Jeff Heck (“Heck”) sued CitiMortgage, Inc. (“CitiMortgage”) over CitiMortgage’s failure to allow his purchase of real property at a non-judicial foreclosure sale after Heck successfully bid on the foreclosure property, was given 20 minutes to obtain a cashier’s check, did not return in the allotted time and the property was sold to another buyer. In affirming the trial court’s dismissal of Heck’s lawsuit, the United States Court of Appeals for the Fifth Circuit found that CitiMortgage did not violate Section 51.0075(f) of the Texas Property Code because Heck did not pay without delay on acceptance of the bid and took more time than allowed by the trustee to make payment.

The events forming the basis of Heck’s claim occurred in June 2014 when a trustee, on behalf of CitiMortgage, conducted a non-judicial foreclosure sale of property in Troup, Texas. Heck was the original winning bidder. After making the successful bid, Heck asked the trustee for at least 30-40 minutes to deliver the purchase price of $63,000 in the form of a cashier’s check. The trustee said, “I’ll give you 20 minutes.” When Heck did not return within 20 minutes, the auction was reopened and the property was sold to someone else for $60,227. Heck subsequently filed suit against CitiMortgage claiming that it violated § 51.0075(f) of the Texas Property Code which states:

The purchase price in a sale held by a trustee or substitute trustee under this section is due and payable without delay on acceptance of the bid or within such reasonable time as may be agreed upon by the purchaser and the trustee or substitute trustee if the purchaser makes such request for additional time to deliver the purchase price….

Heck raised three issues concerning the interpretation of this provision. First, what is the meaning of “without delay”? Second, is a trustee required to wait a reasonable amount of time to receive payment if the parties cannot reach an agreement as to the time of the payment? And third, can a trustee condition a sale when the condition was not announced before the first sale of the day? In rejecting Heck’s assertions regarding the statute, the Fifth Circuit found that it did not need to determine the meaning of “without delay” since Heck requested at least 30-40 minutes to make payment thus attempting to avail himself of the language in the statute allowing payment “within such reasonable time may be agreed upon by the purchaser and the trustee or substitute trustee.” In evaluating that statutory language, the Fifth Circuit found the parties did not reach an agreement as to the time in which payment would be made and that Heck therefore failed to plead a violation of § 57.0075(f). Finally, the Fifth Circuit found that the trustee’s offer to allow payment within 20 minutes was not a condition of the sale, but a mere offer to reach an agreement concerning the time of payment and that the trustee was not required to allow reasonable time for a payment to take place in the absence of an agreement between the parties.

The take away is that a trustee should be clear regarding the time in which payment is expected in order to complete a foreclosure sale—whether immediate or after some reasonable period of time—and if payment is not timely received, the property can be sold to another party.