Waive Goodbye, Part II

This action involved a deficiency claim by a Bank against several loan Guarantors.  The loans at issue were undertaken to finance improvements on properties owned by a partnership in Collin County.   After the partnership defaulted, the Bank exercised its right to sell the properties at non-judicial foreclosure sales, and then brought this action action against the Guarantors.  Because the Guarantors had agreed in the original Guaranty Agreement to waive any defense of offset to the bank’s deficiciency claim, the trial court granted the Bank’s motion for summary judgment and awared the Bank the outstanding amounts due on each of the promissory notes.  On appeal, the Guarantors argued that the right of offset provided for in section 51.003(c) of the property code cannot be contractually waived and, alternatively, that if such waiver were available they did not, in fact, waive the right of offset because the waiver provision did not contain the phrase “right of offset.”  Relying on the reasoning in Moayedi, the Court of Appeals rejected both of the Guarantors’ arguments, finding that nothing  in the property code prevents a guarantor from waiving his right to an offset in a guaranty agreement.  Additionally, the Court found that the waiver language need not include the precise terms “right of offset” to constitute an effective waiver.  Thus, the court upheld the trial court’s summary judgment decision.

King, et al. v. Park Cities Bank, No. 05-11-00593-CV