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Understanding the Texas Contract for Deed form is essential for both buyers and sellers who wish to navigate the complexities of property transactions outside the traditional mortgage route. This unique agreement serves as a binding contract that allows a seller to finance the sale of real estate directly to a buyer. It includes key components such as the sale and description of the property, detailing any rights and encumbrances that may apply. Additionally, the contract outlines the agreed purchase price, payment terms, and due dates. The urgency to comply with the statutory obligations under Texas Property Code sections 5.061 through 5.080 cannot be underestimated. It ensures transparency and protection for both parties involved. Maintaining the property’s condition is another critical aspect, with the purchaser assuming responsibility for upkeep. Furthermore, considerations regarding possession and maintenance of the property are clearly defined, establishing the framework for the seller's rights and the buyer’s obligations. Recognizing the nuance of confidentiality rights included in the form is equally vital, allowing individuals to safeguard sensitive personal information. With the stakes often high in real estate transactions, understanding this form can provide peace of mind and clarity in an otherwise daunting process.

Texas Contract For Deed Example

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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Contract for Deed

Purchaser.

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Contract for Deed

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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Contract for Deed

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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Contract for Deed

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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Contract for Deed

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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Contract for Deed

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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Contract for Deed

Get Texas Contract For Deed PDF Form

Form Characteristics

Fact Name Description
Governing Law The Texas Contract For Deed is governed by Sections 5.061 through 5.080 of the Texas Property Code.
Confidentiality Notice Natural persons can remove personal information, such as social security numbers, from the contract before public filing.
Sale of Property The contract outlines terms for the sale of a property, including a nominal consideration of ten dollars.
Purchase Price and Payment Terms Purchase prices are customizable, with options for installment payments or balloon payments, and may include interest rates.
Time of Performance The phrase "time is of the essence" emphasizes the importance of adherence to the agreed payment schedule.
Security Interest The contract serves as security for Purchaser's financial obligations, protecting the Seller's interests.
Condition of Property Purchaser accepts the property in "as-is" condition, with no warranties regarding its physical state from the Seller.

Guidelines on Utilizing Texas Contract For Deed

Completing the Texas Contract for Deed form is essential for both sellers and purchasers involved in real estate transactions. This step-by-step guide will help ensure accuracy and clarity as you fill out the necessary details.

  1. Gather all relevant information including details about the seller, purchaser, property, purchase price, and terms.
  2. In the first blank line, write the name of the seller or sellers involved in the contract.
  3. In the next blank line, write the name of the purchaser or purchasers involved in the contract.
  4. Fill in the county where the property is located in the section provided.
  5. Describe the property in the designated area. Alternatively, attach a property description as "Exhibit A".
  6. In the section titled "Purchase Price and Terms," enter the total purchase price of the property in the first blank line.
  7. Specify the initial payment the purchaser will make upon execution of the agreement in the next blank line.
  8. Indicate the remaining balance in the following blank line.
  9. Choose the payment plan that suits your agreement by selecting one of the three options and completing the corresponding blanks.
  10. Make sure to enter the date for the first installment payment, as well as any additional dates necessary for future payments.
  11. Review the section about time being of the essence and ensure clarity for all parties.
  12. Consider the security terms outlined in the contract and acknowledge that it acts as security for payment obligations.
  13. Review the maintenance conditions, making sure to include any additional requirements for the property’s upkeep.
  14. Accept the terms regarding the condition of improvements, noting that the property is sold "as-is".
  15. Indicate that the purchaser will take possession upon execution of the contract and include any relevant conditions for property inspection by the seller.
  16. Have all parties sign the document where necessary to confirm completion of the agreement.

After completing the Texas Contract for Deed form, retain copies for personal records. You may consider filing the document with the appropriate county office for legal recording. Be sure to keep a close contact with your seller or purchaser as the agreement proceeds.

What You Should Know About This Form

What is a Texas Contract For Deed?

A Texas Contract For Deed is an agreement between a seller and a buyer for the purchase of property where the seller retains the title until the buyer has fulfilled the payment obligations. The buyer obtains possession and use of the property while making payments, but does not own it outright until all payments are completed.

What are the key components of a Texas Contract For Deed?

Key components include the identification of the seller and purchaser, a detailed description of the property, purchase price, payment terms, security arrangements, and the responsibilities of both parties. The agreement also outlines provisions regarding the maintenance of the property and its condition.

