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Foreclosure · 3 statesDeficiency after foreclosure by state: who is protected, the deadline and the fair market value credit

When a foreclosure sale brings less than the debt, state law decides whether the lender can sue for the difference. Arizona: after a trustee's sale of property of 2.5 acres or less limited to and used for a one- or two-family dwelling, no action for the shortfall is allowed, and a purchase-money mortgage judgment can't reach other property; otherwise the lender sues within 90 days and the debtor is credited with the higher of the sale price or fair market value (A.R.S. §§33-729, 33-814). Oklahoma: after a judicial sale the lender must move for a deficiency order with the confirmation motion or within 90 days, credited with the higher of fair market value or sale price, or the sale satisfies the debt; under a power of sale a homestead owner can elect against a deficiency at least ten days before the sale (12 O.S. §686; 46 O.S. §43). Texas: an action for a deficiency after a nonjudicial sale must be brought within two years, and the debtor may ask the court to set fair market value and offset the excess over the sale price; after a judicial sale, a person obligated on the debt has 90 days to sue for a fair market value determination; mortgage insurance payments are credited to the borrower first (Tex. Prop. Code §§51.003–51.005).

How each state treats the shortfall

  1. Arizona (§§33-729, 33-814)

    No deficiency after a trustee's sale of a home on 2.5 acres or less; otherwise 90 days, higher of price or value.

  2. Oklahoma (12 O.S. §686; 46 O.S. §43)

    Motion within 90 days, higher of value or price; homestead election under a power of sale.

  3. Texas (Prop. Code §§51.003–51.005)

    Two years after a nonjudicial sale; fair market value offset on request; 90-day suit after a judicial sale.

What the TC does on a short sale or foreclosure file

  • Read the lender's short sale approval letter for any deficiency terms and send it to the seller's attorney.
  • Note the foreclosure sale date on the file so the seller's attorney can track the state deadline.
  • Refer questions about whether a deficiency can be pursued to an attorney.

Questions about deficiency judgments

How long does a lender have to sue for a deficiency after foreclosure?

In these states: 90 days after a trustee's sale in Arizona (A.R.S. §33-814(A)), 90 days after a judicial sale in Oklahoma (12 O.S. §686) and two years after a nonjudicial sale in Texas (Tex. Prop. Code §51.003(a)).

Does fair market value reduce a deficiency?

Yes in all three: Arizona and Oklahoma credit the higher of fair market value or the sale price (A.R.S. §33-814(A); 12 O.S. §686), and in Texas the debtor can ask the court to offset the amount by which fair market value exceeds the sale price (Tex. Prop. Code §51.003(b)–(c)).

State guides

Keep the short sale approval letter and the sale date with the deal in ClosingCode.

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Sources: A.R.S. §§33-729, 33-814 (azleg.gov); 12 O.S. §686, 46 O.S. §43 (oklegislature.gov); Tex. Prop. Code §§51.003–51.005 (statutes.capitol.texas.gov); all read October 29, 2026.

General information, not legal advice. ClosingCode is software; it is not a law firm or brokerage. This guide is not a substitute for the advice or services of an attorney.