Texas Commercial Law Firm

2. Reinstatement Agreements should be signed and recorded. The issue concerning properly documenting a reinstatement agreement arises when maturity of a loan in default has been accelerated upon commencement of foreclosure proceedings and where the borrower, thereafter, “reinstates” the loan either by right or by permission. By reinstating the loan, the borrower and lender are agreeing to effectively de-accelerate the acceleration of maturity of the loan, thereby causing the loan to revert to its prior, unmatured state.

3. Limitations. Once the debt is accelerated, the Texas four-year statute of limitations for suit on a written contract begins to run. Sheppler v. Kupena, 563 S.W.2d 382 (Tex. Civ. App.--Austin 1978, no writ). The trustee's authority to sell the property expires when the debt secured by the deed of trust is barred by limitations 4 years after maturity, Tex. Civ. Prac. and Rem. Code Ann. §16.035 (Vernon 1986); Mercer v. Daoran Corp., 676 S.W.2d 580 (Tex. 1984) unless the limitation period is otherwise tolled (e.g., one year from death of owner unless a personal representative qualifies prior to such time). Tex. Civ. Prac. and Rem. Code §16.032; Yates v. Darby, 133 Tex. 593, 131 S.W.2d 95 (1939). Any sale made after limitations has expired is void. Stubbs v. Lowrey Heirs, 253 S.W.2d 312 (Tex. Civ. App.--Eastland 1952, writ ref'd n.r.e.); Rudolph v. Hively, 188 S.W. 721 (Tex. Civ. App.--Amarillo 1916, writ ref'd). (Note: Tex. Civ. Prac. and Rem. Code §16.035(e) provides that the statute of limitations as to any individual installment of a real estate note payable in installments does not begin to run until the maturity of date of the last installment; see also Palmer v. Palmer, 831 S.W.2d 479 [Tex. Civ. App.--Texarkana 1992, no writ]).

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