Contract for Deed Law in Texas? - Posted by Dickie L. Taylor

Posted by Michel (TX) on January 29, 2002 at 17:47:38:

Info received from Legalwiz

Legalwiz -

Texas Investors:

While you were sleeping, your government has enacted
sweeping legislation affecting land contracts (aka “contracts for

A complete copy can be downloaded from my web site in RTF
format at

The most significant changes are as follows:

  1. You are required to give a land contract buyer a 14 day right of
    recission (that is, 14 days to find an attorney to kill the deal!)

  2. Upon default, a buyer gets 60 days to cure, rather than 15, 30,
    45 & 60 under the old law. If the buyer has paid 40% down or 48
    payments, the seller must do a trustee foreclosure (which is
    fairly quick in TX).

  3. If you negotiate a deal with a person in Spanish, you need to
    write the land contract in Spanish.

  4. You have to give a big fat, disclosure BEFORE signing the
    land contract, which includes a copy of a survey, copies of all
    existing liens, copies of recorded covenants & restrictions, and a
    statement that recommends the buyer get title insurance. A copy
    of the complete disclosure can be found in the statute.

  5. You must disclose annually in writing before Jan 31st the amt
    of interest paid, balance due, taxes and insurance paid, etc for
    the previous year. Failure to comply is a $250/day fine! This
    provision is retroactive, that is, it applies to EXISTING contracts!

  6. Seller must disclose the financing terms (similar to a Federal
    Truth in Lending).

  7. Late payments cannot exceed 8% of the monthly payment or
    actual administrative costs, whichever is LESS. The law forbids
    pre-payment penalties!

  8. The seller must provide a certificate that taxes are current and
    proof of insurance to the buyer.

  9. The seller mnust notify the insurance company about the
    contract and add the buyer as a named insured within 10 days of
    the contract.

  10. The contract must be recorded within 30 days (although,
    interestingly, the statute provides no specific penalty for failing to
    do so!)

These changes are the basics . . .

Please read over the statute and comply. It really doesn’t change
that much, other than the length of time to get a defaulting buyer
out of possession and the amt of paperwork you must deal with
at closing.

The law apparently applies to all new contracts after 9/1/2001.
Some of the provisions apply to all existing contracts, which may
not be legal, since it clearly violates the provision of the United
State Constitution which forbids the government from passing
laws that imair existing contracts between private citizens. I
would not be suprised to see lawyers challenging whether the
law can be enforced retroactively.

Contract for Deed Law in Texas? - Posted by Dickie L. Taylor

Posted by Dickie L. Taylor on January 29, 2002 at 16:36:26:

Can someone tell me where to find the ammended law in Texas for contract for deed sellers and buyers?