The Court of Appeals has once again ruled that a contractual waiver prevents a guarantor from invoking its statutory right to offset if the foreclosed property was sold for less than its fair market value. This is the seventh time the Court has made that ruling in a little over a year, dating back to August 2012 in the case of Interstate 35/Chisam Road, L.P. v. Moayedi, and as recently as August 2013 in Compass Bank v. Manchester Platinum Mgmt. In this particular instance, the parties actually stipulated that the two homes at issue had fair market values in excess of the amounts owed under the promissory notes, even though they were sold for $582,623.07 less than those stipulated values. The Court further held that the broad waiver of “any statute or limitations or other defenses affecting [the guarantor's] liability hereunder” was sufficiently specific to include a waiver of the offset defense provided by section 53.001 of the Texas Property Code. The Court therefore reversed the trial court and rendered judgment for the deficiency in favor of the lender.
Given the importance of this recurring issue to borrowers, lenders, and guarantors, it would not be surprising to see the Texas Supreme Court weigh in. The petition for review in the Moayedi case has proceeded to briefing on the merits.
Compass Bank v. Goodman, No. 05-13-00447-CV