A promissory note claim is a suit to collect money a borrower promised in writing to repay. A guaranty claim is a suit against the person or company that promised to pay if the borrower didn't. Texas treats both as contract claims with firm limitations periods, and the documents usually decide the outcome.
We represent both sides. Many cases end in a payoff or workout before trial, and those that don't are often decided on summary judgment, because the note, proof of who owns it and evidence of the balance can establish the claim unless the defense raises a real fact dispute.
Private lenders, investment funds and companies collecting on notes in default.
Sellers whose buyer stopped paying the note given for part of the price.
Companies facing a default notice, acceleration or a lawsuit on a note.
Owners and companies sued on a guaranty they signed.
A limited time to sue that generally runs from the due date, or the accelerated due date.
A limited time to sue that generally runs from when the claim accrues. A guaranty claim usually accrues when the guarantor's payment comes due and isn't made.
Foreclosure must happen within a set period after the claim accrues, usually at final maturity or an earlier acceleration, or the lien becomes void.
A suit for the shortfall after a nonjudicial foreclosure sale of real estate has its own deadline, which runs from the sale.
The periods differ for each, and extensions, renewals and acceleration can change when they run.
Texas guaranties commonly waive notices of intent to accelerate and acceleration, defenses based on loan changes and, after a real estate foreclosure, the right to a fair market value credit against the deficiency. Courts generally enforce clear waivers, though a blanket advance waiver of all limitations defenses is generally unenforceable.
A buyer that stops paying a seller note may claim a right to offset damages for the seller's breaches of the purchase agreement, and if a bank or SBA lender financed the deal, a subordination agreement can limit when the seller may collect. See selling a business and partner buyouts.
A forbearance, modification or discounted payoff can resolve a default faster than a lawsuit. After judgment, an abstract of judgment creates a lien on the debtor's nonexempt real property in the county where it is recorded, and turnover orders and garnishment reach other nonexempt assets, including money a bank holds for the debtor. Texas exempts a debtor's homestead and some personal property.
We read the note, guaranty, security documents and amendments, and check the payment history.
We send, or respond to, the default and acceleration notices the documents call for.
Many defaults end in forbearance, a loan modification or a negotiated payoff.
Unresolved defaults go to court, where many note cases are decided on summary judgment.
Abstracts of judgment, turnover orders and garnishment reach the debtor's nonexempt assets.
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Ask a QuestionUsually, yes. Under a guaranty of payment, the common form in commercial lending, the lender can pursue the guarantor as soon as the borrower defaults, and many guaranties waive any right to make the lender go after the borrower or the collateral first. Under a guaranty of collection, the lender generally must try the borrower first.
Acceleration makes the entire unpaid balance due at once. Unless the borrower has waived it, Texas law generally requires a clear notice of intent to accelerate and then a separate, clear notice of acceleration. Many notes waive both, but the waiver must be unequivocal.
It can be. Texas law can discharge a guarantor when the loan is materially changed without its consent and to its detriment. Most guaranties, though, consent in advance to extensions, modifications and releases of collateral, and courts generally enforce that consent as written.
Check the loan documents for any cure period, note the deadlines in the notice and get advice before responding. A forbearance or modification usually requires the guarantors to confirm their guaranties, so they should be involved early.
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