A Comedy of Errors

HSBC Bank foreclosed on a residential property in Cedar Hill, but failed to pay assessments on the property to the local homeowners association. The HOA foreclosed on its assessment lien, and the property was purchased out of foreclosure by Khyber Holdings, LLC. HSBC sought to redeem the property as permitted by § 209.011 of the Texas Property Code. However, when the bank’s attorney sent the required notice to Khyber, the letter incorrectly identified Countrywide Home Loans as the owner seeking to redeem the home. The attorney testified that the error had occurred because he represented the servicer for both HSBC and Countrywide, and that Khyber had purchased lots owned by both lenders during the same foreclosure sale. HSBC sued for a declaratory judgment that it was entitled to redeem the property. When Khyber responded with a letter that stated the redemption price would be $80,000, the attorney responded with an $80,000 check and a letter that once again named Countrywide as the owner, although the redemption deed correctly identified HSBC as the grantee of the redemption sale. Khyber refused to allow redemption, the case proceeded to trial, and the jury returned a verdict in favor of HSBC. The Court of Appeals affirmed, concluding that only substantial compliance is required to fulfill the notice requirements of § 209.011, and that the series of back-and-forth exchanges between the parties was sufficient proof that the notice requirements had been fulfilled. The Court also affirmed the jury’s award of damages for trespass, concluding that HSBC was entitled to recover for lost rents during the period of time the property was improperly retained by Khyber.

Khyber Holdings, LLC v. HSBC Bank USA, N.A., No. 05-12-01212-CV