A Contract for Deed is used as owner financing for the purchase of real property. The Seller retains title to the property until an agreed amount is paid. After the agreed amount is paid, the Seller conveys the property to Buyer.
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Texas Agreement or Contract for Deed a/k/a Land or Executory Contract...
Arlington Texas Agreement or Contract for Deed a/k/a Land or Executory Contract - Nonresidential
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FAQ
Under Section 5.081 of the Texas Property Code, the buyer ?at any time and without paying penalties or charges of any kind? is entitled to convert the contract-for-deed into recorded, legal title by tendering a promissory note for the balance owed with the same terms as the contract.
Yes. Texas Property Code 5.076 requires that a seller record the contract with the county clerk. The seller must do so within 30 days after the contract has been signed. If the executory contract is cancelled for any reason, the seller must record that as well.
The buyer on a recorded executory contract gets the warranties that would come with a general warranty deed unless otherwise limited by the contract. Id. The seller that fails to transfer recorded, legal title after receipt of final payment can be subject to large liquidated damages statutory penalties. Id.
Signing a contract for deed is not the same as taking on a mortgage. Rather, a contract for deed can be used as a financing tool when a Texas homeowner wants to sell land or property. A contract for deed may represent a simple transaction between two parties, however, significant risk can be involved.
Executory contracts must be in writing and must be signed by the parties that enter into the agreement. This is the only way the agreement can be enforceable. In fact, any oral agreement that is not in writing is difficult to enforce.
STATUTE OF FRAUDS ? GENERAL RULE REQUIRES REAL ESTATE CONTRACTS TO BE WRITTEN AND SIGNED.
An executory contract is when one or both parties have obligations still to be performed. For example, a sales contract is an executory contract until the buyer has obtained financing-there are still obligations remaining to be performed before the contract can be considered executed.
If you fall behind on payments, the contract can be terminated and you will lose whatever equity was previously built. Furthermore, if the seller has a mortgage and defaults on their payments, you may lose the property even though your own payments to the seller are current.
Signing a contract for deed is not the same as taking on a mortgage. Rather, a contract for deed can be used as a financing tool when a Texas homeowner wants to sell land or property. A contract for deed may represent a simple transaction between two parties, however, significant risk can be involved.
The buyer on a recorded executory contract gets the warranties that would come with a general warranty deed unless otherwise limited by the contract. Id. The seller that fails to transfer recorded, legal title after receipt of final payment can be subject to large liquidated damages statutory penalties. Id.
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Interesting Questions
An Arlington Agreement or Contract for Deed, also known as a Land or Executory Contract, is a legal arrangement in which the seller provides financing for the purchase of a nonresidential property.
In an Arlington Agreement, the buyer agrees to make regular payments to the seller over a specified period while having the right to occupy and use the property. The seller retains legal title until the agreed-upon payments are completed.
The purpose of an Arlington Agreement is to provide an alternative financing option for buyers who may not qualify for traditional bank loans. It allows them to acquire nonresidential properties through seller financing.
Entering into an Arlington Agreement can be advantageous for buyers who have difficulty obtaining a bank loan. It may require a smaller down payment, have less stringent credit requirements, and provide an opportunity to build equity over time.
There are risks involved in an Arlington Agreement. The buyer may face forfeiture of the property and loss of all payments made if they fail to meet the agreed-upon payment schedule. Additionally, the property could still be subject to liens or claims by the seller until the contract is fully executed.
The buyer typically cannot sell the property during the contract period since legal title remains with the seller until all payments are completed. However, it's advisable to review the specific terms of the Arlington Agreement, as some contracts may allow for early sale with certain conditions.
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Arlington Texas Agreement or Contract for Deed a/k/a Land or Executory Contract - Nonresidential
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Law summary
Agreement or Contract for Deed a/k/a Land or Executory Contract - Nonresidential
TEXAS STATUTESPROPERTY CODE
TITLE 2. CONVEYANCES
CHAPTER 5. CONVEYANCES
SUBCHAPTER D. EXECUTORY CONTRACT FOR CONVEYANCE
§ 5.061 PROP. Definition
In this subchapter, "default" means the failure to:
(1) make a timely payment; or
(2) comply with a term of an executory contract.
Added by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.065 and amended by Act 2001, 77th Leg., ch. 693, Sec. 1, Sept. 1, 2001.
§ 5.062 PROP. Applicability
(a) This subchapter applies only to a transaction involving an executory contract for conveyance of real property used or to be used as the purchaser's residence or as the residence of a person related to the purchaser within the second degree by consanguinity or affinity, as determined under Chapter 573, Government Code. For purposes of this subchapter, and only for the purposes of this subchapter:
(1) a lot measuring one acre or less is presumed to be residential property; and
(2) an option to purchase real property that includes or is combined or executed concurrently with a residential lease agreement, together with the lease, is considered an executory contract for conveyance of real property.
(b) This subchapter does not apply to the following transactions under an executory contract:
(1) the sale of state land; or
(2) a sale of land by:
(A) the Veterans' Land Board;
(B) this state or a political subdivision of this state; or
(C) an instrumentality, public corporation, or other entity created to act on behalf of this state or a political subdivision of this state, including an entity created under Chapter 303, 392, or 394, Local Government Code.
(c) This subchapter does not apply to an executory contract that provides for the delivery of a deed from the seller to the purchaser within 180 days of the date of the final execution of the executory contract.
(d) Section 5.066 and Sections 5.068-5.080 do not apply to a transaction involving an executory contract for conveyance if the purchaser of the property:
(1) is related to the seller of the property within the second degree by consanguinity or affinity, as determined under Chapter 573, Government Code; and
(2) has waived the applicability of those sections in a written agreement.
(e) Sections 5.066, 5.067, 5.071, 5.075, 5.079, 5.081, and 5.082 do not apply to an executory contract described by Subsection (a)(2).
(f) Notwithstanding any other provision of this subchapter, only the following sections apply to an executory contract described by Subsection (a)(2) if the term of the contract is three years or less and the purchaser and seller, or the purchaser's or seller's assignee, agent, or affiliate, have not been parties to an executory contract to purchase the property covered by the executory contract for longer than three years:
(1) Sections 5.063-5.065;
(2) Section 5.073, except for Section 5.073(a)(2); and
(3) Sections 5.083 and 5.085.
(g) Except as provided by Subsection (b), if Subsection (f) conflicts with another provision of this subchapter, Subsection (f) prevails.
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.091 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.
Amended by:
Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 2, eff. September 1, 2005.
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 1, eff. September 1, 2015.
§ 5.0621 PROP. Contruction With Other Law
(a) Except as provided by Subsection (b), the provisions of this subchapter and Chapter 92 apply to the portion of an executory contract described by Section 5.062(a)(2) that is a residential lease agreement.
(b) After a tenant exercises an option to purchase leased property under a residential lease described by Subsection (a), Chapter 92 no longer applies to the lease.
Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 3, eff. September 1, 2005.
§ 5.063 PROP. Notice
(a) Notice under Section 5.064 must be in writing and must be delivered by registered or certified mail, return receipt requested. The notice must be conspicuous and printed in 14-point boldface type or 14-point uppercase typewritten letters, and must include on a separate page the statement:
NOTICE
YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO BUY YOUR PROPERTY. UNLESS YOU TAKE THE ACTION SPECIFIED IN THIS NOTICE BY (date) THE SELLER HAS THE RIGHT TO TAKE POSSESSION OF YOUR PROPERTY.
(b) The notice must also:
(1) identify and explain the remedy the seller intends to enforce;
(2) if the purchaser has failed to make a timely payment, specify:
(A) the delinquent amount, itemized into principal and interest;
(B) any additional charges claimed, such as late charges or attorney's fees; and
(C) the period to which the delinquency and additional charges relate; and
(3) if the purchaser has failed to comply with a term of the contract, identify the term violated and the action required to cure the violation.
(c) Notice by mail is given when it is mailed to the purchaser's residence or place of business. The affidavit of a person knowledgeable of the facts to the effect that notice was given is prima facie evidence of notice in an action involving a subsequent bona fide purchaser for value if the purchaser is not in possession of the real property and if the stated time to avoid the forfeiture has expired. A bona fide subsequent purchaser for value who relies upon the affidavit under this subsection shall take title free and clear of the contract.
Acts 1983, 68th Leg., p. 3485, ch. 576, Sec. 1, eff. Jan. 1, 1984. Amended by Acts 1993, 73rd Leg., ch. 444, Sec. 1, eff. Sept. 1, 1993; Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.062 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.
§ 5.064 PROP. Seller's Remedies on Default
A seller may enforce the remedy of rescission or of forfeiture and acceleration against a purchaser in default under an executory contract for conveyance of real property only if:
(1) the seller notifies the purchaser of:
(A) the seller's intent to enforce a remedy under this section; and
(B) the purchaser's right to cure the default within the 30-day period described by Section 5.065;
(2) the purchaser fails to cure the default within the 30-day period described by Section 5.065;
(3) Section 5.066 does not apply; and
(4) the contract has not been recorded in the county in which the property is located.
Acts 1983, 68th Leg., p. 3484, ch. 576, Sec. 1, eff. Jan. 1, 1984. Amended by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.061 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001. Amended by Acts 2003, 78th Leg., ch. 959, Sec. 1, eff. Sept. 1, 2003.
Amended by:
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 2, eff. September 1, 2015.
§ 5.065 PROP. Right to Cure Default
Notwithstanding an agreement to the contrary, a purchaser in default under an executory contract for the conveyance of real property may avoid the enforcement of a remedy described by Section 5.064 by complying with the terms of the contract on or before the 30th day after the date notice is given under
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that section.<br />
<br />
Acts 1983, 68th Leg., p. 3485, ch. 576, Sec. 1, eff. Jan. 1, 1984. Amended by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.063 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001. Amended by Acts 2003, 78th Leg., ch. 959, Sec. 2, eff. Sept. 1, 2003.<br />
<br />
§ 5.066 PROP. Equity Protection; Sale of Property<br />
<br />
(a) If a purchaser defaults after the purchaser has paid 40 percent or more of the amount due or the equivalent of 48 monthly payments under the executory contract or, regardless of the amount the purchaser has paid, the executory contract has been recorded, the seller is granted the power to sell, through a trustee designated by the seller, the purchaser’s interest in the property as provided by this section. The seller may not enforce the remedy of rescission or of forfeiture and acceleration after the contract has been recorded.<br />
<br />
(b) The seller shall notify a purchaser of a default under the contract and allow the purchaser at least 60 days after the date notice is given to cure the default. The notice must be provided as prescribed by Section 5.063 except that the notice must substitute the following statement:<br />
<br />
NOTICE<br />
<br />
YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO BUY YOUR PROPERTY. UNLESS YOU TAKE THE ACTION SPECIFIED IN THIS NOTICE BY (date) A TRUSTEE DESIGNATED BY THE SELLER HAS THE RIGHT TO SELL YOUR PROPERTY AT A PUBLIC AUCTION.<br />
<br />
(c) The trustee or a substitute trustee designated by the seller must post, file, and serve a notice of sale and the county clerk shall record and maintain the notice of sale as prescribed by Section 51.002. A notice of sale is not valid unless it is given after the period to cure has expired.<br />
<br />
(d) The trustee or a substitute trustee designated by the seller must conduct the sale as prescribed by Section 51.002. The seller must:<br />
<br />
(1) convey to a purchaser at a sale conducted under this section fee simple title to the real property; and<br />
<br />
(2) warrant that the property is free from any encumbrance.<br />
<br />
(e) The remaining balance of the amount due under the executory contract is the debt for purposes of a sale under this section. If the proceeds of the sale exceed the debt amount, the seller shall disburse the excess funds to the purchaser under the executory contract. If the proceeds of the sale are insufficient to extinguish the debt amount, the seller’s right to recover the resulting deficiency is subject to Sections 51.003, 51.004, and 51.005 unless a provision of the executory contract releases the purchaser under the contract from liability.<br />
<br />
(f) The affidavit of a person knowledgeable of the facts that states that the notice was given and the sale was conducted as provided by this section is prima facie evidence of those facts. A purchaser for value who relies on an affidavit under this subsection acquires title to the property free and clear of the executory contract.<br />
<br />
(g) If a purchaser defaults before the purchaser has paid 40 percent of the amount due or the equivalent of 48 monthly payments under the executory contract, the seller may enforce the remedy of rescission or of forfeiture and acceleration of the indebtedness if the seller complies with the notice requirements of Sections 5.063 and 5.064.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.101 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 3, eff. September 1, 2015.<br />
<br />
§ 5.067 PROP. Placement of Lien for Utility Service<br />
<br />
Notwithstanding any terms of a contract to the contrary, the placement of a lien for the reasonable value of improvements to residential real estate for purposes of providing utility service to the property shall not constitute a default under the terms of an executory contract for the purchase of the real property.<br />
<br />
Added by Acts 1991, 72nd Leg., ch. 743, Sec. 1, eff. Sept. 1, 1991. Amended by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.064 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.068 PROP. Foreign Language Requirement<br />
<br />
If the negotiations that precede the execution of an executory contract are conducted primarily in a language other than English, the seller shall provide a copy in that language of all written documents relating to the transaction, including the contract, disclosure notices, annual accounting statements, and a notice of default required by this subchapter.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.093 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.069 PROP. Seller’s Disclosure of Property Condition<br />
<br />
(a) Before an executory contract is signed by the purchaser, the seller shall provide the purchaser with:<br />
<br />
(1) a survey, which was completed within the past year, or plat of a current survey of the real property;<br />
<br />
(2) a legible copy of any document that describes an encumbrance or other claim, including a restrictive covenant or easement, that affects title to the real property; and<br />
