| Perfection
|| Possession and Sale || New Title
and Plates || Other Issues
|| Kelley Blue Book | |
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| LAWDOG™ Texas Repossession |
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| The Texas
Statutes |
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| Perfection of Security Interest Except
for vehicles held by dealer as inventory for sale, a person may perfect a security
interest in a motor vehicle that is the subject of a transfer only by recording the
security interest on the certificate of title as provided by chapter 501. A person
may perfect a security interest in a motor vehicle held as inventory by a person in the
business of selling motor vehicles only by complying with Chapter 9, Business & Commerce
Code. See Transportation Code, Sec. 501.111 |
| Certificate of Title Is a Requirement
The owner of a motor vehicle registered in Texas may not operate or permit the
operation of vehicle on a public highway until owner obtains a certificate of title for
the vehicle. If a person has reason to believe that owner has not obtained a certificate
of title for the vehicle, that person may not operate vehicle. Owner of vehicle required
to be registered, must apply for certificate of title of vehicle before selling vehicle.
Vehicle may be operated on public highway with dealer license plate or a dealer's or
buyer's temporary cardboard tag attached to vehicle. Sec. 501.022 |
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| Right to Possession Without Breach of Peace
Unless otherwise agreed, secured party has, on default, the right to take possession of
the collateral. In taking possession a secured party may proceed without judicial process
only if this can be done without breach of the peace. If not, a legal action may proceed.
Sec. 9.503
See Chapter 9, Business
& Commerce Code. |
| Right to Redeem At any time
before the secured party has disposed of collateral or entered into a contract for its
disposition under Section 9.504, or before discharge under Section9.505, debtor or any
other secured party may, unless otherwise agreed in writing, after default, redeem the
collateral by tendering fulfillment of all obligations secured by collateral, expenses
reasonably incurred by secured party in retaking, holding and preparing collateral,
arranging for sale, and to extent provided in agreement and not prohibited by law,
reasonable attorneys' fees and legal expenses. Sec. 9.506 |
| Compulsory Sale If debtor
has paid sixty per cent of the cash price in case of a purchase money security interest in
consumer goods, or sixty per cent of the loan in case of another security interest in
consumer goods, and has not signed, after default, a statement renouncing or modifying
rights, secured party who has taken possession of collateral must dispose of it by sale
under Section 9.504. If secured party fails to do so within ninety days after possession,
debtor may recover damages on secured party's liability. Sec. 9.505 See Chapter 9, Business & Commerce
Code. |
| Acceptance as Satisfaction
In other cases not involving consumer goods 60% rule, secured party in possession
may, after default, propose to retain collateral in satisfaction of the obligation.
Written notice of the proposal must be sent to debtor, if he has not signed, after
default, a statement renouncing or modifying rights. In case of consumer goods, no other
notice need be given. In other cases notice must be given to any other secured party who
has security interest in the same collateral and who has duly filed in the office of the
Secretary of State or County Clerk in proper county in this state, a financing statement
indexed in the name of debtor or from whom the secured party has received, before sending
notice to debtor or renunciation, written notice of a claim of an interest in the
collateral. If secured party receives objection in writing from person entitled to
receive notice, within twenty-one days after notice sent, secured party must dispose of
the collateral by sale under Section 9.504. If no such written objection is received,
secured party may retain collateral in satisfaction of the obligation. Sec. 9.505 |
| Sale and Application of Proceeds
A secured party after default may sell, lease or otherwise dispose of any or all of the
collateral, in its then condition or following any commercially reasonable preparation or
processing. Any sale of goods is subject to the chapter on Sales (Chapter 2). The proceeds
are applied in the order following to reasonable expenses of retaking, holding, preparing
for sale or lease, selling, leasing and the like and, to extent provided for in agreement
and not prohibited by law, reasonable attorneys' fees and legal expenses incurred.
Proceeds are next applied to satisfaction of debt secured by the security interest under
which the sale is made. Sec. 9.504 |
| Subordinate Liens If
proceeds remain, they would next apply to satisfaction of debt secured by any subordinate
security interest in the collateral, if written notice of demand is received before
distribution of proceeds is completed. If requested by secured party, holder of a
subordinate security interest must seasonably furnish reasonable proof of interest, and
unless he does so, secured party need not comply with demand. Sec. 9.504 |
| Accounting and Deficiency
If the security interest secures an indebtedness, thesecured party must account to the
debtor for any surplus, and,unless otherwise agreed, the debtor is liable for any
deficiency. Sec.
9.504 See Chapter 9, Business & Commerce
Code. |
| Subordinate Liens In other
non-consumer cases, notice must be sent to any other secured party who has a security
interest in the same collateral and has duly filed in the office of the Secretary of State
or county clerk in the proper county in state, a financing statement indexed in the name
of the debtor or from whom secured party has received, before sending notice to debtor or
before renunciation of rights, written notice of claim of interest in the collateral. Sec.
9.504 |
| Public or Private Sale After Notice Disposition
of the collateral may be by public or private proceedings and may be at any time and place
and on any terms but every aspect of the disposition including method, manner, time, place
and terms must be commercially reasonable. Unless collateral is perishable, reasonable
notice of the time and place of any public sale, or time after which any private sale is
to be made must be sent by secured party to debtor, if he has not signed, after default, a
statement renouncing or modifying right to notice of sale. In case of consumer goods no
other notice need be sent. |
| Guarantors and Others Liable
A person who is liable to a secured party under a guaranty, indorsement, repurchase
agreement or the like and receives a transfer of collateral from secured party or is
subrogated to his rights, thereafter has the rights and duties of secured party. Such a
transfer is not considered a sale of the collateral under this chapter. Sec. 9.504
See Chapter 9, Business
& Commerce Code. |
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| Transfer by Operation of Law
The department issues a new certificate of title for a motor vehicle registered in Texas
when ownership is transferred by operation of law, including by probate, bankruptcy,
judicial sale, or other involuntary divestiture of ownership. This section illustrates
rules and documentation required for transfer in certain situations, including a court
order, or bill of sale from an officer making judicial sale. If a lien is foreclosed by
nonjudicial means, the department may issue a new certificate of title in the name of
purchaser at the foreclosure sale on receiving the affidavit of the lienholder of the fact
of the nonjudicial foreclosure. Sec. 501.074 |
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