When a Texas homeowner dies and the mortgage is still outstanding, the debt does not die with the borrower. The lender’s right to foreclose does not die either. What changes is who owns the house. And under Texas law, ownership shifts the instant the homeowner takes her last breath — title passes by operation of law to the heirs, debts and all. Most heirs do not learn this until a foreclosure lawsuit shows up naming them as defendants.
That is exactly what happened to the children of a San Antonio woman who died in April 2022 with a home equity loan still on her house. No one opened a probate estate for her. The lender sued the heirs anyway — not because they personally signed the note, but because Texas Estates Code §§ 101.001 and 101.051 put title in their hands the moment she died, subject to her debts. That statutory transfer is what gave the lender something to foreclose against.
The case is Deutsche Bank National Trust Company v. Mandujano, No. SA-23-CV-01098-JKP (W.D. Tex. Jan. 5, 2026). It shows how a lender can collect on a mortgage when no probate is opened, how Texas’s “statutory probate lien” actually works, and — importantly — what the heirs are and are not personally on the hook for.
Facts & Procedural History
The decedent was Zulema Mandujano. In December 2003, she signed a Texas Home Equity Note for $58,800 at 8.75% interest payable to New Century Mortgage Corporation. She also signed a Texas Home Equity Security Instrument giving New Century a lien on her home. New Century later assigned the loan to Deutsche Bank National Trust Company as trustee for a securitized asset-backed trust. By the time of the lawsuit, Deutsche Bank held the note and was the beneficiary of the deed of trust.
Zulema died on April 29, 2022. No probate was ever opened for her estate. No application for letters testamentary, no independent administration, no muniment of title — nothing. The loan went into default starting with the May 2022 payment. Deutsche Bank sent a notice of default by certified mail on July 28, 2022, and a notice of acceleration on September 12, 2022.
In August 2023, Deutsche Bank filed suit in the Western District of Texas against Zulema’s known heirs and others with potential interests in the property — Saturnino Mandujano Jr., Alfredo Mandujano, Esperanza Mandujano Lerma, Olga Mandujano Valles, Francisco Ramirez III, Giancarlo Reyes, Carlo Reyes, and Angelica Baez. Deutsche Bank did not seek a money judgment against any of them. It sought a declaratory judgment that it was the rightful mortgagee, that it had a statutory probate lien on the property, and that it could foreclose.
All defendants were served between September 2023 and March 2024. None filed an answer. The clerk entered default. Saturnino Mandujano Jr. eventually responded to a show cause order without a lawyer, explaining his silence and submitting proof he had been making payments. The court treated his pro se response liberally as an answer and gave the parties a chance to mediate. Mediation failed. Deutsche Bank then filed a renewed motion for summary judgment against Saturnino and a renewed motion for default judgment against the rest. Saturnino did not respond to the summary judgment motion, even after a final warning. The court granted both motions.
How did the heirs end up holding title to a house tied to a debt none of them signed for? That is where Texas Estates Code §§ 101.001 and 101.051 come in.
How Property and Debts Pass Without Probate in Texas
Texas has two statutes that work together to answer what happens when someone dies owning real property and a debt secured by that property.
Texas Estates Code § 101.001 says that title to a decedent’s property vests immediately in the heirs or devisees at the moment of death. Subsection (a) covers testate estates: property passes to whoever the will names. Subsection (b) covers intestate estates: property passes to the heirs at law. Either way, there is no gap. The title does not sit in limbo waiting on a probate court. It moves the instant the decedent dies.
Texas Estates Code § 101.051 attaches the strings. It says that the estate vests under § 101.001 “subject to the payment of” the decedent’s debts (with limited exceptions) and any delinquent court-ordered child support. The phrase “subject to” is doing real work here. It means the heir gets the property but the debts ride along. The heir’s title is not free and clear just because the heir never signed the loan documents.
Put the two together and the picture is clear. When a Texas homeowner dies owing a mortgage and no one opens a probate to pay it off, the heirs end up holding title to a house that is still encumbered by that mortgage. The lender’s claim doesn’t disappear. Texas law gives the lender a way to collect anyway — what courts call a “statutory probate lien.”