<br />
(3) a written notice, which must be attached to the contract, informing the purchaser of the condition of the property that must, at a minimum, be executed by the seller and purchaser and read substantially similar to the following:<br />
<br />
WARNING<br />
<br />
IF ANY OF THE ITEMS BELOW HAVE NOT BEEN CHECKED, YOU MAY NOT BE ABLE TO LIVE ON THE PROPERTY.<br />
<br />
SELLER’S DISCLOSURE NOTICE<br />
<br />
CONCERNING THE PROPERTY AT (street address or legal description and city)<br />
<br />
THIS DOCUMENT STATES CERTAIN APPLICABLE FACTS ABOUT THE PROPERTY YOU ARE CONSIDERING PURCHASING.<br />
<br />
CHECK ALL THE ITEMS THAT ARE APPLICABLE OR TRUE:<br />
<br />
_____ The property is in a recorded subdivision.<br />
<br />
_____ The property has water service that provides potable water.<br />
<br />
_____ The property has sewer service.<br />
<br />
_____ The property has been approved by the appropriate municipal, county, or state agency for installation of a septic system.<br />
<br />
_____ The property has electric service.<br />
<br />
_____ The property is not in a floodplain.<br />
<br />
_____ The roads to the boundaries of the property are paved and maintained by:<br />
<br />
_____ the seller;<br />
<br />
_____ the owner of the property on which the road exists;<br />
<br />
_____ the municipality;<br />
<br />
_____ the county; or<br />
<br />
_____ the state.<br />
<br />
_____ No individual or entity other than the seller:<br />
<br />
(1) owns the property;<br />
<br />
(2) has a claim of ownership to the property; or<br />
<br />
(3) has an interest in the property.<br />
<br />
_____ No individual or entity has a lien filed against the property.<br />
<br />
_____ There are no restrictive covenants, easements, or other title exceptions or encumbrances that prohibit construction of a house on the property.<br />
<br />
NOTICE: SELLER ADVISES PURCHASER TO:<br />
<br />
(1) OBTAIN A TITLE ABSTRACT OR TITLE COMMITMENT COVERING<br />
<br />
THE PROPERTY AND HAVE THE ABSTRACT OR COMMITMENT REVIEWED<br />
<br />
BY AN ATTORNEY BEFORE SIGNING A CONTRACT OF THIS TYPE; AND<br />
<br />
(2) PURCHASE AN OWNER’S POLICY OF TITLE INSURANCE<br />
<br />
COVERING THE PROPERTY.<br />
<br />
_____________________________ ______________________________<br />
<br />
(Date) (Signature of Seller)<br />
<br />
_____________________________ ______________________________<br />
<br />
(Date) (Signature of Purchaser)<br />
<br />
(b) If the property is not located in a recorded subdivision, the seller shall provide the purchaser with a separate disclosure form stating that utilities may not be available to the property until the subdivision is recorded as required by law.<br />
<br />
(c) If the seller advertises property for sale under an executory contract, the advertisement must disclose information regarding the availability of water, sewer, and electric service.<br />
<br />
(d) The seller’s failure to provide information required by this section:<br />
<br />
(1) is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Business & Commerce Code, and is actionable in a public or private suit brought under Subchapter E, Chapter 17, Business & Commerce Code; and<br />
<br />
(2) entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller.<br />
<br />
(e) Subsection (d) does not limit the purchaser’s remedy against the seller for other false, misleading, or deceptive acts or practices actionable in a suit brought under Subchapter E, Chapter 17, Business & Commerce Code.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.094 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.070 PROP. Seller’s Disclosure of Tax Payments and Insurance Coverage<br />
<br />
(a) Before an executory contract is signed by the purchaser, the seller shall provide the purchaser with:<br />
<br />
(1) a tax certificate from the collector for each taxing unit that collects taxes due on the property as provided by Section 31.08, Tax Code; and<br />
<br />
(2) a legible copy of any insurance policy, binder, or other evidence relating to the property that indicates:<br />
<br />
(A) the name of the insurer and the insured;<br />
<br />
(B) a description of the property insured; and<br />
<br />
(C) the amount for which the property is insured.<br />
<br />
(b) The seller’s failure to provide information required by this section:<br />
<br />
(1) is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Business & Commerce Code, and is actionable in a public or private suit brought under Subchapter E, Chapter 17, Business & Commerce Code; and<br />
<br />
(2) entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller.<br />
<br />
(c) Subsection (b) does not limit the purchaser’s remedy against the seller for other false, misleading, or deceptive acts or practices actionable in a suit brought under Subchapter E, Chapter 17, Business & Commerce Code.<br />
<br />
(d) If the executory contract is recorded, the seller is not required to continue insuring the property.<br />
<br />
Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 4, eff. September 1, 2015.<br />
<br />
§ 5.071 PROP. Seller’s Disclosure of Financing Terms<br />
<br />
Before an executory contract is signed by the purchaser, the seller shall provide to the purchaser a written statement that specifies:<br />
<br />
(1) the purchase price of the property;<br />
<br />
(2) the interest rate charged under the contract;<br />
<br />
(3) the dollar amount, or an estimate of the dollar amount if the interest rate is variable, of the interest charged for the term of the contract;<br />
<br />
(4) the total amount of principal and interest to be paid under the contract;<br />
<br />
(5) the late charge, if any, that may be assessed under the contract; and<br />
<br />
(6) the fact that the seller may not charge a prepayment penalty or any similar fee if the purchaser elects to pay the entire amount due under the contract before the scheduled payment date under the contract.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.095 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.072 PROP. Oral Agreements Prohibited<br />
<br />
(a) An executory contract is not enforceable unless the contract is in writing and signed by the party to be bound or by that party’s authorized representative.<br />
<br />
(b) The rights and obligations of the parties to a contract are determined solely from the written contract, and any prior oral agreements between the parties are superseded by and merged into the contract.<br />
<br />
(c) An executory contract may not be varied by any oral agreements or discussions that occur before or contemporaneously with the execution of the contract.<br />
<br />
(d) The seller shall include in a separate document or in a provision of the contract a statement printed in 14-point boldfaced type or 14-point uppercase typewritten letters that reads substantially similar to the following:<br />
<br />
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.<br />
<br />
____________________________<br />
<br />
____________________________<br />
<br />
(Date)<br />
<br />
(Signature of Seller)<br />
<br />
____________________________<br />
<br />
____________________________<br />
<br />
(Date)<br />
<br />
(Signature of Purchaser)<br />
<br />
(e) The seller’s failure to provide the notice required by this section:<br />
<br />
(1) is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Business & Commerce Code, and is actionable in a public or private suit brought under Subchapter E, Chapter 17, Business & Commerce Code; and<br />
<br />
(2) entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller.<br />
<br />
(f) Subsection (e) does not limit the purchaser’s remedy against the seller for other false, misleading, or deceptive acts or practices actionable in a suit brought under Subchapter E, Chapter 17, Business & Commerce Code.<br />
<br />
Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.073 PROP. Contract Terms, Certain Waivers Prohibited<br />
<br />
(a) A seller may not include as a term of the executory contract a provision that:<br />
<br />
(1) imposes an additional late-payment fee that exceeds the lesser of:<br />
<br />
(A) eight percent of the monthly payment under the contract; or<br />
<br />
(B) the actual administrative cost of processing the late payment;<br />
<br />
(2) prohibits the purchaser from pledging the purchaser’s interest in the property as security to obtain a loan to place improvements, including utility improvements or fire protection improvements, on the property;<br />
<br />
(3) imposes a prepayment penalty or any similar fee if the purchaser elects to pay the entire amount due under the contract before the scheduled payment date under the contract;<br />
<br />
(4) forfeits an option fee or other option payment paid under the contract for a late payment; or<br />
<br />
(5) increases the purchase price, imposes a fee or charge of any type, or otherwise penalizes a purchaser leasing property with an option to buy the property for requesting repairs or exercising any other right under Chapter 92.<br />
<br />
(b) A provision of the executory contract that purports to waive a right or exempt a party from a liability or duty under this subchapter is void.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.096 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 4, eff. September 1, 2005.<br />
<br />
§ 5.074 PROP. Purchaser’s Right to Cancel Contract Without Cause<br />
<br />
(a) In addition to other rights or remedies provided by law, the purchaser may cancel and rescind an executory contract for any reason by sending by telegram or certified or registered mail, return receipt requested, or by delivering in person a signed, written notice of cancellation to the seller not later than the 14th day after the date of the contract.<br />
<br />
(b) If the purchaser cancels the contract as provided by Subsection (a), the seller shall, not later than the 10th day after the date the seller receives the purchaser’s notice of cancellation:<br />
<br />
(1) return to the purchaser the executed contract and any property exchanged or payments made by the purchaser under the contract; and<br />
<br />
(2) cancel any security interest arising out of the contract.<br />
<br />
(c) The seller shall include in immediate proximity to the space reserved in the executory contract for the purchaser’s signature a statement printed in 14-point boldface type or 14-point uppercase typewritten letters that reads substantially similar to the following:<br />
<br />
YOU, THE PURCHASER, MAY CANCEL THIS CONTRACT AT ANY TIME DURING THE NEXT TWO WEEKS. THE DEADLINE FOR CANCELING THE CONTRACT IS (date). THE ATTACHED NOTICE OF CANCELLATION EXPLAINS THIS RIGHT.<br />
<br />
(d) The seller shall provide a notice of cancellation form to the purchaser at the time the purchaser signs the executory contract that is printed in 14-point boldface type or 14-point uppercase typewritten letters and that reads substantially similar to the following:<br />
<br />
(date of contract)<br />
<br />
NOTICE OF CANCELLATION<br />
<br />
YOU MAY CANCEL THE EXECUTORY CONTRACT FOR ANY REASON WITHOUT ANY PENALTY OR OBLIGATION BY (date).<br />
<br />
(1) YOU MUST SEND BY TELEGRAM OR CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, OR DELIVER IN PERSON A SIGNED AND DATED COPY OF THIS CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE TO (Name of Seller) AT (Seller’s Address) BY (date).<br />
<br />
(2) THE SELLER SHALL, NOT LATER THAN THE 10TH DAY AFTER THE DATE THE SELLER RECEIVES YOUR CANCELLATION NOTICE:<br />
<br />
(A) RETURN THE EXECUTED CONTRACT AND ANY PROPERTY EXCHANGED OR PAYMENTS MADE BY YOU UNDER THE CONTRACT; AND<br />
<br />
(B) CANCEL ANY SECURITY INTEREST ARISING OUT OF THE CONTRACT.<br />
<br />
I ACKNOWLEDGE RECEIPT OF THIS NOTICE OF CANCELLATION FORM.<br />
<br />
_________________________<br />
<br />
_________________________<br />
<br />
(Date) (Purchaser’s Signature)<br />
<br />
I HEREBY CANCEL THIS CONTRACT.<br />
<br />
_________________________<br />
<br />
_________________________<br />
<br />
(Date) (Purchaser’s Signature)<br />
<br />
(e) The seller may not request the purchaser to sign a waiver of receipt of the notice of cancellation form required by this section.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.097 by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.075 PROP. Purchaser’s Right to Pledge Interest in Property on Contracts Entered Into Before September 1, 2001<br />
<br />
(a) On an executory contract entered into before September 1, 2001 , a purchaser may pledge the interest in the property, which accrues pursuant to Section 5.066, only to obtain a loan for improving the safety of the property or any improvements on the property.<br />
<br />
(b) Loans that improve the safety of the property and improvements on the property include loans for:<br />
<br />
(1) improving or connecting a residence to water service;<br />
<br />
(2) improving or connecting a residence to a wastewater system;<br />
<br />
(3) building or improving a septic system;<br />
<br />
(4) structural improvements in the residence; and<br />
<br />
(5) improved fire protection.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.098 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.076 PROP. Recording Requirements<br />
<br />
(a) Except as provided by Subsection (b), the seller shall record the executory contract, including the attached disclosure statement required by Section 5.069, as prescribed by Title 3 on or before the 30th day after the date the contract is executed.<br />
<br />
(b) Section 12.002(c) does not apply to an executory contract filed for record under this section.<br />
<br />
(c) If the executory contract is terminated for any reason, the seller shall record the instrument that terminates the contract.<br />
<br />
(d) The county clerk shall collect the filing fee prescribed by Section 118.011, Local Government Code.<br />
<br />
(e) A seller who violates this section is liable to the purchaser in the same manner and for the same amount as a seller who violates Section 5.079 is liable to a purchaser, except the damages may not exceed $500 for each calendar year of noncompliance. This subsection does not limit or affect any other rights or remedies a purchaser has under other law.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.099 and amended Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 5, eff. September 1, 2015.<br />
<br />
§ 5.077 PROP. Annual Accounting Statement<br />
<br />
(a) The seller shall provide the purchaser with an annual statement in January of each year for the term of the executory contract. If the seller mails the statement to the purchaser, the statement must be postmarked not later than January 31.<br />
<br />
(b) The statement must include the following information:<br />
<br />
(1) the amount paid under the contract;<br />
<br />
(2) the remaining amount owed under the contract;<br />
<br />
(3) the number of payments remaining under the contract;<br />
<br />
(4) the amounts paid to taxing authorities on the purchaser’s behalf if collected by the seller;<br />
<br />
(5) the amounts paid to insure the property on the purchaser’s behalf if collected by the seller;<br />
<br />
(6) if the property has been damaged and the seller has received insurance proceeds, an accounting of the proceeds applied to the property; and<br />
<br />
(7) if the seller has changed insurance coverage, a legible copy of the current policy, binder, or other evidence that satisfies the requirements of Section 5.070(a)(2).<br />
<br />
(c) A seller who conducts less than two transactions in a 12-month period under this section who fails to comply with Subsection (a) is liable to the purchaser for:<br />
<br />
(1) liquidated damages in the amount of $100 for each annual statement the seller fails to provide to the purchaser within the time required by Subsection (a); and<br />
<br />
(2) reasonable attorney’s fees.<br />
<br />
(d) A seller who conducts two or more transactions in a 12-month period under this section who fails to comply with Subsection (a) is liable to the purchaser for:<br />
<br />
(1) liquidated damages in the amount of $250 a day for each day after January 31 that the seller fails to provide the purchaser with the statement, but not to exceed the fair market value of the property; and<br />
<br />
(2) reasonable attorney’s fees.<br />
<br />
(e) The requirements of this section continue to apply after a purchaser obtains title to the property by conversion or any other process.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.100 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 5, eff. September 1, 2005.<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 6, eff. September 1, 2015.<br />
<br />
§ 5.078 PROP. Disposition of Insurance Proceeds<br />
<br />
