A Texas Contract for Deed form is a legal document used for the sale of real property where the seller provides the financing to the buyer, allowing the transfer of property ownership without a traditional mortgage from a third party. This method differs from the conventional buy-sell agreement by delaying the transfer of the property's title until the buyer completes the agreed-upon payments. Before engaging with these forms, it's essential to familiarize oneself with Sections 5.061 through 5.080 of the Property Code dealing with Executory Contracts, ensuring a comprehensive understanding of the legal obligations and rights. Click the button below to get started with filling out your Texas Contract for Deed form.
In the vast and varied landscape of real estate transactions within the state of Texas, the Contract for Deed form emerges as a pivotal document, especially for those pursuing non-traditional pathways to homeownership. This legal instrument, carefully delineated under Sections 5.061 through 5.080 of the Texas Property Code, establishes a buyer-seller agreement where the purchase of property is not immediately transferred to the buyer but is instead contingent upon the fulfillment of the contract's terms. Typically, these conditions involve the buyer making a series of scheduled payments to the seller over a period until the agreed-upon amount is fully paid, at which point ownership is officially transferred. Reinforcing the significance of this agreement, the form includes crucial sections not only outlining the sale particulars and financial considerations but also specifying the obligations of both parties regarding the maintenance and condition of the property. Notably, it emphasizes the "as-is" nature of the sale, expressly stating that the property is accepted by the purchaser without any warranties beyond those explicitly articulated in the contract itself. Moreover, the contract underscores the importance of timely adherence to the agreed-upon payment schedule, declaring "time is of the essence," thus binding the purchasers to a strict observance of payment deadlines. Additionally, the document provides safeguards for the sellers, granting them rights to inspect the property and stipulating conditions under which they may regain possession should the purchasers fail to meet their contractual obligations. This blend of buyer protections, seller safeguards, and clearly defined terms serves to frame the Contract for Deed as a crucial document for facilitating property transactions under the specific legal and regulatory milieu of Texas.
Before using these forms, please read the sections of the
Property Code dealing with
Executory Contracts (Contracts for Deed)
Sections 5.061 through 5.080
http://www.capitol.state.tx.us/statutes/py/py0000500toc.html
NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.
CONTRACT FOR DEED
THIS DAY this agreement is entered into by and between _______________________, hereinafter
referred to as "SELLER", whether one or more, and _______________________, hereinafter referred to as
"PURCHASER", whether one or more, on the terms and conditions and for the purposes hereinafter set forth:
1.
SALE OF PROPERTY
For and in consideration of TEN DOLLARS ($10.00) and other good and valuable considerations the receipt and sufficiency of which is hereby acknowledged, Seller does hereby agree to convey, sell, assign, transfer and set over unto Purchaser, the following property situated in ___________________ County,
State of Texas, said property being described as follows: (Type description or attach description as exhibit "A")
Together with all rights of ownership associated with the property, including, but not limited to, all easements and rights benefiting the premises, whether or not such easements and rights are of record, and all tenements, hereditaments, improvements and appurtenances, including all lighting fixtures, plumbing fixtures, shades, venetian blinds, curtain rods, storm windows, storm doors, screens, awnings, if any, and
____________________________________________ now on the premises.
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Contract for Deed
SUBJECT TO all recorded easements, rights-of-way, conditions, encumbrances and limitations and to all applicable building and use restrictions, zoning laws and ordinances, if any, affecting the property.
2.
PURCHASE PRICE AND TERMS
The purchase price of the property shall be $____________________. The purchaser does hereby
agree to pay to the order of the Seller the sum of ___________________ Dollars ($_______________)
upon execution of this agreement, with the balance of $__________________ being due and payable as
follows:(Select one)
(a) Balance payable in __________ (_______) monthly installments of ______________
Dollars ($_________) each, with the first installment being due and payable on the ____ day of
_______________, 20____ and a like payment on the first day of each month thereafter until the
______ day of ________________, 20____, when the final payment shall be due. No interest.
(b) Balance payable, together with interest on the whole sum that shall be from time to time unpaid at the rate of _______ per cent, per annum, payable in the amount of $____________ dollars per
month beginning on the _____ day of ____________, 20____ and continuing on the same day of
each month thereafter until fully paid.
