In its broadest sense real estate lending is a term used to describe any loan which is supported by a lien on some type of real property interest owned by the borrower or a third party. The owner of the property interest agrees that if the money borrowed from the Bank is not repaid by the borrower, the Bank (which is the “Secured Party”) can sell the property securing the loan and use the proceeds to repay the loan.
When Texas real estate or real property serves as collateral for a loan the Uniform Commercial Code (“UCC”) does not apply unless the property is a “fixture,” as described below. Real estate lending is governed by federal rules and regulations, the Texas Property Code (“TPC”) and other Texas statutes, the Texas Constitution and Texas Court decisions. A list of Texas laws affecting real estate lending is located at the end of this Chapter as Appendix 2.
This Guide’s purpose is to assist loan officers in understanding various lending arrangements secured by interests in real estate and the requisite documents so that the terms of the transaction are clearly spelled out and all parties know their respective rights and responsibilities. The goal of this Guide is to acquaint the lending officer with relevant terminology, legal principles and practices, and standard financing arrangements secured by interests in real estate. The loan officer should become generally familiar with the format and the content of this Guide and then study in detail the subjects which apply to particular loan transactions.
With such a broad spectrum of topics and issues, it is impossible to give an exhaustive treatment of the many questions and problems that may arise in complex real estate lending situations. Bank Counsel should be consulted.
Forms are included at the end of various chapters. These forms are either issued by state and federal governmental agencies which oversee lien perfection on specified types of collateral or are produced, marked and copyrighted by Wolters Kluwer. The Wolters Kluwer forms serve as guides only and may or may not be the most current version of the document, are reproduced in this Guide with the permission of Wolters Kluwer and neither the author of this Guide nor the Texas Bankers Association has undertaken an independent review of these forms. For more information about Wolters Kluwer forms please contact your Wolters Kluwer Account Executive or the Texas Bankers Association. The state and governmental forms used are current as of the date of this Guide.