(a) The named insured under an insurance policy, binder, or other coverage relating to property subject to an executory contract for the conveyance of real property shall inform the insurer, not later than the 10th day after the date the coverage is obtained or the contract executed, whichever is later, of:<br />
<br />
(1) the executory contract for conveyance and the term of the contract; and<br />
<br />
(2) the name and address of the other party to the contract.<br />
<br />
(b) An insurer who disburses proceeds under an insurance policy, binder, or other coverage relating to property that has been damaged shall issue the proceeds jointly to the purchaser and the seller designated in the contract.<br />
<br />
(c) If proceeds under an insurance policy, binder, or other coverage are disbursed, the purchaser and seller shall ensure that the proceeds are used to repair, remedy, or improve the condition on the property.<br />
<br />
(d) The failure of a seller or purchaser to comply with Subsection (c) is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Business & Commerce Code, and is actionable in a public or private suit brought under Subchapter E, Chapter 17, Business & Commerce Code.<br />
<br />
(e) Subsection (d) does not limit either party’s remedy for other false, misleading, or deceptive acts or practices actionable in a suit brought under Subchapter E, Chapter 17, Business & Commerce Code.<br />
<br />
Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.079 PROP. Title Transfer<br />
<br />
(a) A recorded executory contract shall be the same as a deed with a vendor’s lien. The vendor’s lien is for the amount of the unpaid contract price, less any lawful deductions, and may be enforced by foreclosure sale under Section 5.066 or by judicial foreclosure. A general warranty is implied unless otherwise limited by the recorded executory contract. If an executory contract has not been recorded or converted under Section 5.081, the seller shall transfer recorded, legal title of the property covered by the executory contract to the purchaser not later than the 30th day after the date the seller receives the purchaser’s final payment due under the contract.<br />
<br />
(b) A seller who violates Subsection (a) is liable to the purchaser for:<br />
<br />
(1) liquidated damages in the amount of:<br />
<br />
(A) $250 a day for each day the seller fails to transfer the title to the purchaser during the period that begins the 31st day and ends the 90th day after the date the seller receives the purchaser’s final payment due under the contract; and<br />
<br />
(B) $500 a day for each day the seller fails to transfer title to the purchaser after the 90th day after the date the seller receives the purchaser’s final payment due under the contract; and<br />
<br />
(2) reasonable attorney’s fees.<br />
<br />
(c) If a person to whom a seller’s property interest passes by will or intestate succession is required to obtain a court order to clarify the person’s status as an heir or to clarify the status of the seller or the property before the person may convey good and indefeasible title to the property, the court in which the action is pending may waive payment of the liquidated damages and attorney’s fees under Subsection (b) if the court finds that the person is pursuing the action to establish good and indefeasible title with reasonable diligence.<br />
<br />
(d) In this section, “seller” includes a successor, assignee, personal representative, executor, or administrator of the seller.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.102 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 7, eff. September 1, 2015.<br />
<br />
§ 5.080 PROP. Liability for Disclosures<br />
<br />
For purposes of this subchapter, a disclosure required by this subchapter that is made by a seller’s agent is a disclosure made by the seller.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.103 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.081 PROP. Right to Convert Contract<br />
<br />
(a) A purchaser, at any time and without paying penalties or charges of any kind, is entitled to convert the purchaser’s interest in property under an executory contract into recorded, legal title in accordance with this section, regardless of whether the seller has recorded the executory contract.<br />
<br />
(b) If the purchaser tenders to the seller an amount of money equal to the balance of the total amount owed by the purchaser to the seller under the executory contract, the seller shall transfer to the purchaser recorded, legal title of the property covered by the contract.<br />
<br />
(c) Subject to Subsection (d), if the purchaser delivers to the seller of property covered by an executory contract a promissory note that is equal in amount to the balance of the total amount owed by the purchaser to the seller under the contract and that contains the same interest rate, due dates, and late fees as the contract:<br />
<br />
(1) the seller shall execute a deed containing any warranties required by the contract and conveying to the purchaser recorded, legal title of the property; and<br />
<br />
(2) the purchaser shall simultaneously execute a deed of trust that:<br />
<br />
(A) contains the same terms as the contract regarding the purchaser’s and seller’s duties concerning the property;<br />
<br />
(B) secures the purchaser’s payment and performance under the promissory note and deed of trust; and<br />
<br />
(C) conveys the property to the trustee, in trust, and confers on the trustee the power to sell the property if the purchaser defaults on the promissory note or the terms of the deed of trust.<br />
<br />
(d) On or before the 10th day after the date the seller receives a promissory note under Subsection (c) that substantially complies with that subsection, the seller shall:<br />
<br />
(1) deliver to the purchaser a written explanation that legally justifies why the seller refuses to convert the purchaser’s interest into recorded, legal title under Subsection (c); or<br />
<br />
(2) communicate with the purchaser to schedule a mutually agreeable day and time to execute the deed and deed of trust under Subsection (c).<br />
<br />
(e) A seller who violates this section is liable to the purchaser in the same manner and amount as a seller who violates Section 5.079 is liable to a purchaser. This subsection does not limit or affect any other rights or remedies a purchaser has under other law.<br />
<br />
(f) On the last date that all of the conveyances described by Subsections (b) and (c) are executed, the executory contract:<br />
<br />
(1) is considered completed; and<br />
<br />
(2) has no further effect.<br />
<br />
(g) The appropriate use of forms published by the Texas Real Estate Commission for transactions described by this section constitutes compliance with this section.<br />
<br />
(h) This section may not be construed to limit the purchaser’s interest in the property established by other law, if any, or any other rights of the purchaser under this subchapter.<br />
<br />
Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 6, eff. September 1, 2005.<br />
<br />
Amended by:<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 8, eff. September 1, 2015.<br />
<br />
§ 5.082 PROP. Request for Balance and Trustee<br />
<br />
(a) A purchaser under an executory contract, on written request, is entitled to receive the following information from the seller:<br />
<br />
(1) as of the date of the request or another date specified by the purchaser, the amount owed by the purchaser under the contract; and<br />
<br />
(2) if applicable, the name and address of the seller’s desired trustee for a deed of trust to be executed under Section 5.081.<br />
<br />
(b) On or before the 10th day after the date the seller receives from the purchaser a written request for information described by Subsection (a), the seller shall provide to the purchaser a written statement of the requested information.<br />
<br />
(c) If the seller does not timely respond to a request made under this section, the purchaser may:<br />
<br />
(1) determine or pay the amount owed under the contract, including determining the amount necessary for a promissory note under Section 5.081; and<br />
<br />
(2) if applicable, select a trustee for a deed of trust under Section 5.081.<br />
<br />
(d) For purposes of Subsection (c)(2), a purchaser must select a trustee that lives or has a place of business in the same county where the property covered by the executory contract is located.<br />
<br />
(e) Not later than the 20th day after the date a seller receives notice of an amount determined by a purchaser under Subsection (c)(1), the seller may contest that amount by sending a written objection to the purchaser. An objection under this subsection must:<br />
<br />
(1) be sent to the purchaser by regular and certified mail;<br />
<br />
(2) include the amount the seller claims is the amount owed under the contract; and<br />
<br />
(3) be based on written records kept by the seller or the seller’s agent that were maintained and regularly updated for the entire term of the executory contract.<br />
<br />
Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 6, eff. September 1, 2005.<br />
<br />
§ 5.083 PROP. Right to Cancel Contract for Improper Platting<br />
<br />
(a) Except as provided by Subsection (c), in addition to other rights or remedies provided by law, the purchaser may cancel and rescind an executory contract at any time if the purchaser learns that the seller has not properly subdivided or platted the property that is covered by the contract in accordance with state and local law. A purchaser canceling and rescinding a contract under this subsection must:<br />
<br />
(1) deliver a signed, written notice of the cancellation and rescission to the seller in person; or<br />
<br />
(2) send a signed, written notice of the cancellation and rescission to the seller by telegram or certified or registered mail, return receipt requested.<br />
<br />
(b) If the purchaser cancels the contract as provided under Subsection (a), the seller, not later than the 10th day after the date the seller receives the notice of cancellation and rescission, shall:<br />
<br />
(1) deliver in person or send by telegram or certified or registered mail, return receipt requested, to the purchaser a signed, written notice that the seller intends to subdivide or plat the property properly; or<br />
<br />
(2) return to the purchaser all payments of any kind made to the seller under the contract and reimburse the purchaser for:<br />
<br />
(A) any payments the purchaser made to a taxing authority for the property; and<br />
<br />
(B) the value of any improvements made to the property by the purchaser.<br />
<br />
(c) A purchaser may not exercise the purchaser’s right to cancel and rescind an executory contract under this section if, on or before the 90th day after the date the purchaser receives the seller’s notice under Subsection (b)(1), the seller:<br />
<br />
(1) properly subdivides or plats the property; and<br />
<br />
(2) delivers in person or sends by telegram or certified or registered mail, return receipt requested, to the purchaser a signed, written notice evidencing that the property has been subdivided or platted in accordance with state and local law.<br />
<br />
(d) The seller may not terminate the purchaser’s possession of the property covered by the contract being canceled and rescinded before the seller pays the purchaser any money to which the purchaser is entitled under Subsection (b).<br />
<br />
Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 6, eff. September 1, 2005.<br />
<br />
§ 5.084 PROP. Right to Deduct<br />
<br />
If a seller is liable to a purchaser under this subchapter, the purchaser, without taking judicial action, may deduct the amount owed to the purchaser by the seller from any amounts owed to the seller by the purchaser under the terms of an executory contract.<br />
<br />
Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 6, eff. September 1, 2005.<br />
<br />
§ 5.085 PROP. Fee Simple Title Required; Maintenance of Fee Simple Title<br />
<br />
(a) A potential seller may not execute an executory contract with a potential purchaser if the seller does not own the property in fee simple free from any liens or other encumbrances.<br />
<br />
(b) Except as provided by this subsection, a seller, or the seller’s heirs or assigns, must maintain fee simple title free from any liens or other encumbrances to property covered by an executory contract for the entire duration of the contract. This subsection does not apply to a lien or encumbrance placed on the property that is:<br />
<br />
(1) placed on the property because of the conduct of the purchaser;<br />
<br />
(2) agreed to by the purchaser as a condition of a loan obtained to place improvements on the property, including utility or fire protection improvements; or<br />
<br />
(3) placed on the property by the seller prior to the execution of the contract in exchange for a loan used only to purchase the property if:<br />
<br />
(A) the seller, not later than the third day before the date the contract is executed, notifies the purchaser in a separate written disclosure:<br />
<br />
(i) of the name, address, and phone number of the lienholder or, if applicable, servicer of the loan;<br />
<br />
(ii) of the loan number and outstanding balance of the loan;<br />
<br />
(iii) of the monthly payments due on the loan and the due date of those payments; and<br />
<br />
(iv) in 14-point type that, if the seller fails to make timely payments to the lienholder, the lienholder may attempt to collect the debt by foreclosing on the lien and selling the property at a foreclosure sale;<br />
<br />
(B) the lien:<br />
<br />
(i) is attached only to the property sold to the purchaser under the contract; and<br />
<br />
(ii) secures indebtedness that, at no time, is or will be greater in amount than the amount of the total outstanding balance owed by the purchaser under the executory contract;<br />
<br />
(C) the lienholder:<br />
<br />
(i) does not prohibit the property from being encumbered by an executory contract; and<br />
<br />
(ii) consents to verify the status of the loan on request of the purchaser and to accept payments directly from the purchaser if the seller defaults on the loan; and<br />
<br />
(D) the following covenants are placed in the executory contract:<br />
<br />
(i) a covenant that obligates the seller to make timely payments on the loan and to give monthly statements to the purchaser reflecting the amount paid to the lienholder, the date the lienholder receives the payment, and the information described by Paragraph (A);<br />
<br />
(ii) a covenant that obligates the seller, not later than the third day the seller receives or has actual knowledge of a document or an event described by this subparagraph, to notify the purchaser in writing in 14-point type that the seller has been sent a notice of default, notice of acceleration, or notice of foreclosure or has been sued in connection with a lien on the property and to attach a copy of all related documents received to the written notice; and<br />
<br />
(iii) a covenant that warrants that if the seller does not make timely payments on the loan or any other indebtedness secured by the property, the purchaser may, without notice, cure any deficiency with a lienholder directly and deduct from the total outstanding balance owed by the purchaser under the executory contract, without the necessity of judicial action, 150 percent of any amount paid to the lienholder.<br />
<br />
(c) A violation of this section:<br />
<br />
(1) is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Business & Commerce Code, and is actionable in a public or private suit brought under Subchapter E, Chapter 17, Business & Commerce Code; and<br />
<br />
(2) in addition to other rights or remedies provided by law, entitles the purchaser to cancel and rescind the executory contract and receive from the seller:<br />
<br />
(A) the return of all payments of any kind made to the seller under the contract; and<br />
<br />
(B) reimbursement for:<br />
<br />
(i) any payments the purchaser made to a taxing authority for the property; and<br />
<br />
(ii) the value of any improvements made to the property by the purchaser.<br />
<br />
(d) A seller is not liable under this section if:<br />
<br />
(1) a lien is placed on the property by a person other than the seller; and<br />
<br />
(2) not later than the 30th day after the date the seller receives notice of the lien, the seller takes all steps necessary to remove the lien and has the lien removed from the property.<br />
<br />
Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 6, eff. September 1, 2005.<br />
<br />
TEXAS CASE LAW<br />
<br />
Texas legislature strictly regulates contracts for deed by statute; this can be seen in PabloMartinez v. Doccarett, 865 S.W.2d 161 and Holcombe v. Lorino, 124 Tex. 446 (Tex. 1935)
© Copyright 1997-2016 US Legal, Inc.
