Deficiency Judgment
A court judgment against a borrower for the loan balance still owed after a foreclosure sale brings less than the debt.
When a foreclosure sale produces less money than the borrower owes, the shortfall is a deficiency. A deficiency judgment is a court order making the borrower personally liable for that remaining balance.
Texas allows a deficiency judgment after a non-judicial foreclosure sale, but the borrower may ask the court to determine the property's fair market value and offset the deficiency by that value. A separate suit must be brought within the statutory deadline.
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- Foreclosure
The process by which a lender forces the sale of property after default. Texas usually uses non-judicial foreclosure under a deed of trust.
- Non-Judicial Foreclosure
Foreclosure conducted by the trustee under a deed of trust's power of sale, without a court action, on the first Tuesday of the month in Texas.
- Deed of Trust
The Texas security instrument that pledges real property for a loan and lets a trustee sell it non-judicially if the borrower defaults.
This definition is Texas real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.