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42 step up and initiate a dependent administration. Now, the death of a borrower doesn't always automatically mean that the servicer's enforce- ment remedies are obstructed for four years. For example, if the borrower passes away after the foreclosure sale, the validity of the sale will not be affected by the subsequent death of the borrower. 8 Alternatively, if more than four years have elapsed since the borrower's death with no administration having been commenced, the foreclosure sale is not subject to challenge on the grounds that the borrower is deceased. 9 Other scenarios that frequently arise include those in which the heirs have initiated an inde- pendent or a dependent administration before the servicer contemplates its enforcement remedies. In the case of a pending independent adminis- tration, the nonjudicial foreclosure remedy is still available to the servicer, albeit with additional notice requirements and prescribed timeframes to allow the independent administrator an oppor- tunity to liquidate the asset. 10 In the case of a pending dependent administration, the Estates Code outlines a formal and well-defined process for the servicer to establish its claim, and to seek foreclosure of its lien. 11 It is the scenario where the borrower has passed away within the last four years, and the heirs have taken no action, that creates the great- est obstacle to servicers attempting to enforce their security interests. is is the scenario where- in the paradox of the beneficial interest passing to the heirs, who have no obligation to satisfy the underlying mortgage debt, can limit the servicer's practical options. at isn't to say that there are no options. ere are. But the nature of the options available is very fact-specific and will be dictated largely by the particular circumstances of any given case. When a borrower passes away in Texas, a servicer is presented with a variety of scenarios that may be as complex as they are unique. e paradox inherent in Texas probate law creates challenges and issues for servicers that must be analyzed for each deceased borrower matter based upon its own unique circumstances. ere are a multitude of legal and procedural questions that arise beginning on the date of a borrower's death and may remain unanswered well after the borrower's death. When the situation arises, a servicer is not limited solely to waiting out a four-year period for probate. ere can be a path forward—however, a servicer should proceed cautiously. It would be prudent to consult an attorney in Texas, and a servicer would be well advised to seek guidance from a probate specialist that can investigate and evaluate the status of the estate and provide options and alternatives that best align with your objectives. uy Frazier, Associate Attorney and Texas Foreclosure Oversight Counsel, McCarthy & Holthus, LLP, . uy Frazier is an Associate Attorney and Texas Foreclosure Oversight Counsel with the law firm of McCarthy & Holthus, LLP. Frazier has over a decade of experience advising servicing industry clients with a focus on creditors' rights and a specialty in probate-foreclosure matters in Texas. She is a graduate of the SMU Dedman School of Law in Dallas and completed her undergraduate studies at Baylor University in Waco. As an alumna of the State Bar of Texas Real Estate, Probate, and Trust Law Section's Leadership Academy, she is active in local and state bar associations encouraging involvement and participation from young lawyers in real estate and creditors' rights practice areas. Cole Patton, Managing Partner, McCarthy & Holthus, LLP. Cole Patton is a Managing Partner of McCarthy & Holthus, LLP, and oversees the firm's Texas and Arkansas practices. Patton has a BBA in finance from Texas Tech University and is a graduate of SMU School of Law. His practice is focused on creditor's rights, having represented financial institutions in litigation, bankruptcy, and default enforcement matters for more than 20 years. Patton is licensed to practice law in the states of Texas, Mississippi, and Arkansas. 1 Tex. Est. Code §§ 201.001 – 201.003 2 Tex. Est. Code § 101.001(a) 3 Tex. Est. Code § 22.010 4 Tex. Est. Code § 301.002 5 Tex. Est. Code § 301.051 6 Wiener v. Zweib, 147 S.W. 867 (Tex. 1912) 7 Pearce v. Stokes, 291 S.W.2d 309, 310–11 (Tex. 1956) 8 Smith v. San Antonio Joint Stock Land Bank, 130 S.W.2d 1070 (Tex. Civ. App.—Eastland 1939, writ ref 'd) 9 Pearce v. Stokes, 291 S.W.2d 309, 310–11 (Tex. 1956) 10 Tex. Est. Code § 403.054 11 Tex. Est. Code §§ 355.051 – 355.066 and Tex. Est. Code §§ 355.155 – 355.160 It is the scenario where the borrower has passed away within the last four years, and the heirs have taken no action, that creates the greatest obstacle to servicers attempting to enforce their security interests. Legal Industry Update By: Thuy Frazier & Cole Patton