Legal definition
Agreement or Contract for Deed a/k/a Land or Executory Contract - Nonresidential
TEXAS STATUTES
PROPERTY CODE
TITLE 2. CONVEYANCES
CHAPTER 5. CONVEYANCES
SUBCHAPTER D. EXECUTORY CONTRACT FOR CONVEYANCE
§ 5.061 PROP. Definition
In this subchapter, "default" means the failure to:
(1) make a timely payment; or
(2) comply with a term of an executory contract.
Added by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.065 and amended by Act 2001, 77th Leg., ch. 693, Sec. 1, Sept. 1, 2001.
§ 5.062 PROP. Applicability
(a) This subchapter applies only to a transaction involving an executory contract for conveyance of real property used or to be used as the purchaser's residence or as the residence of a person related to the purchaser within the second degree by consanguinity or affinity, as determined under Chapter 573, Government Code. For purposes of this subchapter, and only for the purposes of this subchapter:
(1) a lot measuring one acre or less is presumed to be residential property; and
(2) an option to purchase real property that includes or is combined or executed concurrently with a residential lease agreement, together with the lease, is considered an executory contract for conveyance of real property.
(b) This subchapter does not apply to the following transactions under an executory contract:
(1) the sale of state land; or
(2) a sale of land by:
(A) the Veterans' Land Board;
(B) this state or a political subdivision of this state; or
(C) an instrumentality, public corporation, or other entity created to act on behalf of this state or a political subdivision of this state, including an entity created under Chapter 303, 392, or 394, Local Government Code.
(c) This subchapter does not apply to an executory contract that provides for the delivery of a deed from the seller to the purchaser within 180 days of the date of the final execution of the executory contract.
(d) Section 5.066 and Sections 5.068-5.080 do not apply to a transaction involving an executory contract for conveyance if the purchaser of the property:
(1) is related to the seller of the property within the second degree by consanguinity or affinity, as determined under Chapter 573, Government Code; and
(2) has waived the applicability of those sections in a written agreement.
(e) Sections 5.066, 5.067, 5.071, 5.075, 5.079, 5.081, and 5.082 do not apply to an executory contract described by Subsection (a)(2).
(f) Notwithstanding any other provision of this subchapter, only the following sections apply to an executory contract described by Subsection (a)(2) if the term of the contract is three years or less and the purchaser and seller, or the purchaser's or seller's assignee, agent, or affiliate, have not been parties to an executory contract to purchase the property covered by the executory contract for longer than three years:
(1) Sections 5.063-5.065;
(2) Section 5.073, except for Section 5.073(a)(2); and
(3) Sections 5.083 and 5.085.
(g) Except as provided by Subsection (b), if Subsection (f) conflicts with another provision of this subchapter, Subsection (f) prevails.
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.091 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.
Amended by:
Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 2, eff. September 1, 2005.
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 1, eff. September 1, 2015.
§ 5.0621 PROP. Contruction With Other Law
(a) Except as provided by Subsection (b), the provisions of this subchapter and Chapter 92 apply to the portion of an executory contract described by Section 5.062(a)(2) that is a residential lease agreement.
(b) After a tenant exercises an option to purchase leased property under a residential lease described by Subsection (a), Chapter 92 no longer applies to the lease.
Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 3, eff. September 1, 2005.
§ 5.063 PROP. Notice
(a) Notice under Section 5.064 must be in writing and must be delivered by registered or certified mail, return receipt requested. The notice must be conspicuous and printed in 14-point boldface type or 14-point uppercase typewritten letters, and must include on a separate page the statement:
NOTICE
YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO BUY YOUR PROPERTY. UNLESS YOU TAKE THE ACTION SPECIFIED IN THIS NOTICE BY (date) THE SELLER HAS THE RIGHT TO TAKE POSSESSION OF YOUR PROPERTY.
(b) The notice must also:
(1) identify and explain the remedy the seller intends to enforce;
(2) if the purchaser has failed to make a timely payment, specify:
(A) the delinquent amount, itemized into principal and interest;
(B) any additional charges claimed, such as late charges or attorney's fees; and
(C) the period to which the delinquency and additional charges relate; and
(3) if the purchaser has failed to comply with a term of the contract, identify the term violated and the action required to cure the violation.
(c) Notice by mail is given when it is mailed to the purchaser's residence or place of business. The affidavit of a person knowledgeable of the facts to the effect that notice was given is prima facie evidence of notice in an action involving a subsequent bona fide purchaser for value if the purchaser is not in possession of the real property and if the stated time to avoid the forfeiture has expired. A bona fide subsequent purchaser for value who relies upon the affidavit under this subsection shall take title free and clear of the contract.
Acts 1983, 68th Leg., p. 3485, ch. 576, Sec. 1, eff. Jan. 1, 1984. Amended by Acts 1993, 73rd Leg., ch. 444, Sec. 1, eff. Sept. 1, 1993; Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.062 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.
§ 5.064 PROP. Seller's Remedies on Default
A seller may enforce the remedy of rescission or of forfeiture and acceleration against a purchaser in default under an executory contract for conveyance of real property only if:
(1) the seller notifies the purchaser of:
(A) the seller's intent to enforce a remedy under this section; and
(B) the purchaser's right to cure the default within the 30-day period described by Section 5.065;
(2) the purchaser fails to cure the default within the 30-day period described by Section 5.065;
(3) Section 5.066 does not apply; and
(4) the contract has not been recorded in the county in which the property is located.
Acts 1983, 68th Leg., p. 3484, ch. 576, Sec. 1, eff. Jan. 1, 1984. Amended by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.061 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001. Amended by Acts 2003, 78th Leg., ch. 959, Sec. 1, eff. Sept. 1, 2003.
Amended by:
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 2, eff. September 1, 2015.
§ 5.065 PROP. Right to Cure Default
Notwithstanding an agreement to the contrary, a purchaser in default under an executory contract for the conveyance of real property may avoid the enforcement of a remedy described by Section 5.064 by complying with the terms of the contract on or before the 30th day after the date notice is given under
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that section.<br />
<br />
Acts 1983, 68th Leg., p. 3485, ch. 576, Sec. 1, eff. Jan. 1, 1984. Amended by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.063 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001. Amended by Acts 2003, 78th Leg., ch. 959, Sec. 2, eff. Sept. 1, 2003.<br />
<br />
§ 5.066 PROP. Equity Protection; Sale of Property<br />
<br />
(a) If a purchaser defaults after the purchaser has paid 40 percent or more of the amount due or the equivalent of 48 monthly payments under the executory contract or, regardless of the amount the purchaser has paid, the executory contract has been recorded, the seller is granted the power to sell, through a trustee designated by the seller, the purchaser’s interest in the property as provided by this section. The seller may not enforce the remedy of rescission or of forfeiture and acceleration after the contract has been recorded.<br />
<br />
(b) The seller shall notify a purchaser of a default under the contract and allow the purchaser at least 60 days after the date notice is given to cure the default. The notice must be provided as prescribed by Section 5.063 except that the notice must substitute the following statement:<br />
<br />
NOTICE<br />
<br />
YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO BUY YOUR PROPERTY. UNLESS YOU TAKE THE ACTION SPECIFIED IN THIS NOTICE BY (date) A TRUSTEE DESIGNATED BY THE SELLER HAS THE RIGHT TO SELL YOUR PROPERTY AT A PUBLIC AUCTION.<br />
<br />
(c) The trustee or a substitute trustee designated by the seller must post, file, and serve a notice of sale and the county clerk shall record and maintain the notice of sale as prescribed by Section 51.002. A notice of sale is not valid unless it is given after the period to cure has expired.<br />
<br />
(d) The trustee or a substitute trustee designated by the seller must conduct the sale as prescribed by Section 51.002. The seller must:<br />
<br />
(1) convey to a purchaser at a sale conducted under this section fee simple title to the real property; and<br />
<br />
(2) warrant that the property is free from any encumbrance.<br />
<br />
(e) The remaining balance of the amount due under the executory contract is the debt for purposes of a sale under this section. If the proceeds of the sale exceed the debt amount, the seller shall disburse the excess funds to the purchaser under the executory contract. If the proceeds of the sale are insufficient to extinguish the debt amount, the seller’s right to recover the resulting deficiency is subject to Sections 51.003, 51.004, and 51.005 unless a provision of the executory contract releases the purchaser under the contract from liability.<br />
<br />
(f) The affidavit of a person knowledgeable of the facts that states that the notice was given and the sale was conducted as provided by this section is prima facie evidence of those facts. A purchaser for value who relies on an affidavit under this subsection acquires title to the property free and clear of the executory contract.<br />
<br />
(g) If a purchaser defaults before the purchaser has paid 40 percent of the amount due or the equivalent of 48 monthly payments under the executory contract, the seller may enforce the remedy of rescission or of forfeiture and acceleration of the indebtedness if the seller complies with the notice requirements of Sections 5.063 and 5.064.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.101 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 3, eff. September 1, 2015.<br />
<br />
§ 5.067 PROP. Placement of Lien for Utility Service<br />
<br />
Notwithstanding any terms of a contract to the contrary, the placement of a lien for the reasonable value of improvements to residential real estate for purposes of providing utility service to the property shall not constitute a default under the terms of an executory contract for the purchase of the real property.<br />
<br />
Added by Acts 1991, 72nd Leg., ch. 743, Sec. 1, eff. Sept. 1, 1991. Amended by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.064 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.068 PROP. Foreign Language Requirement<br />
<br />
If the negotiations that precede the execution of an executory contract are conducted primarily in a language other than English, the seller shall provide a copy in that language of all written documents relating to the transaction, including the contract, disclosure notices, annual accounting statements, and a notice of default required by this subchapter.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.093 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.069 PROP. Seller’s Disclosure of Property Condition<br />
<br />
(a) Before an executory contract is signed by the purchaser, the seller shall provide the purchaser with:<br />
<br />
(1) a survey, which was completed within the past year, or plat of a current survey of the real property;<br />
<br />
(2) a legible copy of any document that describes an encumbrance or other claim, including a restrictive covenant or easement, that affects title to the real property; and<br />
<br />
(3) a written notice, which must be attached to the contract, informing the purchaser of the condition of the property that must, at a minimum, be executed by the seller and purchaser and read substantially similar to the following:<br />
<br />
WARNING<br />
<br />
IF ANY OF THE ITEMS BELOW HAVE NOT BEEN CHECKED, YOU MAY NOT BE ABLE TO LIVE ON THE PROPERTY.<br />
<br />
SELLER’S DISCLOSURE NOTICE<br />
<br />
CONCERNING THE PROPERTY AT (street address or legal description and city)<br />
<br />
THIS DOCUMENT STATES CERTAIN APPLICABLE FACTS ABOUT THE PROPERTY YOU ARE CONSIDERING PURCHASING.<br />
<br />
CHECK ALL THE ITEMS THAT ARE APPLICABLE OR TRUE:<br />
<br />
_____ The property is in a recorded subdivision.<br />
<br />
_____ The property has water service that provides potable water.<br />
<br />
_____ The property has sewer service.<br />
<br />
_____ The property has been approved by the appropriate municipal, county, or state agency for installation of a septic system.<br />
<br />
_____ The property has electric service.<br />
<br />
_____ The property is not in a floodplain.<br />
<br />
_____ The roads to the boundaries of the property are paved and maintained by:<br />
<br />
_____ the seller;<br />
<br />
_____ the owner of the property on which the road exists;<br />
<br />
_____ the municipality;<br />
<br />
_____ the county; or<br />
<br />
_____ the state.<br />
<br />
_____ No individual or entity other than the seller:<br />
<br />
(1) owns the property;<br />
<br />
(2) has a claim of ownership to the property; or<br />
<br />
(3) has an interest in the property.<br />
<br />
_____ No individual or entity has a lien filed against the property.<br />
<br />
_____ There are no restrictive covenants, easements, or other title exceptions or encumbrances that prohibit construction of a house on the property.<br />
<br />
NOTICE: SELLER ADVISES PURCHASER TO:<br />
<br />
(1) OBTAIN A TITLE ABSTRACT OR TITLE COMMITMENT COVERING<br />
<br />
THE PROPERTY AND HAVE THE ABSTRACT OR COMMITMENT REVIEWED<br />
<br />
BY AN ATTORNEY BEFORE SIGNING A CONTRACT OF THIS TYPE; AND<br />
<br />
(2) PURCHASE AN OWNER’S POLICY OF TITLE INSURANCE<br />
<br />
COVERING THE PROPERTY.<br />
<br />
_____________________________ ______________________________<br />
<br />
(Date) (Signature of Seller)<br />
<br />
_____________________________ ______________________________<br />
<br />
(Date) (Signature of Purchaser)<br />
<br />
(b) If the property is not located in a recorded subdivision, the seller shall provide the purchaser with a separate disclosure form stating that utilities may not be available to the property until the subdivision is recorded as required by law.<br />
<br />
(c) If the seller advertises property for sale under an executory contract, the advertisement must disclose information regarding the availability of water, sewer, and electric service.<br />
<br />
(d) The seller’s failure to provide information required by this section:<br />
<br />
(1) is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Business & Commerce Code, and is actionable in a public or private suit brought under Subchapter E, Chapter 17, Business & Commerce Code; and<br />
<br />