(c) Balance payable, together with interest on the whole sum that shall be from time to time unpaid at the rate of _______ per cent, per annum, payable in the amount of _____________________
dollars per month beginning on the ________ day of _______________, 20____, and continuing on
the same day of each month thereafter until the ______ day of _______________, 20____, when all
remaining principal and interest shall be paid. (Balloon payment)
If interest is charged, interest shall be computed monthly and deducted from payment and the balance of payment shall be applied on principal.
3.
TIME OF THE ESSENCE
Time is of the essence in the performance of each and every term and provision in this agreement by
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Purchaser.
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4.
SECURITY
This contract shall stand as security of the payment of the obligations of Purchaser.
5.
MAINTENANCE OF IMPROVEMENTS
Except as permitted by law, all improvements on the property, including, but not limited to, buildings, trees or other improvements now on the premises, or hereafter made or placed thereon, shall be a part of the security for the performance of this contract and shall not be removed therefrom. Purchaser shall not commit, or suffer any other person to commit, any waste or damage to said premises or the appurtenances and shall keep the premises and all improvements in as good condition as they are now.
6.
CONDITION OF IMPROVEMENTS
Purchaser agrees that the Seller has not made, nor makes any representations or warranties as to the condition of the premises, the condition of the buildings, appurtenances and fixtures locate thereon, and/or the location of the boundaries. Purchaser accepts the property in its "as-is" condition without warranty of any kind. The required Property Disclosure Statement is attached hereto as “Exhibit “A”, which form was provided to the Purchaser before execution of this agreement.
7.
POSSESSION OF PROPERTY
Purchaser shall take possession of the property and all improvements thereon upon execution of this contract and shall continue in the peaceful enjoyment of the property so long as all payments due under the terms of this contract are timely made. Purchaser agrees to keep the property in a good state of repair and in the event of termination of this contract, Purchaser agrees to return the property to Seller in substantially the same condition as it now exists, ordinary wear and tear excepted. Seller reserves the right to inspect the property at any time with or without notice to Purchaser.
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8.
TAXES, INSURANCE AND ASSESSMENTS
Taxes and Assessments: During the term of this contract:(Select one)
(a) Purchaser shall pay all taxes and assessments levied against the property.
(b) Seller shall pay all taxes and assessments levied against the property. In the event that Seller pays the taxes and insurance, Purchaser shall reimburse Seller for same upon 30 days notice to purchaser.
Content Insurance: Purchaser shall be solely responsible for obtaining insurance of the contents, insuring contents owned by Purchaser. Seller shall be solely responsible for obtaining insurance on all contents owned by Seller.
Liability and Hazard Insurance: Liability insurance shall be maintained by Purchaser during the term of this contract naming Seller as an additional insured, in the amount of not less than $________________.
Fire, Hazard and Windstorm insurance: Fire, hazard and windstorm insurance shall be maintained as follows: (Select one)
(a) Purchaser shall obtain fire, hazard and windstorm insurance in the amount not less than $_______________, on a policy of insurance naming Seller as additional insured.
(b) Seller shall obtain and pay for hazard, fire and windstorm insurance in an amount not less than
$_________________. In the event Seller elects this option, Purchaser shall repay the amount so paid by Seller within thirty (30) days of demand for same by Seller.
Should the Purchaser fail to pay any tax or assessment, or installment thereof, when due, or keep said
buildings insured, Seller may pay the same and have the buildings insured, and the amounts thus expended shall be a lien on said premises and may be added to the balance then unpaid, or collected by Seller, in the discretion if Seller with interest until paid at the rate of the ______________ per cent per annum.
In case of any damage as a result of which said insurance proceeds are available, the Purchaser may, within sixty (60) days of said loss or damage, give to the Seller written notice of Purchaser’s election to repair
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or rebuild the damaged parts of the premises, in which event said insurance proceeds shall be used for such purpose. The balance of said proceeds, if any, which remain after completion of said repairing or rebuilding, or all of said insurance proceeds if the Purchaser elects not to repair or rebuild, shall be applied first toward the satisfaction of any existing defaults under the terms of this contract, and then as a prepayment upon the principal balance owing. No such prepayment shall defer the time for payment of any remaining payments required by said contract. Any surplus of said proceeds in excess of the balance owing hereon shall be paid to the Purchaser.