How is payment structured in a Texas Contract For Deed?

Payment structures can vary. Payments may be made in monthly installments without interest, or with interest included, depending on what is agreed upon. Some contracts may also stipulate a balloon payment at the end of a payment period. These specifics must be clearly outlined in the contract.

What responsibilities does the purchaser have?

The purchaser is responsible for maintaining the property in good condition and making timely payments as per the contract terms. Additionally, the purchaser must ensure no waste or damage occurs to the property and may be required to return it in a similar condition if the contract is terminated.

Can the seller inspect the property?

Yes, the seller reserves the right to inspect the property at any time. This can be done with or without notice to the purchaser to ensure the property is being maintained according to the terms of the contract.

What does 'as-is' condition mean in this contract?

The term 'as-is' means that the purchaser accepts the property in its current state without any guarantees or warranties from the seller regarding its condition. The purchaser acknowledges they are responsible for any repairs or issues that arise after the purchase.

Common mistakes

Filling out the Texas Contract for Deed form requires careful attention to detail. One common mistake is leaving the property description incomplete. Inadequate descriptions can lead to confusion about the actual property being sold. Ensure that you either provide a thorough description or attach a clearly labeled exhibit that specifies the property.

Another frequent error is failing to specify the purchase price and payment terms clearly. It’s essential to state the total purchase price and detail how it will be paid. If you select an installment plan, make sure to fill in the number of installments, the amount of each payment, and the payment due dates. Vague terms can create misunderstandings later.

Omitting signatures is also a serious error. Both the Seller and the Purchaser must sign the contract. Without signatures, the document may not be considered legally binding. Always double-check that all parties involved have signed and dated the agreement before submission.

Another mistake to watch for is neglecting to incorporate timing commitments adequately. The form states that “time is of the essence,” meaning timely payments are crucial. Be sure to indicate due dates for payments accurately and maintain this schedule to avoid complications.

Furthermore, it is vital to understand the implications of the “as-is” condition clause. Many purchasers overlook what this means. By accepting the property in its current condition, buyers are waiving any claims against the Seller regarding repairs. Make sure you are fully aware of the condition of the property before agreeing to this clause.

Lastly, failing to recognize the importance of compliance with local laws can lead to issues down the road. This contract must still adhere to all applicable building codes and zoning laws. Review these regulations before signing to ensure all aspects align with local requirements.

Documents used along the form

The Texas Contract for Deed form is a vital document for real estate transactions in Texas that outlines the terms under which a property seller finances the sale to a buyer. However, it often accompanies several other forms and documents that help to clarify the agreement and protect both parties involved. Below are common documents that are frequently used alongside the Texas Contract for Deed.

  • Property Disclosure Statement: This document provides details about the condition of the property from the seller's perspective, including any known defects or issues. It is mandatory for the seller to present this to the buyer before execution of the contract.
  • Buyer’s Affidavit: This affidavit is a sworn statement made by the buyer confirming their identity and ability to complete the purchase, often required during the closing process.
  • Deed of Trust: A Deed of Trust secures the loan by establishing a lien on the property and typically involves a third party, such as a trustee. This document assures the seller that they have a legal claim to the property until the buyer completes their payments.
  • Amortization Schedule: This document outlines the payment schedule for the buyer, detailing principal and interest repayments over the life of the contract. It provides clarity on the financial obligations of the buyer.
  • Notice of Default: This is a preliminary document indicating that the buyer has failed to meet a payment obligation. It serves as an official warning before the seller takes further legal action.
  • Assignment of Contract: In situations where a buyer wants to transfer their interest in the contract to another party, this document facilitates that transfer, ensuring all parties involved are in agreement.
  • Warranty Deed: This document transfers ownership of the property once the buyer has fulfilled the payment terms. It offers a guarantee from the seller regarding the property’s title and any encumbrances.
  • Closing Statement: This statement details all financial transactions that occur at closing, including fees, payments, and other expenditures. It provides a comprehensive overview of the final financial arrangements between the buyer and seller.

When navigating a real estate transaction involving a Texas Contract for Deed, understanding these associated documents is crucial. Each serves a specific purpose and helps foster a more secure and transparent process for both the seller and the buyer.