(2) entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller.<br />
<br />
(e) Subsection (d) does not limit the purchaser’s remedy against the seller for other false, misleading, or deceptive acts or practices actionable in a suit brought under Subchapter E, Chapter 17, Business & Commerce Code.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.094 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.070 PROP. Seller’s Disclosure of Tax Payments and Insurance Coverage<br />
<br />
(a) Before an executory contract is signed by the purchaser, the seller shall provide the purchaser with:<br />
<br />
(1) a tax certificate from the collector for each taxing unit that collects taxes due on the property as provided by Section 31.08, Tax Code; and<br />
<br />
(2) a legible copy of any insurance policy, binder, or other evidence relating to the property that indicates:<br />
<br />
(A) the name of the insurer and the insured;<br />
<br />
(B) a description of the property insured; and<br />
<br />
(C) the amount for which the property is insured.<br />
<br />
(b) The seller’s failure to provide information required by this section:<br />
<br />
(1) is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Business & Commerce Code, and is actionable in a public or private suit brought under Subchapter E, Chapter 17, Business & Commerce Code; and<br />
<br />
(2) entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller.<br />
<br />
(c) Subsection (b) does not limit the purchaser’s remedy against the seller for other false, misleading, or deceptive acts or practices actionable in a suit brought under Subchapter E, Chapter 17, Business & Commerce Code.<br />
<br />
(d) If the executory contract is recorded, the seller is not required to continue insuring the property.<br />
<br />
Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 4, eff. September 1, 2015.<br />
<br />
§ 5.071 PROP. Seller’s Disclosure of Financing Terms<br />
<br />
Before an executory contract is signed by the purchaser, the seller shall provide to the purchaser a written statement that specifies:<br />
<br />
(1) the purchase price of the property;<br />
<br />
(2) the interest rate charged under the contract;<br />
<br />
(3) the dollar amount, or an estimate of the dollar amount if the interest rate is variable, of the interest charged for the term of the contract;<br />
<br />
(4) the total amount of principal and interest to be paid under the contract;<br />
<br />
(5) the late charge, if any, that may be assessed under the contract; and<br />
<br />
(6) the fact that the seller may not charge a prepayment penalty or any similar fee if the purchaser elects to pay the entire amount due under the contract before the scheduled payment date under the contract.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.095 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.072 PROP. Oral Agreements Prohibited<br />
<br />
(a) An executory contract is not enforceable unless the contract is in writing and signed by the party to be bound or by that party’s authorized representative.<br />
<br />
(b) The rights and obligations of the parties to a contract are determined solely from the written contract, and any prior oral agreements between the parties are superseded by and merged into the contract.<br />
<br />
(c) An executory contract may not be varied by any oral agreements or discussions that occur before or contemporaneously with the execution of the contract.<br />
<br />
(d) The seller shall include in a separate document or in a provision of the contract a statement printed in 14-point boldfaced type or 14-point uppercase typewritten letters that reads substantially similar to the following:<br />
<br />
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.<br />
<br />
____________________________<br />
<br />
____________________________<br />
<br />
(Date)<br />
<br />
(Signature of Seller)<br />
<br />
____________________________<br />
<br />
____________________________<br />
<br />
(Date)<br />
<br />
(Signature of Purchaser)<br />
<br />
(e) The seller’s failure to provide the notice required by this section:<br />
<br />
(1) is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Business & Commerce Code, and is actionable in a public or private suit brought under Subchapter E, Chapter 17, Business & Commerce Code; and<br />
<br />
(2) entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller.<br />
<br />
(f) Subsection (e) does not limit the purchaser’s remedy against the seller for other false, misleading, or deceptive acts or practices actionable in a suit brought under Subchapter E, Chapter 17, Business & Commerce Code.<br />
<br />
Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.073 PROP. Contract Terms, Certain Waivers Prohibited<br />
<br />
(a) A seller may not include as a term of the executory contract a provision that:<br />
<br />
(1) imposes an additional late-payment fee that exceeds the lesser of:<br />
<br />
(A) eight percent of the monthly payment under the contract; or<br />
<br />
(B) the actual administrative cost of processing the late payment;<br />
<br />
(2) prohibits the purchaser from pledging the purchaser’s interest in the property as security to obtain a loan to place improvements, including utility improvements or fire protection improvements, on the property;<br />
<br />
(3) imposes a prepayment penalty or any similar fee if the purchaser elects to pay the entire amount due under the contract before the scheduled payment date under the contract;<br />
<br />
(4) forfeits an option fee or other option payment paid under the contract for a late payment; or<br />
<br />
(5) increases the purchase price, imposes a fee or charge of any type, or otherwise penalizes a purchaser leasing property with an option to buy the property for requesting repairs or exercising any other right under Chapter 92.<br />
<br />
(b) A provision of the executory contract that purports to waive a right or exempt a party from a liability or duty under this subchapter is void.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.096 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 4, eff. September 1, 2005.<br />
<br />
§ 5.074 PROP. Purchaser’s Right to Cancel Contract Without Cause<br />
<br />
(a) In addition to other rights or remedies provided by law, the purchaser may cancel and rescind an executory contract for any reason by sending by telegram or certified or registered mail, return receipt requested, or by delivering in person a signed, written notice of cancellation to the seller not later than the 14th day after the date of the contract.<br />
<br />
(b) If the purchaser cancels the contract as provided by Subsection (a), the seller shall, not later than the 10th day after the date the seller receives the purchaser’s notice of cancellation:<br />
<br />
(1) return to the purchaser the executed contract and any property exchanged or payments made by the purchaser under the contract; and<br />
<br />
(2) cancel any security interest arising out of the contract.<br />
<br />
(c) The seller shall include in immediate proximity to the space reserved in the executory contract for the purchaser’s signature a statement printed in 14-point boldface type or 14-point uppercase typewritten letters that reads substantially similar to the following:<br />
<br />
YOU, THE PURCHASER, MAY CANCEL THIS CONTRACT AT ANY TIME DURING THE NEXT TWO WEEKS. THE DEADLINE FOR CANCELING THE CONTRACT IS (date). THE ATTACHED NOTICE OF CANCELLATION EXPLAINS THIS RIGHT.<br />
<br />
(d) The seller shall provide a notice of cancellation form to the purchaser at the time the purchaser signs the executory contract that is printed in 14-point boldface type or 14-point uppercase typewritten letters and that reads substantially similar to the following:<br />
<br />
(date of contract)<br />
<br />
NOTICE OF CANCELLATION<br />
<br />
YOU MAY CANCEL THE EXECUTORY CONTRACT FOR ANY REASON WITHOUT ANY PENALTY OR OBLIGATION BY (date).<br />
<br />
(1) YOU MUST SEND BY TELEGRAM OR CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, OR DELIVER IN PERSON A SIGNED AND DATED COPY OF THIS CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE TO (Name of Seller) AT (Seller’s Address) BY (date).<br />
<br />
(2) THE SELLER SHALL, NOT LATER THAN THE 10TH DAY AFTER THE DATE THE SELLER RECEIVES YOUR CANCELLATION NOTICE:<br />
<br />
(A) RETURN THE EXECUTED CONTRACT AND ANY PROPERTY EXCHANGED OR PAYMENTS MADE BY YOU UNDER THE CONTRACT; AND<br />
<br />
(B) CANCEL ANY SECURITY INTEREST ARISING OUT OF THE CONTRACT.<br />
<br />
I ACKNOWLEDGE RECEIPT OF THIS NOTICE OF CANCELLATION FORM.<br />
<br />
_________________________<br />
<br />
_________________________<br />
<br />
(Date) (Purchaser’s Signature)<br />
<br />
I HEREBY CANCEL THIS CONTRACT.<br />
<br />
_________________________<br />
<br />
_________________________<br />
<br />
(Date) (Purchaser’s Signature)<br />
<br />
(e) The seller may not request the purchaser to sign a waiver of receipt of the notice of cancellation form required by this section.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.097 by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.075 PROP. Purchaser’s Right to Pledge Interest in Property on Contracts Entered Into Before September 1, 2001<br />
<br />
(a) On an executory contract entered into before September 1, 2001 , a purchaser may pledge the interest in the property, which accrues pursuant to Section 5.066, only to obtain a loan for improving the safety of the property or any improvements on the property.<br />
<br />
(b) Loans that improve the safety of the property and improvements on the property include loans for:<br />
<br />
(1) improving or connecting a residence to water service;<br />
<br />
(2) improving or connecting a residence to a wastewater system;<br />
<br />
(3) building or improving a septic system;<br />
<br />
(4) structural improvements in the residence; and<br />
<br />
(5) improved fire protection.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.098 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.076 PROP. Recording Requirements<br />
<br />
(a) Except as provided by Subsection (b), the seller shall record the executory contract, including the attached disclosure statement required by Section 5.069, as prescribed by Title 3 on or before the 30th day after the date the contract is executed.<br />
<br />
(b) Section 12.002(c) does not apply to an executory contract filed for record under this section.<br />
<br />
(c) If the executory contract is terminated for any reason, the seller shall record the instrument that terminates the contract.<br />
<br />
(d) The county clerk shall collect the filing fee prescribed by Section 118.011, Local Government Code.<br />
<br />
(e) A seller who violates this section is liable to the purchaser in the same manner and for the same amount as a seller who violates Section 5.079 is liable to a purchaser, except the damages may not exceed $500 for each calendar year of noncompliance. This subsection does not limit or affect any other rights or remedies a purchaser has under other law.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.099 and amended Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 5, eff. September 1, 2015.<br />
<br />
§ 5.077 PROP. Annual Accounting Statement<br />
<br />
(a) The seller shall provide the purchaser with an annual statement in January of each year for the term of the executory contract. If the seller mails the statement to the purchaser, the statement must be postmarked not later than January 31.<br />
<br />
(b) The statement must include the following information:<br />
<br />
(1) the amount paid under the contract;<br />
<br />
(2) the remaining amount owed under the contract;<br />
<br />
(3) the number of payments remaining under the contract;<br />
<br />
(4) the amounts paid to taxing authorities on the purchaser’s behalf if collected by the seller;<br />
<br />
(5) the amounts paid to insure the property on the purchaser’s behalf if collected by the seller;<br />
<br />
(6) if the property has been damaged and the seller has received insurance proceeds, an accounting of the proceeds applied to the property; and<br />
<br />
(7) if the seller has changed insurance coverage, a legible copy of the current policy, binder, or other evidence that satisfies the requirements of Section 5.070(a)(2).<br />
<br />
(c) A seller who conducts less than two transactions in a 12-month period under this section who fails to comply with Subsection (a) is liable to the purchaser for:<br />
<br />
(1) liquidated damages in the amount of $100 for each annual statement the seller fails to provide to the purchaser within the time required by Subsection (a); and<br />
<br />
(2) reasonable attorney’s fees.<br />
<br />
(d) A seller who conducts two or more transactions in a 12-month period under this section who fails to comply with Subsection (a) is liable to the purchaser for:<br />
<br />
(1) liquidated damages in the amount of $250 a day for each day after January 31 that the seller fails to provide the purchaser with the statement, but not to exceed the fair market value of the property; and<br />
<br />
(2) reasonable attorney’s fees.<br />
<br />
(e) The requirements of this section continue to apply after a purchaser obtains title to the property by conversion or any other process.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.100 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 5, eff. September 1, 2005.<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 6, eff. September 1, 2015.<br />
<br />
§ 5.078 PROP. Disposition of Insurance Proceeds<br />
<br />
(a) The named insured under an insurance policy, binder, or other coverage relating to property subject to an executory contract for the conveyance of real property shall inform the insurer, not later than the 10th day after the date the coverage is obtained or the contract executed, whichever is later, of:<br />
<br />
(1) the executory contract for conveyance and the term of the contract; and<br />
<br />
(2) the name and address of the other party to the contract.<br />
<br />
(b) An insurer who disburses proceeds under an insurance policy, binder, or other coverage relating to property that has been damaged shall issue the proceeds jointly to the purchaser and the seller designated in the contract.<br />
<br />
(c) If proceeds under an insurance policy, binder, or other coverage are disbursed, the purchaser and seller shall ensure that the proceeds are used to repair, remedy, or improve the condition on the property.<br />
<br />
(d) The failure of a seller or purchaser to comply with Subsection (c) is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Business & Commerce Code, and is actionable in a public or private suit brought under Subchapter E, Chapter 17, Business & Commerce Code.<br />
<br />
(e) Subsection (d) does not limit either party’s remedy for other false, misleading, or deceptive acts or practices actionable in a suit brought under Subchapter E, Chapter 17, Business & Commerce Code.<br />
<br />
Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.079 PROP. Title Transfer<br />
<br />
