A Texas Contract for Deed is a legal agreement that allows a buyer to purchase property through installment payments, while the seller retains the title until the full purchase price is paid. This type of contract can be an appealing option for buyers who may not qualify for traditional financing. If you're considering using this form, make sure to fill it out by clicking the button below.
The Texas Contract for Deed form serves as a crucial instrument in real estate transactions, facilitating the sale of property through a unique financing arrangement. This contract outlines the agreement between the seller and purchaser, detailing essential elements such as the sale price, payment terms, and conditions of the property. It includes provisions for the transfer of ownership rights while allowing the purchaser to take possession of the property before full payment is made. The form emphasizes the importance of the property's condition, stating that the purchaser accepts it "as-is," without warranties from the seller. Additionally, it specifies the obligations of both parties, including maintenance responsibilities and the consequences of non-payment. Notably, confidentiality rights are highlighted, allowing individuals to protect sensitive information before filing the contract in public records. Understanding these components is vital for anyone engaging in a real estate transaction in Texas, as they ensure clarity and protection for both parties involved.
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 the Texas Contract For Deed form requires careful attention to detail. The form outlines the terms of the agreement between the seller and the purchaser regarding the sale of property. After completing the form, both parties will sign it, and it may need to be filed with the appropriate county office.
A Texas Contract for Deed is a legal agreement between a seller and a buyer where the seller finances the purchase of a property. The buyer makes payments over time, and once the full purchase price is paid, the seller transfers the title to the buyer. This type of contract allows buyers to acquire property without needing a traditional mortgage.
The main components include:
Buyers can choose from several payment structures:
Once the contract is executed, the buyer gains the right to occupy and enjoy the property, as long as payments are made on time. The buyer is also responsible for maintaining the property and ensuring it remains in good condition.
The seller does not provide any warranties regarding the condition of the property. Buyers accept the property in its "as-is" condition, meaning they must conduct their own due diligence before signing the contract.
If the buyer fails to make timely payments, the seller has the right to terminate the contract. This can lead to the loss of the property, and the buyer may not receive any refunds for payments made.
Yes, the contract can be recorded in the public records. However, buyers should be aware of their confidentiality rights. Personal information such as social security numbers or driver's license numbers can be removed before recording.
Buyers should familiarize themselves with the Texas Property Code, specifically Sections 5.061 through 5.080, which govern executory contracts. Understanding these laws can help buyers protect their interests and ensure compliance with state regulations.
Incomplete Property Description: Failing to provide a complete and accurate description of the property can lead to confusion and disputes. Ensure you fill in all required details or attach a proper exhibit.
Incorrect Purchase Price: Entering an incorrect purchase price can create legal issues. Double-check the amount you intend to pay and make sure it matches what you agreed upon with the seller.
Missing Payment Terms: Not selecting or clearly defining the payment terms can result in misunderstandings. Choose one of the payment options and fill in all necessary details, including installment amounts and due dates.
Neglecting to Sign: Forgetting to sign the contract is a common mistake. Both the seller and purchaser must sign the document for it to be valid.
Ignoring the Confidentiality Notice: Not removing or striking out personal information, such as your Social Security number, can expose you to identity theft. Always protect your personal information before filing.
Overlooking Maintenance Obligations: Failing to understand your responsibilities for maintaining the property can lead to disputes later. Read the maintenance clause carefully and know what is expected of you.
Assuming Warranties Exist: Many people mistakenly believe the seller provides warranties on the property condition. The contract states that the property is sold "as-is," so be aware that you are accepting it without any guarantees.
The Texas Contract for Deed is a significant document in real estate transactions, particularly for buyers and sellers who prefer an alternative to traditional mortgage financing. However, it is essential to recognize that this contract often works in conjunction with several other forms and documents. Each of these documents serves a specific purpose and helps clarify the rights and responsibilities of both parties involved in the transaction.
Understanding these associated documents is vital for anyone involved in a Contract for Deed transaction. Each document plays a role in ensuring that the process is transparent, fair, and legally binding. By familiarizing oneself with these forms, both buyers and sellers can navigate the complexities of real estate transactions with greater confidence and security.
The Texas Lease Purchase Agreement is similar to the Texas Contract for Deed because both documents allow a buyer to occupy a property while making payments toward ownership. In a lease purchase agreement, the buyer leases the property with an option to buy it at a later date. This arrangement provides the buyer with the chance to live in the home while they save for a down payment or improve their credit score. Like the Contract for Deed, the lease purchase agreement specifies payment terms and conditions, ensuring both parties understand their obligations during the lease period.
The Texas Warranty Deed also shares similarities with the Texas Contract for Deed. Both documents involve the transfer of property ownership, but they do so in different ways. A warranty deed provides a clear and immediate transfer of ownership from the seller to the buyer, along with guarantees about the property's title. In contrast, the Contract for Deed allows the buyer to make payments over time, with ownership transferring only after all payments are completed. This means that while both documents are used in property transactions, the timing and nature of the ownership transfer differ significantly.
The Texas Promissory Note is another document that aligns closely with the Texas Contract for Deed. A promissory note outlines the borrower's promise to repay a loan, detailing the amount borrowed, interest rates, and repayment terms. In the context of a Contract for Deed, the promissory note serves as a financial instrument that formalizes the buyer's obligation to make payments to the seller. Both documents emphasize the importance of clear payment terms, ensuring that both parties understand their financial responsibilities.
The Texas Option to Purchase Agreement is yet another document that resembles the Texas Contract for Deed. This agreement gives the buyer the right, but not the obligation, to purchase a property within a specified timeframe. While the Contract for Deed obligates the buyer to purchase the property after making payments, the option agreement allows for more flexibility. Both agreements involve an initial payment and set terms for the purchase, but the option to purchase offers the buyer a chance to walk away if they choose not to buy.
Lastly, the Texas Real Estate Sales Contract is similar to the Texas Contract for Deed in that both documents facilitate the sale of real estate. A real estate sales contract typically involves an immediate transfer of ownership upon closing, while the Contract for Deed allows for a gradual transfer through installment payments. Both contracts detail the purchase price, property description, and terms of the sale. They are essential in ensuring that both buyers and sellers are protected and informed throughout the transaction process.
When filling out the Texas Contract For Deed form, it is essential to approach the task with care. Here are ten important dos and don’ts to keep in mind:
Many people have misconceptions about the Texas Contract For Deed form. Understanding these can help you make informed decisions. Here are four common misunderstandings:
While it may seem that the Seller keeps ownership, the Purchaser actually gains equitable title upon signing the contract. This means the Purchaser has rights to the property, but the Seller retains legal title until full payment is made.
This is incorrect. The Purchaser is responsible for maintaining the property and making timely payments throughout the contract period. Failure to do so can lead to termination of the contract.
In fact, the Purchaser accepts the property "as-is." The Seller does not provide any warranties regarding the condition of the property. It's crucial for the Purchaser to conduct their own inspections before signing.
These two agreements differ significantly. A Contract for Deed does not involve a bank or lender, while a mortgage does. In a Contract for Deed, the Seller finances the purchase directly, which can lead to different risks and benefits.
When considering the Texas Contract For Deed form, it's essential to understand its components and implications. Here are key takeaways that can guide you through the process:
By keeping these points in mind, individuals can navigate the Texas Contract For Deed form more effectively and make informed decisions throughout the process.