”Foreclosed Lien” Buyers and Lienholder Rights In Texas

Foreclosure of a lien cuts off the rights of junior lienholders but does not terminate interests in the foreclosed real estate that are senior to the mortgage being foreclosed. See Richards v. Suckle, 871 S.W.2d 239, 242 (Tex. App.-Houston [14th Dist.] 1994, no writ); Conversion Properties, L.L.C. v. Kessler, 994 S.W.2d 810, 813 (Tex. App.-Dallas 1999, pet. denied).

A purchaser at a foreclosure sale obtains only such title as the trustee had authority to convey. See First Southern Properties, Inc. v. Vallone, 533 S.W.2d 339, 341 (Tex. 1976).

Moreover, a purchaser who has knowledge that his rights are subject to a senior lienholder takes title subject to the rights and lien of the senior lienholder. See Mercer v. Bludworth, 715 S.W.2d 693, 698 (Tex. App.-Houston [1st Dist.] 1986, writ ref'd n.r.e.), overruled on other grounds, Shumway v. Horizon Credit Corp., 801 S.W.2d 890, 894 (Tex. 1991).

A developer of a subdivision, as owner of the land subject to declarations of covenants and restrictions, is entitled to create liens on his land to secure payment of assessments. See Inwood North Homeowners' Ass'n, Inc. v. Harris, 736 S.W.2d 632, 634 (Tex. 1987).

Such provisions creating maintenance association fees are characterized as contractual liens 2 which run with the land. See Harris, 736 S.W.2d at 634-36.

The creation of a contractual lien depends only on evidence apparent from the language of the agreement that the parties intended to create a lien. See Inwood, 736 S.W.2d at 634.

We construe assessment provisions and their liens as a whole and not contrary to the clear and explicit intentions of the parties. See id.

Any subsequent purchaser is bound by the terms of the instruments in his chain of title. See id. at 635.