On May 20, 2016, the Texas Supreme Court issued opinions in two noteworthy cases concerning home equity lending in Texas. The Wood case concerns whether a statute of limitations applies to actions to quiet title for constitutionally noncompliant 50(a)(6) home equity liens, and the Garofolo case concerns in what manner and under what circumstances a forfeiture action can be brought for a lender’s failure to perform its requirements under 50(a)(6). Wood v. HSBC Bank USA, N.A., ___ S.W.3d ___ (Tex. 2016) In Wood (click here), the Court held that home equity liens that fail to comply with the requirements of Section 50(a)(6) are “invalid” until such failure is cured and therefore actions seeking to invalidate such liens are not subject to any statute of limitations. This decision overrules a line of cases that had applied the common-law distinction of void-versus-voidable liens to those liens provided for under 50(a)(6) and had held that a four-year limitations period applied to actions seeking to invalidate defective 50(a)(6) home equity liens (see, e.g. Priester v. JP Morgan Chase Bank, 708 F.3d 667 (5th Cir. 2013), cert. denied, 134 S.Ct. 196, 187 L.Ed.2d 256, 82 USLW 3001, 82 USLW 3149, 82 USLW 3189 (U.S. Oct 07, 2013) (NO. 12-1481)). Under common law, a voidable lien is presumed valid unless later invalidated; whereas, a void lien is entirely null and not subject to cure.

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