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House Bill 2067 – Avoiding Statute of Limitations Issues

On Behalf of | Aug 1, 2015 | Firm News |

By: E. Jason Billick


The Texas Legislature recently passed House Bill 2067, which is effective immediately and will be codified as 16.038 of the Texas Civil Practice & Remedies Code. This bill addresses the statute of limitations for recovery of real property once a borrower’s underlying note becomes due.

The Texas Supreme Court has made it clear that if a series of notes or obligations or a note or obligation payable in installments is secured by a lien on real property, limitations does not begin to run until the maturity date of the last note, obligation, or installment. Limitations may run sooner if the mortgagee exercises its option to accelerate the loan once a borrower has defaulted.

The latter situation is what we’ve become accustomed to seeing with some of our clients’ loans. The “lender”, usually the entity exercising said option, has been able to avoid the limitations issue if it’s able to prove the acceleration has been abandoned either through an agreement of the parties or through some other action of one or both parties.

House Bill 2067 allows the lender to abandon the acceleration through a notice of rescission. This has been an approved form of abandonment in the past, but now the Texas Legislature has made it clear as to how lenders may accomplish said abandonment.