Posted by Michel (TX) on January 29, 2002 at 17:47:38:
Info received from Legalwiz
Legalwiz - http://www.legalwiz.com
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 http://www.legalwiz.com/texaslaw.rtf
The most significant changes are as follows:
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!)
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).
If you negotiate a deal with a person in Spanish, you need to
write the land contract in Spanish.
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.
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!
Seller must disclose the financing terms (similar to a Federal
Truth in Lending).
Late payments cannot exceed 8% of the monthly payment or
actual administrative costs, whichever is LESS. The law forbids
The seller must provide a certificate that taxes are current and
proof of insurance to the buyer.
The seller mnust notify the insurance company about the
contract and add the buyer as a named insured within 10 days of
The contract must be recorded within 30 days (although,
interestingly, the statute provides no specific penalty for failing to
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
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.