(a) A recorded executory contract shall be the same as a deed with a vendor’s lien. The vendor’s lien is for the amount of the unpaid contract price, less any lawful deductions, and may be enforced by foreclosure sale under Section 5.066 or by judicial foreclosure. A general warranty is implied unless otherwise limited by the recorded executory contract. If an executory contract has not been recorded or converted under Section 5.081, the seller shall transfer recorded, legal title of the property covered by the executory contract to the purchaser not later than the 30th day after the date the seller receives the purchaser’s final payment due under the contract.<br />
<br />
(b) A seller who violates Subsection (a) is liable to the purchaser for:<br />
<br />
(1) liquidated damages in the amount of:<br />
<br />
(A) $250 a day for each day the seller fails to transfer the title to the purchaser during the period that begins the 31st day and ends the 90th day after the date the seller receives the purchaser’s final payment due under the contract; and<br />
<br />
(B) $500 a day for each day the seller fails to transfer title to the purchaser after the 90th day after the date the seller receives the purchaser’s final payment due under the contract; and<br />
<br />
(2) reasonable attorney’s fees.<br />
<br />
(c) If a person to whom a seller’s property interest passes by will or intestate succession is required to obtain a court order to clarify the person’s status as an heir or to clarify the status of the seller or the property before the person may convey good and indefeasible title to the property, the court in which the action is pending may waive payment of the liquidated damages and attorney’s fees under Subsection (b) if the court finds that the person is pursuing the action to establish good and indefeasible title with reasonable diligence.<br />
<br />
(d) In this section, “seller” includes a successor, assignee, personal representative, executor, or administrator of the seller.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.102 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 7, eff. September 1, 2015.<br />
<br />
§ 5.080 PROP. Liability for Disclosures<br />
<br />
For purposes of this subchapter, a disclosure required by this subchapter that is made by a seller’s agent is a disclosure made by the seller.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.103 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.081 PROP. Right to Convert Contract<br />
<br />
(a) A purchaser, at any time and without paying penalties or charges of any kind, is entitled to convert the purchaser’s interest in property under an executory contract into recorded, legal title in accordance with this section, regardless of whether the seller has recorded the executory contract.<br />
<br />
(b) If the purchaser tenders to the seller an amount of money equal to the balance of the total amount owed by the purchaser to the seller under the executory contract, the seller shall transfer to the purchaser recorded, legal title of the property covered by the contract.<br />
<br />
(c) Subject to Subsection (d), if the purchaser delivers to the seller of property covered by an executory contract a promissory note that is equal in amount to the balance of the total amount owed by the purchaser to the seller under the contract and that contains the same interest rate, due dates, and late fees as the contract:<br />
<br />
(1) the seller shall execute a deed containing any warranties required by the contract and conveying to the purchaser recorded, legal title of the property; and<br />
<br />
(2) the purchaser shall simultaneously execute a deed of trust that:<br />
<br />
(A) contains the same terms as the contract regarding the purchaser’s and seller’s duties concerning the property;<br />
<br />
(B) secures the purchaser’s payment and performance under the promissory note and deed of trust; and<br />
<br />
(C) conveys the property to the trustee, in trust, and confers on the trustee the power to sell the property if the purchaser defaults on the promissory note or the terms of the deed of trust.<br />
<br />
(d) On or before the 10th day after the date the seller receives a promissory note under Subsection (c) that substantially complies with that subsection, the seller shall:<br />
<br />
(1) deliver to the purchaser a written explanation that legally justifies why the seller refuses to convert the purchaser’s interest into recorded, legal title under Subsection (c); or<br />
<br />
(2) communicate with the purchaser to schedule a mutually agreeable day and time to execute the deed and deed of trust under Subsection (c).<br />
<br />
(e) A seller who violates this section is liable to the purchaser in the same manner and amount as a seller who violates Section 5.079 is liable to a purchaser. This subsection does not limit or affect any other rights or remedies a purchaser has under other law.<br />
<br />
(f) On the last date that all of the conveyances described by Subsections (b) and (c) are executed, the executory contract:<br />
<br />
(1) is considered completed; and<br />
<br />
(2) has no further effect.<br />
<br />
(g) The appropriate use of forms published by the Texas Real Estate Commission for transactions described by this section constitutes compliance with this section.<br />
<br />
(h) This section may not be construed to limit the purchaser’s interest in the property established by other law, if any, or any other rights of the purchaser under this subchapter.<br />
<br />
Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 6, eff. September 1, 2005.<br />
<br />
Amended by:<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 8, eff. September 1, 2015.<br />
<br />
§ 5.082 PROP. Request for Balance and Trustee<br />
<br />
(a) A purchaser under an executory contract, on written request, is entitled to receive the following information from the seller:<br />
<br />
(1) as of the date of the request or another date specified by the purchaser, the amount owed by the purchaser under the contract; and<br />
<br />
(2) if applicable, the name and address of the seller’s desired trustee for a deed of trust to be executed under Section 5.081.<br />
<br />
(b) On or before the 10th day after the date the seller receives from the purchaser a written request for information described by Subsection (a), the seller shall provide to the purchaser a written statement of the requested information.<br />
<br />
(c) If the seller does not timely respond to a request made under this section, the purchaser may:<br />
<br />
(1) determine or pay the amount owed under the contract, including determining the amount necessary for a promissory note under Section 5.081; and<br />
<br />
(2) if applicable, select a trustee for a deed of trust under Section 5.081.<br />
<br />
(d) For purposes of Subsection (c)(2), a purchaser must select a trustee that lives or has a place of business in the same county where the property covered by the executory contract is located.<br />
<br />
(e) Not later than the 20th day after the date a seller receives notice of an amount determined by a purchaser under Subsection (c)(1), the seller may contest that amount by sending a written objection to the purchaser. An objection under this subsection must:<br />
<br />
(1) be sent to the purchaser by regular and certified mail;<br />
<br />
(2) include the amount the seller claims is the amount owed under the contract; and<br />
<br />
(3) be based on written records kept by the seller or the seller’s agent that were maintained and regularly updated for the entire term of the executory contract.<br />
<br />
Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 6, eff. September 1, 2005.<br />
<br />
§ 5.083 PROP. Right to Cancel Contract for Improper Platting<br />
<br />
(a) Except as provided by Subsection (c), in addition to other rights or remedies provided by law, the purchaser may cancel and rescind an executory contract at any time if the purchaser learns that the seller has not properly subdivided or platted the property that is covered by the contract in accordance with state and local law. A purchaser canceling and rescinding a contract under this subsection must:<br />
<br />
(1) deliver a signed, written notice of the cancellation and rescission to the seller in person; or<br />
<br />
(2) send a signed, written notice of the cancellation and rescission to the seller by telegram or certified or registered mail, return receipt requested.<br />
<br />
(b) If the purchaser cancels the contract as provided under Subsection (a), the seller, not later than the 10th day after the date the seller receives the notice of cancellation and rescission, shall:<br />
<br />
(1) deliver in person or send by telegram or certified or registered mail, return receipt requested, to the purchaser a signed, written notice that the seller intends to subdivide or plat the property properly; or<br />
<br />
(2) return to the purchaser all payments of any kind made to the seller under the contract and reimburse the purchaser for:<br />
<br />
(A) any payments the purchaser made to a taxing authority for the property; and<br />
<br />
(B) the value of any improvements made to the property by the purchaser.<br />
<br />
(c) A purchaser may not exercise the purchaser’s right to cancel and rescind an executory contract under this section if, on or before the 90th day after the date the purchaser receives the seller’s notice under Subsection (b)(1), the seller:<br />
<br />
(1) properly subdivides or plats the property; and<br />
<br />
(2) delivers in person or sends by telegram or certified or registered mail, return receipt requested, to the purchaser a signed, written notice evidencing that the property has been subdivided or platted in accordance with state and local law.<br />
<br />
(d) The seller may not terminate the purchaser’s possession of the property covered by the contract being canceled and rescinded before the seller pays the purchaser any money to which the purchaser is entitled under Subsection (b).<br />
<br />
Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 6, eff. September 1, 2005.<br />
<br />
§ 5.084 PROP. Right to Deduct<br />
<br />
If a seller is liable to a purchaser under this subchapter, the purchaser, without taking judicial action, may deduct the amount owed to the purchaser by the seller from any amounts owed to the seller by the purchaser under the terms of an executory contract.<br />
<br />
Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 6, eff. September 1, 2005.<br />
<br />
§ 5.085 PROP. Fee Simple Title Required; Maintenance of Fee Simple Title<br />
<br />
(a) A potential seller may not execute an executory contract with a potential purchaser if the seller does not own the property in fee simple free from any liens or other encumbrances.<br />
<br />
(b) Except as provided by this subsection, a seller, or the seller’s heirs or assigns, must maintain fee simple title free from any liens or other encumbrances to property covered by an executory contract for the entire duration of the contract. This subsection does not apply to a lien or encumbrance placed on the property that is:<br />
<br />
(1) placed on the property because of the conduct of the purchaser;<br />
<br />
(2) agreed to by the purchaser as a condition of a loan obtained to place improvements on the property, including utility or fire protection improvements; or<br />
<br />
(3) placed on the property by the seller prior to the execution of the contract in exchange for a loan used only to purchase the property if:<br />
<br />
(A) the seller, not later than the third day before the date the contract is executed, notifies the purchaser in a separate written disclosure:<br />
<br />
(i) of the name, address, and phone number of the lienholder or, if applicable, servicer of the loan;<br />
<br />
(ii) of the loan number and outstanding balance of the loan;<br />
<br />
(iii) of the monthly payments due on the loan and the due date of those payments; and<br />
<br />
(iv) in 14-point type that, if the seller fails to make timely payments to the lienholder, the lienholder may attempt to collect the debt by foreclosing on the lien and selling the property at a foreclosure sale;<br />
<br />
(B) the lien:<br />
<br />
(i) is attached only to the property sold to the purchaser under the contract; and<br />
<br />
(ii) secures indebtedness that, at no time, is or will be greater in amount than the amount of the total outstanding balance owed by the purchaser under the executory contract;<br />
<br />
(C) the lienholder:<br />
<br />
(i) does not prohibit the property from being encumbered by an executory contract; and<br />
<br />
(ii) consents to verify the status of the loan on request of the purchaser and to accept payments directly from the purchaser if the seller defaults on the loan; and<br />
<br />
(D) the following covenants are placed in the executory contract:<br />
<br />
(i) a covenant that obligates the seller to make timely payments on the loan and to give monthly statements to the purchaser reflecting the amount paid to the lienholder, the date the lienholder receives the payment, and the information described by Paragraph (A);<br />
<br />
(ii) a covenant that obligates the seller, not later than the third day the seller receives or has actual knowledge of a document or an event described by this subparagraph, to notify the purchaser in writing in 14-point type that the seller has been sent a notice of default, notice of acceleration, or notice of foreclosure or has been sued in connection with a lien on the property and to attach a copy of all related documents received to the written notice; and<br />
<br />
(iii) a covenant that warrants that if the seller does not make timely payments on the loan or any other indebtedness secured by the property, the purchaser may, without notice, cure any deficiency with a lienholder directly and deduct from the total outstanding balance owed by the purchaser under the executory contract, without the necessity of judicial action, 150 percent of any amount paid to the lienholder.<br />
<br />
(c) A violation of this section:<br />
<br />
(1) is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Business & Commerce Code, and is actionable in a public or private suit brought under Subchapter E, Chapter 17, Business & Commerce Code; and<br />
<br />
(2) in addition to other rights or remedies provided by law, entitles the purchaser to cancel and rescind the executory contract and receive from the seller:<br />
<br />
(A) the return of all payments of any kind made to the seller under the contract; and<br />
<br />
(B) reimbursement for:<br />
<br />
(i) any payments the purchaser made to a taxing authority for the property; and<br />
<br />
(ii) the value of any improvements made to the property by the purchaser.<br />
<br />
(d) A seller is not liable under this section if:<br />
<br />
(1) a lien is placed on the property by a person other than the seller; and<br />
<br />
(2) not later than the 30th day after the date the seller receives notice of the lien, the seller takes all steps necessary to remove the lien and has the lien removed from the property.<br />
<br />
Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 6, eff. September 1, 2005.<br />
<br />
TEXAS CASE LAW<br />
<br />
Texas legislature strictly regulates contracts for deed by statute; this can be seen in PabloMartinez v. Doccarett, 865 S.W.2d 161 and Holcombe v. Lorino, 124 Tex. 446 (Tex. 1935)
© Copyright 1997-2016 US Legal, Inc.
