Last reviewed November 2026
SBA and USDA both make a properly perfected lien a condition of the guarantee, and a conventional loan is only as secure as its liens. Here is where and how Texas liens are perfected, and the rural property issues that come up on Hill Country loans.
Where each lien is perfected
| Collateral | How to perfect | Watch for |
|---|---|---|
| Real property | Record the deed of trust in the real property records of each county where the land sits | Title exceptions, severed minerals, unrecorded leases, and property in more than one county |
| Fixtures | Fixture filing in the county real property records, or a deed of trust drafted to serve as a fixture filing | Equipment that may be fixtures, such as irrigation systems, grain bins and solar arrays |
| Equipment, inventory, receivables, general intangibles | UCC-1 financing statement with the Texas Secretary of State for a Texas registered organization | File where the debtor is located; an out-of-state entity files in its home state |
| Titled vehicles and trailers | Lien noted on the Texas certificate of title | A UCC filing alone does not perfect a lien on titled vehicles that are not inventory |
| Deposit accounts | Control: automatic for accounts at the lending bank, or a control agreement for accounts elsewhere | A UCC filing does not perfect a lien on a deposit account held as original collateral |
| Crops and livestock | UCC-1 with the Texas Secretary of State; for crops, a description of the land | Buyers of farm products can take free of the lien unless they receive direct written notice |
| Life insurance | Collateral assignment acknowledged by the insurer's home office | SBA requires the home office acknowledgment |
Homestead
The Texas Constitution protects a homestead from most liens, so a homestead generally cannot secure a business loan. Rural homesteads can be large: up to 200 acres for a family and 100 acres for a single adult under Texas Property Code section 41.002. An urban homestead is up to 10 acres and can include the owner's place of business. Section 41.0022 (added in 2023) gives a safe harbor when an owner conveys non-homestead rural acreage to the owner's entity before the entity borrows against it; its conditions include a recorded affidavit and recording the deed at least 30 days before the lien. Before taking rural acreage or a residence as collateral, find out who lives there and whether any part is, or could be claimed as, homestead. Where a homestead is present, carve it out of the collateral and have title review confirm the result.
Farm products and the Food Security Act
Under the federal Food Security Act, a buyer of farm products in the ordinary course generally takes free of a lender's lien unless the lender has given the buyer proper notice. Texas is not among the states with a USDA-certified central filing system, so Texas lenders protect themselves by sending direct written notice to the buyers, commission merchants and selling agents the borrower uses, and by requiring the borrower to list them. Refresh that list each year.
Rural and Hill Country issues
- Minerals and water: confirm whether minerals or groundwater rights were severed, and describe in the deed of trust exactly what the bank is taking.
- Access: rural tracts sometimes depend on unrecorded access. Get insured access or a recorded easement.
- Leases: grazing, hunting, wind and solar leases can affect value and priority. Review them and, where needed, subordinate them.
- Flood: river and creek frontage often sits in a special flood hazard area, so check every building.
- Property in several counties: record in each one and confirm the title policy covers every tract.
Remedies after default
Texas deeds of trust usually include a power of sale. A nonjudicial foreclosure sale is held on the first Tuesday of the month (the first Wednesday if that Tuesday is January 1 or July 4) after at least 21 days' notice, posted, filed and mailed as Texas Property Code section 51.002 requires, and property used as the debtor's residence requires an earlier notice giving at least 20 days to cure. On SBA and USDA loans, check the servicing rules and get any required agency consent before acting.
How KS can help
Kennedy Sutherland LLP reviews title, surveys and collateral for Texas commercial and agricultural loans and prepares the lien documents. Initial consultations for lenders are free. Call 210.259.3885.
This guide is general information for lenders and borrowers, not legal advice. Reading it does not create an attorney-client relationship. SBA, USDA and FSA rules change often, so confirm the current program requirements and the terms of your loan's authorization or commitment before relying on it. Kennedy Sutherland LLP is a private law firm. It is not affiliated with or endorsed by SBA, USDA or FSA.
Sources
- Tex. Bus. & Com. Code ch. 9, Secured Transactions
- Texas Secretary of State, UCC filings
- Tex. Const. art. XVI, sec. 50, homestead protection
- Tex. Prop. Code ch. 41, homestead exemptions
- Tex. Prop. Code ch. 51 (secs. 51.002-51.005), foreclosure and deficiency
- USDA AMS, Clear Title: states with certified central filing systems
- SBA SOP 50 10 8.1, Lender and Development Company Loan Programs (effective Oct. 1, 2026)
Sources checked November 2026.