Similar forms

  • Lease Agreement: A lease agreement allows an individual to rent a property for a specific period. Similar to a contract for deed, it involves payment over time and the responsibility for maintenance falls on the tenant, though the lease does not grant ownership rights until fully paid.
  • Option to Purchase Agreement: This document provides a potential buyer the opportunity to purchase a property at a predetermined price within a specific time frame. Like a contract for deed, it often includes monthly payments but does not transfer ownership until the purchase option is exercised.
  • Installment Sale Agreement: An installment sale agreement outlines the terms under which the buyer pays for property over time. Both documents share a similar structure for payments, though an installment sale usually transfers ownership immediately, while a contract for deed does not until all payments are made.
  • Mortgage Agreement: A mortgage agreement involves a borrower taking out a loan to purchase property, using the property itself as collateral. Both contracts create a financial obligation and contain terms for payment; however, a mortgage conveys title to the buyer, unlike a contract for deed, which keeps the seller as the titleholder until paid in full.
  • Purchase Agreement: This is a more traditional agreement for the outright sale of property, where the buyer pays the total purchase price upfront. In contrast, a contract for deed allows for a gradual payment process while retaining some seller control over the property until it’s fully paid.
  • Seller Financing Agreement: This arrangement allows the seller to finance the property purchase directly rather than through a traditional lender. Both a contract for deed and seller financing let the buyer pay in installments; however, a seller financing agreement usually involves more formalized loan terms and a promissory note.

Dos and Don'ts

When filling out the Texas Contract For Deed form, it’s essential to be thorough and precise. Here are five things you should and shouldn't do to help guide you through the process:

  • Do read and understand the relevant Property Code sections (Sections 5.061 through 5.080).
  • Do accurately describe the property, including any associated rights and improvements.
  • Do clearly outline the purchase price and payment terms, ensuring details are correct.
  • Do maintain copies of the signed contract for your records.
  • Do consult a legal professional if you have questions or uncertainties.
  • Don't leave any blanks in the contract; every section should be completed fully.
  • Don't forget to include security terms; they are crucial for the agreement.
  • Don't overlook the importance of reading the entire document carefully before signing.
  • Don't use vague language—be specific about payment amounts and due dates.
  • Don't include personal information like Social Security numbers if it’s not necessary for the contract.

By keeping these dos and don’ts in mind, you can ensure a smoother experience when completing your Texas Contract For Deed form.

Misconceptions

Understanding the Texas Contract for Deed can prevent misunderstandings and help ensure a smoother transaction. Here are five misconceptions that often arise:

  • It guarantees ownership of property immediately. Many believe that signing a contract for deed means they immediately own the property. In fact, the seller retains legal title until the full payment is made. This means the buyer is not the legal owner until the contract is completely fulfilled.
  • All contracts for deed are the same. Not all contracts for deed have identical terms. Details such as payment amounts, interest rates, and the length of the contract can vary significantly, so it is crucial for buyers to understand their specific agreement.
  • Buyers have full rights of ownership from the start. Buyers may think they have all the rights of ownership upon signing. However, the seller maintains the right to sell the property to someone else, or to foreclose, if payments are not made according to the contract.
  • There are no risks involved. Some individuals might feel that a contract for deed is a low-risk option for purchasing property. In reality, potential risks include losing the property if payments are not made and not having legal protections that come with traditional mortgages.
  • The property is in perfect condition and the seller is responsible for repairs. Many buyers mistakenly believe that the seller must maintain the property and ensure it is in good condition. Typically, buyers accept the property "as-is," meaning they take on the responsibility for any repairs or maintenance needed.

Being aware of these misconceptions can help individuals make informed decisions and protect their interests in property transactions.

Key takeaways

  • Understand the Contract Terms: Before signing, review the entire document carefully. Pay close attention to the details about the purchase price, payment terms, and the responsibilities of both the seller and purchaser.
  • Know Your Confidentiality Rights: If you are a natural person, remember that you can remove personal information, like your Social Security number or driver's license number, from the contract before it's recorded.
  • Review Maintenance Obligations: The purchaser must maintain the property and improvements. It's important to keep the property in good condition and refrain from making any modifications without the seller's consent.
  • Property Condition: The seller makes no warranties regarding the property's condition. The purchaser accepts the property "as-is," which means any repairs or issues are the buyer's responsibility.
  • Possession Rights: After signing, the purchaser can take possession of the property but must continue meeting the payment obligations. Failure to make timely payments can lead to termination of the contract.

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