PROPERTY CODE
TITLE 2. CONVEYANCES
CHAPTER 5. CONVEYANCES
SUBCHAPTER D. EXECUTORY CONTRACT FOR CONVEYANCE
§ 5.061 PROP. Definition
In this subchapter, "default" means the failure to:
(1) make a timely payment; or
(2) comply with a term of an executory contract.
Added by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.065 and amended by Act 2001, 77th Leg., ch. 693, Sec. 1, Sept. 1, 2001.
§ 5.062 PROP. Applicability
(a) This subchapter applies only to a transaction involving an executory contract for conveyance of real property used or to be used as the purchaser's residence or as the residence of a person related to the purchaser within the second degree by consanguinity or affinity, as determined under Chapter 573, Government Code. For purposes of this subchapter, and only for the purposes of this subchapter:
(1) a lot measuring one acre or less is presumed to be residential property; and
(2) an option to purchase real property that includes or is combined or executed concurrently with a residential lease agreement, together with the lease, is considered an executory contract for conveyance of real property.
(b) This subchapter does not apply to the following transactions under an executory contract:
(1) the sale of state land; or
(2) a sale of land by:
(A) the Veterans' Land Board;
(B) this state or a political subdivision of this state; or
(C) an instrumentality, public corporation, or other entity created to act on behalf of this state or a political subdivision of this state, including an entity created under Chapter 303, 392, or 394, Local Government Code.
(c) This subchapter does not apply to an executory contract that provides for the delivery of a deed from the seller to the purchaser within 180 days of the date of the final execution of the executory contract.
(d) Section 5.066 and Sections 5.068-5.080 do not apply to a transaction involving an executory contract for conveyance if the purchaser of the property:
(1) is related to the seller of the property within the second degree by consanguinity or affinity, as determined under Chapter 573, Government Code; and
(2) has waived the applicability of those sections in a written agreement.
(e) Sections 5.066, 5.067, 5.071, 5.075, 5.079, 5.081, and 5.082 do not apply to an executory contract described by Subsection (a)(2).
(f) Notwithstanding any other provision of this subchapter, only the following sections apply to an executory contract described by Subsection (a)(2) if the term of the contract is three years or less and the purchaser and seller, or the purchaser's or seller's assignee, agent, or affiliate, have not been parties to an executory contract to purchase the property covered by the executory contract for longer than three years:
(1) Sections 5.063-5.065;
(2) Section 5.073, except for Section 5.073(a)(2); and
(3) Sections 5.083 and 5.085.
(g) Except as provided by Subsection (b), if Subsection (f) conflicts with another provision of this subchapter, Subsection (f) prevails.
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.091 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.
Amended by:
Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 2, eff. September 1, 2005.
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 1, eff. September 1, 2015.
§ 5.0621 PROP. Contruction With Other Law
(a) Except as provided by Subsection (b), the provisions of this subchapter and Chapter 92 apply to the portion of an executory contract described by Section 5.062(a)(2) that is a residential lease agreement.
(b) After a tenant exercises an option to purchase leased property under a residential lease described by Subsection (a), Chapter 92 no longer applies to the lease.
Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 3, eff. September 1, 2005.
§ 5.063 PROP. Notice
(a) Notice under Section 5.064 must be in writing and must be delivered by registered or certified mail, return receipt requested. The notice must be conspicuous and printed in 14-point boldface type or 14-point uppercase typewritten letters, and must include on a separate page the statement:
NOTICE
YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO BUY YOUR PROPERTY. UNLESS YOU TAKE THE ACTION SPECIFIED IN THIS NOTICE BY (date) THE SELLER HAS THE RIGHT TO TAKE POSSESSION OF YOUR PROPERTY.
(b) The notice must also:
(1) identify and explain the remedy the seller intends to enforce;
(2) if the purchaser has failed to make a timely payment, specify:
(A) the delinquent amount, itemized into principal and interest;
(B) any additional charges claimed, such as late charges or attorney's fees; and
(C) the period to which the delinquency and additional charges relate; and
(3) if the purchaser has failed to comply with a term of the contract, identify the term violated and the action required to cure the violation.
(c) Notice by mail is given when it is mailed to the purchaser's residence or place of business. The affidavit of a person knowledgeable of the facts to the effect that notice was given is prima facie evidence of notice in an action involving a subsequent bona fide purchaser for value if the purchaser is not in possession of the real property and if the stated time to avoid the forfeiture has expired. A bona fide subsequent purchaser for value who relies upon the affidavit under this subsection shall take title free and clear of the contract.
Acts 1983, 68th Leg., p. 3485, ch. 576, Sec. 1, eff. Jan. 1, 1984. Amended by Acts 1993, 73rd Leg., ch. 444, Sec. 1, eff. Sept. 1, 1993; Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.062 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.
§ 5.064 PROP. Seller's Remedies on Default
A seller may enforce the remedy of rescission or of forfeiture and acceleration against a purchaser in default under an executory contract for conveyance of real property only if:
(1) the seller notifies the purchaser of:
(A) the seller's intent to enforce a remedy under this section; and
(B) the purchaser's right to cure the default within the 30-day period described by Section 5.065;
(2) the purchaser fails to cure the default within the 30-day period described by Section 5.065;
(3) Section 5.066 does not apply; and
(4) the contract has not been recorded in the county in which the property is located.
Acts 1983, 68th Leg., p. 3484, ch. 576, Sec. 1, eff. Jan. 1, 1984. Amended by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.061 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001. Amended by Acts 2003, 78th Leg., ch. 959, Sec. 1, eff. Sept. 1, 2003.
Amended by:
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 2, eff. September 1, 2015.
§ 5.065 PROP. Right to Cure Default
Notwithstanding an agreement to the contrary, a purchaser in default under an executory contract for the conveyance of real property may avoid the enforcement of a remedy described by Section 5.064 by complying with the terms of the contract on or before the 30th day after the date notice is given under
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that section.<br />
<br />
Acts 1983, 68th Leg., p. 3485, ch. 576, Sec. 1, eff. Jan. 1, 1984. Amended by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.063 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001. Amended by Acts 2003, 78th Leg., ch. 959, Sec. 2, eff. Sept. 1, 2003.<br />
<br />
§ 5.066 PROP. Equity Protection; Sale of Property<br />
<br />
(a) If a purchaser defaults after the purchaser has paid 40 percent or more of the amount due or the equivalent of 48 monthly payments under the executory contract or, regardless of the amount the purchaser has paid, the executory contract has been recorded, the seller is granted the power to sell, through a trustee designated by the seller, the purchaser’s interest in the property as provided by this section. The seller may not enforce the remedy of rescission or of forfeiture and acceleration after the contract has been recorded.<br />
<br />
(b) The seller shall notify a purchaser of a default under the contract and allow the purchaser at least 60 days after the date notice is given to cure the default. The notice must be provided as prescribed by Section 5.063 except that the notice must substitute the following statement:<br />
<br />
NOTICE<br />
<br />
YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO BUY YOUR PROPERTY. UNLESS YOU TAKE THE ACTION SPECIFIED IN THIS NOTICE BY (date) A TRUSTEE DESIGNATED BY THE SELLER HAS THE RIGHT TO SELL YOUR PROPERTY AT A PUBLIC AUCTION.<br />
<br />
(c) The trustee or a substitute trustee designated by the seller must post, file, and serve a notice of sale and the county clerk shall record and maintain the notice of sale as prescribed by Section 51.002. A notice of sale is not valid unless it is given after the period to cure has expired.<br />
<br />
(d) The trustee or a substitute trustee designated by the seller must conduct the sale as prescribed by Section 51.002. The seller must:<br />
<br />
(1) convey to a purchaser at a sale conducted under this section fee simple title to the real property; and<br />
<br />
(2) warrant that the property is free from any encumbrance.<br />
<br />
(e) The remaining balance of the amount due under the executory contract is the debt for purposes of a sale under this section. If the proceeds of the sale exceed the debt amount, the seller shall disburse the excess funds to the purchaser under the executory contract. If the proceeds of the sale are insufficient to extinguish the debt amount, the seller’s right to recover the resulting deficiency is subject to Sections 51.003, 51.004, and 51.005 unless a provision of the executory contract releases the purchaser under the contract from liability.<br />
<br />
(f) The affidavit of a person knowledgeable of the facts that states that the notice was given and the sale was conducted as provided by this section is prima facie evidence of those facts. A purchaser for value who relies on an affidavit under this subsection acquires title to the property free and clear of the executory contract.<br />
<br />
(g) If a purchaser defaults before the purchaser has paid 40 percent of the amount due or the equivalent of 48 monthly payments under the executory contract, the seller may enforce the remedy of rescission or of forfeiture and acceleration of the indebtedness if the seller complies with the notice requirements of Sections 5.063 and 5.064.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.101 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 3, eff. September 1, 2015.<br />
<br />
§ 5.067 PROP. Placement of Lien for Utility Service<br />
<br />
Notwithstanding any terms of a contract to the contrary, the placement of a lien for the reasonable value of improvements to residential real estate for purposes of providing utility service to the property shall not constitute a default under the terms of an executory contract for the purchase of the real property.<br />
<br />
Added by Acts 1991, 72nd Leg., ch. 743, Sec. 1, eff. Sept. 1, 1991. Amended by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.064 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.068 PROP. Foreign Language Requirement<br />
<br />
If the negotiations that precede the execution of an executory contract are conducted primarily in a language other than English, the seller shall provide a copy in that language of all written documents relating to the transaction, including the contract, disclosure notices, annual accounting statements, and a notice of default required by this subchapter.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.093 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.069 PROP. Seller’s Disclosure of Property Condition<br />
<br />
(a) Before an executory contract is signed by the purchaser, the seller shall provide the purchaser with:<br />
<br />
(1) a survey, which was completed within the past year, or plat of a current survey of the real property;<br />
<br />
(2) a legible copy of any document that describes an encumbrance or other claim, including a restrictive covenant or easement, that affects title to the real property; and<br />
<br />
(3) a written notice, which must be attached to the contract, informing the purchaser of the condition of the property that must, at a minimum, be executed by the seller and purchaser and read substantially similar to the following:<br />
<br />
WARNING<br />
<br />
IF ANY OF THE ITEMS BELOW HAVE NOT BEEN CHECKED, YOU MAY NOT BE ABLE TO LIVE ON THE PROPERTY.<br />
<br />
SELLER’S DISCLOSURE NOTICE<br />
<br />
CONCERNING THE PROPERTY AT (street address or legal description and city)<br />
<br />
THIS DOCUMENT STATES CERTAIN APPLICABLE FACTS ABOUT THE PROPERTY YOU ARE CONSIDERING PURCHASING.<br />
<br />
CHECK ALL THE ITEMS THAT ARE APPLICABLE OR TRUE:<br />
<br />
_____ The property is in a recorded subdivision.<br />
<br />
_____ The property has water service that provides potable water.<br />
<br />
_____ The property has sewer service.<br />
<br />
_____ The property has been approved by the appropriate municipal, county, or state agency for installation of a septic system.<br />
<br />
_____ The property has electric service.<br />
<br />
_____ The property is not in a floodplain.<br />
<br />
_____ The roads to the boundaries of the property are paved and maintained by:<br />
<br />
_____ the seller;<br />
<br />
_____ the owner of the property on which the road exists;<br />
<br />
_____ the municipality;<br />
<br />
_____ the county; or<br />
<br />
_____ the state.<br />
<br />
_____ No individual or entity other than the seller:<br />
<br />
(1) owns the property;<br />
<br />
(2) has a claim of ownership to the property; or<br />
<br />
(3) has an interest in the property.<br />
<br />
_____ No individual or entity has a lien filed against the property.<br />
<br />
_____ There are no restrictive covenants, easements, or other title exceptions or encumbrances that prohibit construction of a house on the property.<br />
<br />
NOTICE: SELLER ADVISES PURCHASER TO:<br />
<br />
(1) OBTAIN A TITLE ABSTRACT OR TITLE COMMITMENT COVERING<br />
<br />
THE PROPERTY AND HAVE THE ABSTRACT OR COMMITMENT REVIEWED<br />
<br />
BY AN ATTORNEY BEFORE SIGNING A CONTRACT OF THIS TYPE; AND<br />
<br />
(2) PURCHASE AN OWNER’S POLICY OF TITLE INSURANCE<br />
<br />
COVERING THE PROPERTY.<br />
<br />
_____________________________ ______________________________<br />
<br />
(Date) (Signature of Seller)<br />
<br />
_____________________________ ______________________________<br />
<br />
(Date) (Signature of Purchaser)<br />
<br />
(b) If the property is not located in a recorded subdivision, the seller shall provide the purchaser with a separate disclosure form stating that utilities may not be available to the property until the subdivision is recorded as required by law.<br />
<br />
(c) If the seller advertises property for sale under an executory contract, the advertisement must disclose information regarding the availability of water, sewer, and electric service.<br />
<br />
(d) The seller’s failure to provide information required by this section:<br />
<br />
(1) is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Business & Commerce Code, and is actionable in a public or private suit brought under Subchapter E, Chapter 17, Business & Commerce Code; and<br />
<br />
(2) entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller.<br />
<br />
(e) Subsection (d) does not limit the purchaser’s remedy against the seller for other false, misleading, or deceptive acts or practices actionable in a suit brought under Subchapter E, Chapter 17, Business & Commerce Code.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.094 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.070 PROP. Seller’s Disclosure of Tax Payments and Insurance Coverage<br />
<br />
(a) Before an executory contract is signed by the purchaser, the seller shall provide the purchaser with:<br />
<br />
