After the sale, if the property sells for less than what is owed, the creditor may try to come after the borrower for the remainder of what is owed to them. This is referred to as a deficiency judgment. In nonjudicial foreclosures, a lawsuit must be filed in order to obtain a judgment to collect the deficiency. In judicial foreclosures, a second lawsuit needs to be filed. These lawsuits must be filed within two years of the sale.
If requested by the borrower, the remaining amount that is owed may be determined by the fair market value of the property.
After the foreclosure sale, if the property sells for a higher price than what is owed, the excess funds would then be used to pay off any additional liens that may be on the property. If no other liens exist, or if there are additional funds after the junior liens have been paid, the rest of the funds may be available to the former homeowner.
The clerk of the court will notify the former homeowner if there are any excess funds. The homeowner then has two years from the date of the sale to claim them.
The "right of redemption" refers to one's ability to reclaim the property even after the foreclosure sale takes place. In Texas, the "right of redemption" is only available for specific kinds of foreclosure actions such as foreclosures of certain tax liens and property owners association assessment liens.
The redemption period as well as how much it will cost will vary, so see the resources below for further details.
If the previous homeowner refuses to vacate the property after the sale, the new owner would need to file an eviction case against them in court in order to take possession of the property. See the Eviction page of our Landlord/Tenant research guide to learn more about this process.
For tenants who may be living in a home affected by foreclosure, see the Tenant Rights in a Foreclosure page of this guide for information on your rights during the foreclosure process.