The Statutory Probate Lien and How the Court Applied It
A “statutory probate lien” sounds like its own special creature, but it is not a new lien created out of thin air. It is the deed-of-trust lien the decedent already gave the lender, enforced through the operation of §§ 101.001 and 101.051 against the property now sitting in the heirs’ hands. The federal court in Mandujano put it this way, drawing on prior Texas federal decisions: “The remedy of one holding an unpaid claim against the estate is to enforce a statutory lien against the property in the hands of the heirs, devisees, or legatees who receive estate property.” Ocwen Loan Servicing, LLC v. Deane, 2017 WL 6816499, at *3 (N.D. Tex. Dec. 1, 2017). The same point appears in BOKF, N.A. v. Logan, 2020 WL 1470803, at *4–5 (N.D. Tex. Mar. 26, 2020), which the Mandujano court relied on heavily.
To actually foreclose under a Texas security instrument with a power of sale, the lender has to show four things: (1) a debt exists; (2) the debt is secured by a lien created under Texas law; (3) the borrower is in default; and (4) the borrower received proper notice of default and acceleration. Huston v. U.S. Bank Nat’l Ass’n, 988 F. Supp. 2d 732, 740 (S.D. Tex. 2013), aff’d, 583 F. App’x 306 (5th Cir. 2014).
Deutsche Bank hit all four. The 2003 note showed the debt. The home equity security instrument created the Texas lien. The payment history showed default starting May 2022. The certified-mail notices of default and acceleration covered the notice requirement. No defendant disputed any of it. Saturnino, the one defendant who appeared, never responded to the summary judgment motion. The non-answering defendants never appeared at all.
With those facts undisputed, the court found Deutsche Bank had satisfied its burden and was entitled to:
(1) a declaration that it is the rightful mortgagee under Texas Property Code § 51.0001(4);
(2) a declaration that it has the right to foreclose, judicially or non-judicially; and
(3) a declaration that it holds a statutory probate lien against the property under Texas Estates Code §§ 101.001 and 101.051.
The court granted summary judgment against Saturnino and default judgment against the rest. The end result for the heirs is the same: the bank can foreclose and sell the house.
The Heirs’ Personal Liability Question
One part of the opinion is worth a close read for heirs in this situation. Deutsche Bank also asked the court to award it attorney’s fees and costs under a fee-shifting provision in the loan agreement. The court denied that request, and the reasoning matters.
The judge held that the loan agreement’s attorney’s fee provision could only be enforced against Zulema’s estate — not against the heirs personally — because the heirs never signed the loan documents. They were not parties to the contract. Texas law gives the lender a lien against the property they inherited, but it does not turn them into co-signers on a note their mother signed twenty years ago.
That distinction matters in real dollars. A lender holding a statutory probate lien can foreclose on the inherited property and apply the sale proceeds to the debt. But absent a separate assumption agreement or a new contract with the heirs, the lender cannot chase the heirs’ other assets for a deficiency. The heirs’ personal bank accounts, their own homes, their wages — all of that is off limits. The lien runs against the property, not against the people.
The Takeaway
Inheriting a Texas home with a mortgage on it is not a windfall. Under Texas Estates Code §§ 101.001 and 101.051, title passes to you the moment your loved one dies, but it passes subject to the debt secured by the property. If the loan goes into default — and it usually does, because no one is paying the monthly note while the family is still grieving — the lender can foreclose against you as the new title holder, even if no probate was ever opened.
The Mandujano heirs lost the house in part because no one answered the lawsuit. Ignoring a foreclosure complaint is the worst possible response. Once the clerk enters default, every well-pleaded fact in the complaint is deemed admitted, and the court will treat the lender’s evidence as undisputed. The good news, if there is any, is that the heirs were not held personally liable for the debt or for Deutsche Bank’s attorney’s fees. The lien is on the house. If you are an heir in this situation, your goal is usually to either (1) pay or refinance the loan to keep the property, (2) negotiate a short sale or deed in lieu, or (3) make sure the foreclosure proceeds in an orderly way so it does not also threaten your personal finances. Doing nothing is the option that hurts most.
Our San Antonio Probate Attorneys provide a full range of probate services to our clients, including helping with mortgage foreclosure issues that come up after a loved one’s death. Affordable rates, fixed fees, and payment plans are available. We provide step-by-step instructions, guidance, checklists, and more for completing the probate process. We have years of combined experience that we can use to support and guide you with probate and estate matters. Call us today for a FREE attorney consultation.
Disclaimer
The content of this website is for informational purposes only and should not be construed as legal advice. The information presented may not apply to your situation and should not be acted upon without consulting a qualified probate attorney. We encourage you to seek the advice of a competent attorney with any legal questions you may have.
