosure proceeds if the property sells for enough to cover them, and many promissory notes include provisions allowing the note holder to add reasonable foreclosure costs to the amount owed.

Title Search and Recording Costs

A title search before foreclosure is strongly recommended and typically costs 200 to 500 dollars. Recording fees for the substitute trustee appointment and trustee's deed vary by county but are generally modest — usually in the range of 25 to 75 dollars per document. While these costs are relatively small, they add up, and they should be factored into your analysis of whether foreclosure is the best option compared to alternatives such as selling the note or negotiating a deed in lieu of foreclosure.

Ongoing Costs During the Foreclosure Period

During the foreclosure period — from the first default notice through the sale and any post-sale holding period — you may incur ongoing costs including property taxes that come due, property insurance (which you should maintain to protect your collateral), and any necessary property maintenance or security measures. If the borrower has abandoned the property, you may need to secure it against vandalism or deterioration. These costs can be significant, particularly for larger or more remote properties, and they are one reason why some note holders prefer to sell their non-performing note rather than going through the foreclosure process themselves.

Alternatives to Foreclosure Worth Considering

Selling the Note Before or During Foreclosure

One option that many note holders overlook is selling the note to a professional buyer instead of completing the foreclosure themselves. As noted earlier, there is an active market for non-performing Texas land notes, and experienced buyers like Longhorn Note Buyers have the resources and expertise to handle the foreclosure process efficiently. Selling the note provides you with immediate cash, eliminates the ongoing costs and risks of foreclosure, and frees you from the time commitment and emotional burden of the process. The trade-off is that you will receive less than the full note balance, but when you factor in the costs, time, and uncertainty of completing the foreclosure and then reselling the property, selling the note can often produce a better net result. For more on this comparison, our article on selling your land note vs keeping it provides a thorough analysis.

Negotiating a Short Sale or Deed in Lieu

If the property value has declined to the point where it is worth less than the note balance, a short sale or deed in lieu of foreclosure may produce a better outcome than foreclosure. In a short sale, the borrower sells the property on the open market for less than the note balance, and you agree to accept the proceeds as full satisfaction of the note. In a deed in lieu, the borrower conveys the property directly to you in exchange for release from the note. Both options avoid the costs and time of foreclosure and can be completed more quickly. The deed in lieu option is particularly efficient because it eliminates the need for a third-party sale and puts you in immediate control of the property.

Ready to Sell Your Note?

If you are facing the prospect of foreclosing on a land note in Texas and want to explore your alternatives, Longhorn Note Buyers can help. Whether your note is in early default or you are already deep into the foreclosure process, Longhorn provides fair, no-obligation quotes within 24 hours and can close quickly to get you cash when you need it. With over $46 million in Texas notes purchased, a 100 percent close rate on every quoted deal, and a BBB A+ rating, Longhorn Note Buyers brings decades of experience to every transaction. Nick McFadin has been buying notes since 1983, and the Longhorn team understands the Texas foreclosure landscape inside and out. Call (210) 828-3573 or visit longhornnotebuyers.com to get started. Whether you decide to foreclose or sell, getting a professional evaluation of your note is the smart first step.

Frequently Asked Questions

How long does the foreclosure process take in Texas?

The non-judicial foreclosure process in Texas can be completed in approximately 60 to 90 days from the first notice of default to the foreclosure sale. The specific timeline depends on when in the month the notices are sent relative to the first Tuesday sale dates, whether the borrower cures the default and then re-defaults, and whether any complications arise that require additional time. If the foreclosure is uncontested and all notices are sent on schedule, a 60-day timeframe from first notice to sale is achievable. If there are delays or complications, 90 days or slightly longer is more realistic.

Do I need an attorney to foreclose on a land note in Texas?

While Texas law does not strictly require an attorney for non-judicial foreclosure, hiring one is strongly recommended. The notice and procedural requirements are specific and must be followed precisely — a mistake at any stage can result in the foreclosure being challenged and potentially voided. An experienced Texas foreclosure attorney will ensure all notices are properly drafted and delivered, all deadlines are met, and the sale is conducted in compliance with state law. The cost of an attorney is modest compared to the potential cost of a defective foreclosure, making professional representation a sound investment.

What happens if the borrower files for bankruptcy?

If the borrower files for bankruptcy before the foreclosure sale is completed, an automatic stay goes into effect that halts all collection and foreclosure activity. The stay is a federal protection that applies regardless of Texas state law, and violating it can result in serious sanctions. If a borrower files for bankruptcy, you must immediately stop the foreclosure process and consult with an attorney who handles bankruptcy matters. The stay may be temporary, and you may eventually be able to resume the foreclosure through a motion for relief from the automatic stay, but navigating this process requires legal expertise. Bankruptcy is one of the scenarios that can make selling a non-performing note an attractive alternative to foreclosure, as the note buyer assumes the risk and complexity of dealing with the bankruptcy.

Can the borrower stop the foreclosure by making a payment?

During the cure period specified in the notice of default (at least 20 days under Texas law), the borrower can stop the foreclosure by curing the default — which means bringing all payments current, paying all late fees, and resolving any other default conditions. Once the note has been accelerated and the notice of sale has been filed, the borrower's ability to stop the foreclosure by making partial payments is more limited. At that point, the full accelerated balance is due, and anything less than full payment may not be sufficient to halt the sale. Some note holders will agree to reinstate the note if the borrower can demonstrate a genuine ability and willingness to resume payments, but this is at the note holder's discretion and is not required by Texas law.

What if no one bids at the foreclosure sale?

If no third-party bidders appear at the foreclosure sale, the note holder can bid on the property using a credit bid up to the amount owed on the note. In practice, this is what happens in the majority of Texas land note foreclosures — the note holder acquires the property at the sale and then decides what to do with it. This outcome makes the note holder the new owner of the property, which brings its own set of responsibilities and considerations, including property taxes, insurance, maintenance, and eventually marketing and selling the property. For note holders who do not want to own real property, this outcome reinforces the appeal of selling the non-performing note before completing the foreclosure.