9.
DEFAULT
If the Purchaser shall fail to perform any of the covenants or conditions contained in this contract on or before the date on which the performance is required, the Seller shall give Purchaser notice of default or performance, stating the Purchaser is allowed sixty (60) days from the date the notice is made (mailed) to cure the default or performance. In the event the default or failure of performance is not cured within the 60 day time period, then Seller shall have the remedies as provided in the Texas Laws and the Texas Property Code, Sections 5.061 et seq., which include rescission and forfeiture, and all sums due shall be accelerated and become immediately due.
Except as otherwise provided by the Texas Property Code, in the event of default and termination of the contract by Seller, Purchaser shall forfeit any and all payments made under the terms of this contract including taxes and assessments as liquidated damages, Seller shall be entitled to recover possession of the property and such other damages as they may be due which are caused by the acts or negligence of Purchaser.
The parties expressly agree that in the event of default not cured by the Purchaser and termination of this agreement, and Purchaser fails to vacate the premises, Seller shall have the right to obtain possession by appropriate court action.
10.
DEED AND EVIDENCE OF TITLE
Upon total payment of the purchase price and any and all late charges, and other amounts due Seller,
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Seller agrees to deliver to Purchaser a Deed to the subject property, at Seller’s expense, free and clear of any liens or encumbrances other than taxes and assessments for the current year. The deed shall be recorded by Seller within thirty (30) days of receiving final payment from the Purchaser in accordance with the Texas Property Code..
11.
NOTICES
All notices required hereunder shall be deemed to have been made when deposited in the U. S. Mail, postage prepaid, certified, return receipt requested, to the Purchaser or Seller at the addresses listed below. All notices required hereunder may he sent to:
Seller:
Purchaser:
and when mailed, postage prepaid, to said address, shall be binding and conclusively presumed to be served upon said parties respectively. Notice of Default shall be made by registered or certified mail postage prepaid.
12.
ASSIGNMENT OR SALE
Purchaser shall not sell, assign, transfer or convey any interest in the subject property or this
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agreement, without first securing the written consent of the Seller. However, the Purchaser shall have the right to obtain a loan for the purposes allowed by the Texas Property Code, Sections 5.016, and mortgage Purchaser’s interest in the property for such purposes.
13.
PREPAYMENT
Purchaser to have the right to prepay, without penalty, the whole or any part of the balance remaining unpaid on this contract at any time before the due date.
14.
ATTORNEY FEES
In the event of default, Purchaser shall pay to Seller, Seller's reasonable and actual attorneys' fees and expenses incurred by Seller in enforcement of any rights of Seller. All attorney fees shall be payable prior to Purchaser's being deemed to have corrected any such default.
15.
LATE PAYMENT CHARGES
If Purchaser shall fail to pay, within fifteen (15) days after due date, any installment due hereunder, Purchaser shall be required to pay an additional charge of five (5%) percent of the late installment. Such charge shall be paid to Seller at the time of payment of the past due installment.
16.
CONVEYANCE OR MORTGAGE BY SELLER
If the Seller's interest is now or hereafter encumbered by mortgage, the Seller covenants that Seller
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will meet the payments of principal and interest thereon as they mature and produce evidence thereof to the Purchaser upon demand. In the event the Seller shall default upon any such mortgage or land contract, the Purchaser shall have the right to do the acts or make the payments necessary to cure such default and shall be reimbursed for so doing by receiving, automatically, credit to this contract to apply on the payments due or to become due hereon.
The Seller reserves the right to convey, his or her interest in the above described land and such conveyance hereof shall not be a cause for rescission but such conveyance shall be subject to the terms of this agreement.
The Seller may, during the lifetime of this contract, place a mortgage on the premises above described, which shall be a lien on the premises, superior to the rights of the Purchaser herein, or may continue and renew any existing mortgage thereon, provided that the aggregate amount due on all outstanding mortgages shall not at any time be greater than the unpaid balance of the contract.
