USA – TEXAS Law and Practice Contributed by: Taylor Cooksey, David Brooks, Serena Kramer and Philip Kinkaid, Cokinos | Young
3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders Foreign lenders must comply with applicable US fed - eral laws, but there are no specific legal restrictions on foreign lenders being granted liens or security inter - ests with respect to Texas real estate. 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security Texas does not impose a mortgage tax or a documen - tary transfer tax on real estate transactions, including those involving the granting or enforcement of liens and security interests. Nominal recording fees that vary from county to county apply to the recordation of security instruments, and nominal notary public fees may be charged. 3.5 Legal Requirements Before an Entity Can Give Valid Security A borrower entity obtaining a real estate financing loan must establish that it: • properly exists and is in good standing under the laws of its state of formation; • is in good standing in Texas (if the entity was not formed in Texas); and • has the requisite power and authority to enter into the subject loan transaction. A borrower may be required to submit its governance documents for review and to provide corporate reso - lutions, consents and other documents relevant to the loan transaction. The US Patriot Act requires lenders to verify the iden - tity of customers to ensure they are not doing busi - ness with prohibited persons. Under this Act, financial institutions must: • implement reasonable procedures to verify the identity of a person seeking to open an account; • maintain records of the information used to verify the person’s identity; and • determine whether the person appears on any government-provided lists of known or suspected terrorists or terrorist organisations.
“Customers” refers to individuals, corporations, part - nerships, trusts, estates and any other entities recog - nised as legal persons. 3.6 Formalities When a Borrower Is in Default Under Texas law, real property foreclosures may be non-judicial, quasi-judicial or judicial. Quasi-judicial foreclosures are limited to: • a home equity loan, reverse mortgage or home equity line of credit; • a tax lien transfer or property tax loan; or • a property owners’ association assessment. Judicial foreclosure requires the filing of a civil lawsuit and a court order of sale. The most common foreclosure method in Texas is non-judicial foreclosure, which is significantly quicker and more cost-effective than judicial foreclosure. It is a contractual right arising only where a power of sale is expressly granted by the borrower in the deed of trust. It allows a trustee to proceed with a non-judicial sale of the property if the borrower is in breach of a material obligation under the deed of trust or promis - sory note. If a borrower has not waived its right to receive notic - es of default, presentment and the lender’s intent to accelerate and foreclose, the lender must send appro - priate notices to the borrower before it may foreclose, in order to give the borrower an opportunity to cure the default before foreclosure can occur, which is equal to the cure period stated in the deed of trust, and no less than 30 days if attorneys’ fees are sought. Foreclosure sales are conducted on the first Tuesday of each month. At least 21 days before the foreclosure sale, the lender must give notice of the sale, which, among other statutorily required items, must be: • posted at the courthouse in the county where the property is located; • filed with the county clerk; and • served on the defaulting borrower. If a federal tax lien has attached to the property, notice of the foreclosure sale must be given to the IRS at
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