Texas Lawyer Tip: Commercially Reasonable Sale

As you are probably aware, debtors and guarantors who are pursued for a deficiency often attempt to raise every defense imaginable to attempt to avoid liability, and one of the most frequently used defense is that the diposition of the collateral following a foreclosure of personal or real property was not conducted in a commercially reasonable manner. See UCC Sections 9-625, 9-610(b) and 9-626.

As a creditor planning for avoidance of this defense, it is helpful if the secured party and these obligors, at the time requesting the loan, contract for and agree to the method of the disposition of the collateral and accept the method/manner of the sale detailed to be commercially reasonable. This is particularly helpful if the collateral being financed is unique or very large equipment, or something where it is difficult to find a buyer or a "market" for the goods.

Texas Guarantor Not Liable Under Lease Renewal

The Texas Legislature made couple of revisions to the Texas Property Code during the 81st Legislative Session. They added Section 92.021 which addresses liability of guarantors under lease renewals. Under the new code section, for lease agreements executed on or after January 1, 2010, a guarantor is not liable under a lease renewal unless the guarantor expressly agreed to be liable under a lease renewal in the original lease. The original lease must contain specific information as set out in the new code section to bind a guarantor under a lease renewal. Landlords should review and revise their leases as necessary before January 1, 2010.