17.
ENTIRE AGREEMENT
This Agreement embodies and constitutes the entire understanding between the parties with respect to the transactions contemplated herein. All prior or contemporaneous agreements, understandings, representations, oral or written, are merged into this Agreement.
THIS EXECUTORY CONTRACT REPRESENTS THE FINAL AGREEMENT BETWEEN THE SELLER AND PURCHASER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
______________________________
(Date)
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Filling out a Texas Contract for Deed form is a critical step in the process of buying or selling property through a direct financing agreement between the parties. This document outlines the terms of sale, including payment schedules, interest rates (if applicable), and the responsibilities of both the buyer and seller regarding the property's condition and maintenance. Correctly completing this form is essential for protecting the interests of both parties and ensuring a clear, enforceable agreement. Below are the steps to properly fill out the form:
Completing the Texas Contract for Deed form with attention to detail and accuracy will ensure a solid agreement that protects both parties throughout the transaction. It's beneficial to consult with a legal advisor to review the contract before finalization to ensure compliance with Texas law and to address any specific concerns particular to the property or agreement.
A Contract for Deed, also known as a land contract or installment sale agreement, is a legal agreement between a seller and purchaser for the sale of real estate. In this arrangement, the purchaser agrees to pay the purchase price of the property in installments. The seller retains legal title to the property until the purchaser pays the full purchase price. Upon full payment, the seller agrees to transfer the property title to the purchaser. This method of buying property can be beneficial for buyers who may not qualify for traditional mortgage financing.
The Texas Contract for Deed form includes varied critical details, such as:
Under a Contract for Deed, the purchaser has the right to:
The purchaser's primary obligations under a Contract for Deed include, but are not limited to:
If the purchaser fails to make timely payments as outlined in the Contract for Deed, they risk the contract being terminated by the seller. If terminated, the purchaser may lose:
Yes, in most cases, a purchaser can sell their interest in a Contract for Deed. However, this is subject to the terms of the contract itself, which may require the seller's approval or impose other conditions. Selling the interest essentially transfers the purchaser's rights and obligations under the contract to another party, who would then continue making payments to the original seller and eventually gain title to the property upon satisfaction of the contract’s terms.
A Contract for Deed typically ends when the purchaser fulfills all the terms of the contract, primarily by completing payment of the purchase price and any other agreed-upon fees or charges. At this point, the seller is obligated to transfer legal title to the property to the purchaser, usually through a deed. Alternatively, a contract may end prematurely if the purchaser defaults on their obligations, leading to termination of the contract by the seller. In some cases, the parties may mutually agree to terminate the contract under specific conditions.
Yes, it is highly recommended that purchasers consult with a lawyer before entering into a Contract for Deed. A lawyer can help:
When filling out a Texas Contract for Deed form, there are common mistakes that people often make. It's important to be aware of these to ensure a smooth and legally sound agreement. Here are nine such mistakes:
By avoiding these mistakes, both sellers and purchasers can ensure that the Contract for Deed accurately reflects their agreement and protects their interests.
When entering into an agreement such as a Texas Contract for Deed, several additional documents are frequently utilized to ensure clarity, legality, and completeness of the transaction. These documents not only help in defining the terms and conditions of the agreement but also protect the rights and interests of both the seller and the purchaser. Understanding these documents can provide both parties with the assurance that their real estate transaction adheres to the legal standards and requirements.
Complementary to the Texas Contract for Deed, these documents collectively ensure a thorough and legally sound transaction. They address various aspects of the sale, from financing and property condition to legal ownership and community obligations, providing a comprehensive framework that safeguards the interests of both parties involved in the property transaction.
The Texas Contract for Deed form is notably similar to a traditional Mortgage Agreement, where property ownership is transferred from the seller to the buyer under the condition that the buyer pays off a loan used to purchase the property. In both cases, the buyer is allowed to take possession of the property and is responsible for its maintenance, but the ownership (title) of the property doesn't fully transfer until the financial obligations are met. However, in a Contract for Deed, the seller retains the title until the purchase price is paid in full, often making this approach less secure for the buyer compared to the protections offered under a traditional mortgage.
