In Texas, contracts for deed on residential property are considered potentially predatory and subject to strict consumer-protection laws. History of Contract-for-Deed Law in Texas. The contract provides that the seller will deed the property to the buyer after the buyer completes all payments. The long-term purchase contract requires the buyer to make monthly or other periodic payments over a long period of time. Instead, the seller signs a long-term purchase contract. In a contract for deed, the seller keeps the title to the property and the buyer does not receive a deed to the property. A contract for deed is a different form of seller-finance. If the buyer fails to pay the loan, then the seller may foreclose on the loan. The buyer becomes the legal, deeded owner of the property. In traditional owner-finance, the seller deeds the property to the buyer and retains a vendor’s lien in the property to secure the repayment of the loan to the buyer.
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