Prosperity Bank overturns no-notice receivership on its loan collateral
The marriage did not last as long as the loan. The wife filed for divorce in August 2025. By January 2026, Prosperity Bank had notified the LLC and both spouses that they were in default – stating $995,518.45 was owed as of January 21, 2026 – and warned it could foreclose.
In February 2026, the husband asked the divorce court to appoint a receiver to manage the properties and head off foreclosure. The following month, the trial court appointed a receiver charged with selling them. Prosperity Bank got no notice. None.
The bank found out the next day – when the receiver filed a petition and a temporary restraining order application to stop Prosperity Bank from foreclosing. The bank responded and moved to dissolve the receivership, arguing the appointment violated Texas Rule of Civil Procedure 695, the rule that requires notice to adverse parties before a receiver is appointed over real estate.
The trial court denied the motion. Prosperity Bank appealed.
Writing for a three-justice panel, Justice Wade Birdwell held that real estate qualifies as “fixed and immovable property” under Rule 695, that a lienholder is an “adverse party” entitled to notice, and that the no-notice appointment was reversible error. The court reversed the trial court’s order and rendered judgment dissolving the receivership.