Another document akin to the Texas Contract for Deed is the Rent-to-Own Agreement. This arrangement also enables a purchaser to live in a home they plan to buy in the future, with a portion of their rent payments going towards the purchase price. Both contracts allow the purchaser to assume possession before finalizing payment, but under a Rent-to-Own Agreement, the occupant typically pays rent with an option (not an obligation) to buy, making it a less binding commitment to purchase compared to a Contract for Deed.
The Land Contract shares similarities with the Texas Contract for Deed too, particularly in how the property's title transfer is handled. In both agreements, the buyer makes payments directly to the seller for a predetermined period, with the title remaining under the seller's name until all payments are completed. The primary difference usually lies in the contractual terms and conditions specific to the state laws governing these agreements, but the essence of the seller financing the buyer under stipulated payback terms remains constant.
An Installment Sale Agreement is another document closely related to the Texas Contract for Deed, specifically in terms of payment structure. Both arrangements involve the purchaser making payments over time until the agreed-upon amount is paid in full, at which point full ownership is transferred to the purchaser. These agreements typically spell out the terms, including the total sale price, down payment, interest rate (if applicable), and the schedule of payments leading to eventual ownership.
Lastly, the Lease with Option to Purchase contract bears resemblance to the Texas Contract for Deed but with key differences. Both arrangements provide a pathway towards homeownership through the initial possession of the property under lease terms. However, a Lease with Option to Purchase often requires the lessee to pay a premium for the exclusive right to buy the property at a later date, without the obligation to buy. Unlike a Contract for Deed, the lessee has the option, not the requirement, to purchase the property once the lease term ends or within the option period.
Filling out a Texas Contract For Deed requires careful attention to detail and a thorough understanding of one's rights and responsibilities. Here are eight essential dos and don'ts that can guide you through the process:
Understanding the Texas Contract for Deed form is crucial for anyone looking to engage in real estate transactions under this agreement. Misinterpretations can lead to unexpected legal and financial consequences. Here are eight common misconceptions about the Texas Contract for Deed form:
This assumption is incorrect. A Contract for Deed is a legal agreement where the seller retains legal title to the property until the purchaser completes all payment obligations under the contract. It's more complex than a traditional rent-to-own scenario and involves specific legal rights and obligations.
Buyers do not gain full ownership of the property until they have fulfilled all terms of the contract, including complete payment. Until then, the legal title remains with the seller.
Interest can be, and often is, charged in a Contract for Deed. The terms of interest are outlined in the contract and can vary significantly from one agreement to another.
While buyers can live on the property and are responsible for its upkeep, they do not have full homeowner rights until they have completed the terms of the contract. For example, they cannot sell or mortgage the property without the seller's consent.
Unlike a standard landlord-tenant relationship, terminating a Contract for Deed requires legal foreclosure proceedings if the buyer defaults. The process is more akin to foreclosing on a mortgage than evicting a tenant.
Contracts for Deed can vary widely in terms and conditions, including payment schedules, interest rates, and rights of possession. Each contract is unique and must be read and understood fully before signing.
While the transfer of full legal title does not occur until the contract is completed, Contracts for Deed still require a formal agreement and understanding of terms, often necessitating legal guidance or a closing-like process to ensure both parties' rights are protected.
Paying off the contract early can significantly benefit the buyer by reducing the total amount of interest paid and accelerating the transfer of legal title to their name.
Correcting these misconceptions is essential for anyone considering entering into a Contract for Deed in Texas. Understanding the legal implications and obligations of such an agreement is crucial to avoid misunderstandings that could lead to financial loss or legal disputes.
Understanding the Texas Contract for Deed form is crucial for ensuring a smooth and lawful transaction between a seller and purchaser of property. This document outlines the agreement between the two parties, specifying terms including the sale of property, purchase price and terms, and conditions regarding the maintenance and possession of the property. Here are four key takeaways to keep in mind when filling out and using this form:
Taking these key points into account when dealing with the Texas Contract for Deed form can help both sellers and purchasers navigate their agreement with more confidence and clarity, ensuring a legal and fair transaction for both parties involved.
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