Limitations on Preexisting Conditions in the Mortgage Statutes of Texas
- One of the preexisting conditions addressed by mortgage statutes in Texas deals with foreclosures and the effects upon preexisting tenants. A person renting a property has certain rights. Should the rental property suffer a foreclosure, the tenant has the right to remain a tenant in the property until served a notice to vacate. Once the notice to vacate is served, the tenant usually has a 90-day period to leave the property.
- In Texas, before a property goes into foreclosure, the borrower must be in default of payment. This is a preexisting condition under Texas law. In other words, a lender cannot begin to foreclose on a property until the preexisting condition of nonpayment exists.
- Certain health-related preexisting conditions exist that have effects upon mortgage statutes in Texas. Some insurance companies provide mortgage disability income insurance. Known as MDI, the purpose of this insurance provides protection in the event the policyholder suffers from some illness or cannot work. Should that happen, the policy goes into effect and pays the monthly mortgage note. However, some insurance companies will not provide insurance coverage in the event of a preexisting condition. For example, if a policyholder has a history of heart problems, the insurance company may not be required to initiate MDI if the policyholder has a heart attack.
- Preexisting conditions also come into play when a person is offered mortgage life insurance. In mortgage life insurance, a homeowner is given the option of having a policy that pays off the mortgage in the event of his death. However, just as with regular life insurance policies, mortgage life insurance policies do not cover any preexisting conditions. There might not be much sense in paying monthly premiums on a policy that will not help out a policyholder's family if he dies from a condition considered to be a preexisting condition. In some cases, depending upon the financial circumstances, it is better to simply have a regular life insurance policy and have the surviving family members continue to pay off the monthly mortgage payments.
- When a property is sold at a foreclosure auction in Texas, the buyer bears the full responsibility of making sure he knows what he is getting. In addition to having to make sure that there are no conditions existing that might make the property uninhabitable, the buyer is also responsible for paying any and all taxes at the time of sale.