(1) a tax certificate from the collector for each taxing unit that collects taxes due on the property as provided by Section 31.08, Tax Code; and<br />
<br />
(2) a legible copy of any insurance policy, binder, or other evidence relating to the property that indicates:<br />
<br />
(A) the name of the insurer and the insured;<br />
<br />
(B) a description of the property insured; and<br />
<br />
(C) the amount for which the property is insured.<br />
<br />
(b) The seller’s failure to provide information required by this section:<br />
<br />
(1) is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Business & Commerce Code, and is actionable in a public or private suit brought under Subchapter E, Chapter 17, Business & Commerce Code; and<br />
<br />
(2) entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller.<br />
<br />
(c) Subsection (b) does not limit the purchaser’s remedy against the seller for other false, misleading, or deceptive acts or practices actionable in a suit brought under Subchapter E, Chapter 17, Business & Commerce Code.<br />
<br />
(d) If the executory contract is recorded, the seller is not required to continue insuring the property.<br />
<br />
Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 4, eff. September 1, 2015.<br />
<br />
§ 5.071 PROP. Seller’s Disclosure of Financing Terms<br />
<br />
Before an executory contract is signed by the purchaser, the seller shall provide to the purchaser a written statement that specifies:<br />
<br />
(1) the purchase price of the property;<br />
<br />
(2) the interest rate charged under the contract;<br />
<br />
(3) the dollar amount, or an estimate of the dollar amount if the interest rate is variable, of the interest charged for the term of the contract;<br />
<br />
(4) the total amount of principal and interest to be paid under the contract;<br />
<br />
(5) the late charge, if any, that may be assessed under the contract; and<br />
<br />
(6) the fact that the seller may not charge a prepayment penalty or any similar fee if the purchaser elects to pay the entire amount due under the contract before the scheduled payment date under the contract.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.095 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.072 PROP. Oral Agreements Prohibited<br />
<br />
(a) An executory contract is not enforceable unless the contract is in writing and signed by the party to be bound or by that party’s authorized representative.<br />
<br />
(b) The rights and obligations of the parties to a contract are determined solely from the written contract, and any prior oral agreements between the parties are superseded by and merged into the contract.<br />
<br />
(c) An executory contract may not be varied by any oral agreements or discussions that occur before or contemporaneously with the execution of the contract.<br />
<br />
(d) The seller shall include in a separate document or in a provision of the contract a statement printed in 14-point boldfaced type or 14-point uppercase typewritten letters that reads substantially similar to the following:<br />
<br />
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.<br />
<br />
____________________________<br />
<br />
____________________________<br />
<br />
(Date)<br />
<br />
(Signature of Seller)<br />
<br />
____________________________<br />
<br />
____________________________<br />
<br />
(Date)<br />
<br />
(Signature of Purchaser)<br />
<br />
(e) The seller’s failure to provide the notice required by this section:<br />
<br />
(1) is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Business & Commerce Code, and is actionable in a public or private suit brought under Subchapter E, Chapter 17, Business & Commerce Code; and<br />
<br />
(2) entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller.<br />
<br />
(f) Subsection (e) does not limit the purchaser’s remedy against the seller for other false, misleading, or deceptive acts or practices actionable in a suit brought under Subchapter E, Chapter 17, Business & Commerce Code.<br />
<br />
Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.073 PROP. Contract Terms, Certain Waivers Prohibited<br />
<br />
(a) A seller may not include as a term of the executory contract a provision that:<br />
<br />
(1) imposes an additional late-payment fee that exceeds the lesser of:<br />
<br />
(A) eight percent of the monthly payment under the contract; or<br />
<br />
(B) the actual administrative cost of processing the late payment;<br />
<br />
(2) prohibits the purchaser from pledging the purchaser’s interest in the property as security to obtain a loan to place improvements, including utility improvements or fire protection improvements, on the property;<br />
<br />
(3) imposes a prepayment penalty or any similar fee if the purchaser elects to pay the entire amount due under the contract before the scheduled payment date under the contract;<br />
<br />
(4) forfeits an option fee or other option payment paid under the contract for a late payment; or<br />
<br />
(5) increases the purchase price, imposes a fee or charge of any type, or otherwise penalizes a purchaser leasing property with an option to buy the property for requesting repairs or exercising any other right under Chapter 92.<br />
<br />
(b) A provision of the executory contract that purports to waive a right or exempt a party from a liability or duty under this subchapter is void.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.096 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 4, eff. September 1, 2005.<br />
<br />
§ 5.074 PROP. Purchaser’s Right to Cancel Contract Without Cause<br />
<br />
(a) In addition to other rights or remedies provided by law, the purchaser may cancel and rescind an executory contract for any reason by sending by telegram or certified or registered mail, return receipt requested, or by delivering in person a signed, written notice of cancellation to the seller not later than the 14th day after the date of the contract.<br />
<br />
(b) If the purchaser cancels the contract as provided by Subsection (a), the seller shall, not later than the 10th day after the date the seller receives the purchaser’s notice of cancellation:<br />
<br />
(1) return to the purchaser the executed contract and any property exchanged or payments made by the purchaser under the contract; and<br />
<br />
(2) cancel any security interest arising out of the contract.<br />
<br />
(c) The seller shall include in immediate proximity to the space reserved in the executory contract for the purchaser’s signature a statement printed in 14-point boldface type or 14-point uppercase typewritten letters that reads substantially similar to the following:<br />
<br />
YOU, THE PURCHASER, MAY CANCEL THIS CONTRACT AT ANY TIME DURING THE NEXT TWO WEEKS. THE DEADLINE FOR CANCELING THE CONTRACT IS (date). THE ATTACHED NOTICE OF CANCELLATION EXPLAINS THIS RIGHT.<br />
<br />
(d) The seller shall provide a notice of cancellation form to the purchaser at the time the purchaser signs the executory contract that is printed in 14-point boldface type or 14-point uppercase typewritten letters and that reads substantially similar to the following:<br />
<br />
(date of contract)<br />
<br />
NOTICE OF CANCELLATION<br />
<br />
YOU MAY CANCEL THE EXECUTORY CONTRACT FOR ANY REASON WITHOUT ANY PENALTY OR OBLIGATION BY (date).<br />
<br />
(1) YOU MUST SEND BY TELEGRAM OR CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, OR DELIVER IN PERSON A SIGNED AND DATED COPY OF THIS CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE TO (Name of Seller) AT (Seller’s Address) BY (date).<br />
<br />
(2) THE SELLER SHALL, NOT LATER THAN THE 10TH DAY AFTER THE DATE THE SELLER RECEIVES YOUR CANCELLATION NOTICE:<br />
<br />
(A) RETURN THE EXECUTED CONTRACT AND ANY PROPERTY EXCHANGED OR PAYMENTS MADE BY YOU UNDER THE CONTRACT; AND<br />
<br />
(B) CANCEL ANY SECURITY INTEREST ARISING OUT OF THE CONTRACT.<br />
<br />
I ACKNOWLEDGE RECEIPT OF THIS NOTICE OF CANCELLATION FORM.<br />
<br />
_________________________<br />
<br />
_________________________<br />
<br />
(Date) (Purchaser’s Signature)<br />
<br />
I HEREBY CANCEL THIS CONTRACT.<br />
<br />
_________________________<br />
<br />
_________________________<br />
<br />
(Date) (Purchaser’s Signature)<br />
<br />
(e) The seller may not request the purchaser to sign a waiver of receipt of the notice of cancellation form required by this section.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.097 by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.075 PROP. Purchaser’s Right to Pledge Interest in Property on Contracts Entered Into Before September 1, 2001<br />
<br />
(a) On an executory contract entered into before September 1, 2001 , a purchaser may pledge the interest in the property, which accrues pursuant to Section 5.066, only to obtain a loan for improving the safety of the property or any improvements on the property.<br />
<br />
(b) Loans that improve the safety of the property and improvements on the property include loans for:<br />
<br />
(1) improving or connecting a residence to water service;<br />
<br />
(2) improving or connecting a residence to a wastewater system;<br />
<br />
(3) building or improving a septic system;<br />
<br />
(4) structural improvements in the residence; and<br />
<br />
(5) improved fire protection.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.098 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.076 PROP. Recording Requirements<br />
<br />
(a) Except as provided by Subsection (b), the seller shall record the executory contract, including the attached disclosure statement required by Section 5.069, as prescribed by Title 3 on or before the 30th day after the date the contract is executed.<br />
<br />
(b) Section 12.002(c) does not apply to an executory contract filed for record under this section.<br />
<br />
(c) If the executory contract is terminated for any reason, the seller shall record the instrument that terminates the contract.<br />
<br />
(d) The county clerk shall collect the filing fee prescribed by Section 118.011, Local Government Code.<br />
<br />
(e) A seller who violates this section is liable to the purchaser in the same manner and for the same amount as a seller who violates Section 5.079 is liable to a purchaser, except the damages may not exceed $500 for each calendar year of noncompliance. This subsection does not limit or affect any other rights or remedies a purchaser has under other law.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.099 and amended Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 5, eff. September 1, 2015.<br />
<br />
§ 5.077 PROP. Annual Accounting Statement<br />
<br />
(a) The seller shall provide the purchaser with an annual statement in January of each year for the term of the executory contract. If the seller mails the statement to the purchaser, the statement must be postmarked not later than January 31.<br />
<br />
(b) The statement must include the following information:<br />
<br />
(1) the amount paid under the contract;<br />
<br />
(2) the remaining amount owed under the contract;<br />
<br />
(3) the number of payments remaining under the contract;<br />
<br />
(4) the amounts paid to taxing authorities on the purchaser’s behalf if collected by the seller;<br />
<br />
(5) the amounts paid to insure the property on the purchaser’s behalf if collected by the seller;<br />
<br />
(6) if the property has been damaged and the seller has received insurance proceeds, an accounting of the proceeds applied to the property; and<br />
<br />
(7) if the seller has changed insurance coverage, a legible copy of the current policy, binder, or other evidence that satisfies the requirements of Section 5.070(a)(2).<br />
<br />
(c) A seller who conducts less than two transactions in a 12-month period under this section who fails to comply with Subsection (a) is liable to the purchaser for:<br />
<br />
(1) liquidated damages in the amount of $100 for each annual statement the seller fails to provide to the purchaser within the time required by Subsection (a); and<br />
<br />
(2) reasonable attorney’s fees.<br />
<br />
(d) A seller who conducts two or more transactions in a 12-month period under this section who fails to comply with Subsection (a) is liable to the purchaser for:<br />
<br />
(1) liquidated damages in the amount of $250 a day for each day after January 31 that the seller fails to provide the purchaser with the statement, but not to exceed the fair market value of the property; and<br />
<br />
(2) reasonable attorney’s fees.<br />
<br />
(e) The requirements of this section continue to apply after a purchaser obtains title to the property by conversion or any other process.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.100 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 5, eff. September 1, 2005.<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 6, eff. September 1, 2015.<br />
<br />
§ 5.078 PROP. Disposition of Insurance Proceeds<br />
<br />
(a) The named insured under an insurance policy, binder, or other coverage relating to property subject to an executory contract for the conveyance of real property shall inform the insurer, not later than the 10th day after the date the coverage is obtained or the contract executed, whichever is later, of:<br />
<br />
(1) the executory contract for conveyance and the term of the contract; and<br />
<br />
(2) the name and address of the other party to the contract.<br />
<br />
(b) An insurer who disburses proceeds under an insurance policy, binder, or other coverage relating to property that has been damaged shall issue the proceeds jointly to the purchaser and the seller designated in the contract.<br />
<br />
(c) If proceeds under an insurance policy, binder, or other coverage are disbursed, the purchaser and seller shall ensure that the proceeds are used to repair, remedy, or improve the condition on the property.<br />
<br />
(d) The failure of a seller or purchaser to comply with Subsection (c) is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Business & Commerce Code, and is actionable in a public or private suit brought under Subchapter E, Chapter 17, Business & Commerce Code.<br />
<br />
(e) Subsection (d) does not limit either party’s remedy for other false, misleading, or deceptive acts or practices actionable in a suit brought under Subchapter E, Chapter 17, Business & Commerce Code.<br />
<br />
Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.079 PROP. Title Transfer<br />
<br />
(a) A recorded executory contract shall be the same as a deed with a vendor’s lien. The vendor’s lien is for the amount of the unpaid contract price, less any lawful deductions, and may be enforced by foreclosure sale under Section 5.066 or by judicial foreclosure. A general warranty is implied unless otherwise limited by the recorded executory contract. If an executory contract has not been recorded or converted under Section 5.081, the seller shall transfer recorded, legal title of the property covered by the executory contract to the purchaser not later than the 30th day after the date the seller receives the purchaser’s final payment due under the contract.<br />
<br />
(b) A seller who violates Subsection (a) is liable to the purchaser for:<br />
<br />
(1) liquidated damages in the amount of:<br />
<br />
(A) $250 a day for each day the seller fails to transfer the title to the purchaser during the period that begins the 31st day and ends the 90th day after the date the seller receives the purchaser’s final payment due under the contract; and<br />
<br />
(B) $500 a day for each day the seller fails to transfer title to the purchaser after the 90th day after the date the seller receives the purchaser’s final payment due under the contract; and<br />
<br />
(2) reasonable attorney’s fees.<br />
<br />
(c) If a person to whom a seller’s property interest passes by will or intestate succession is required to obtain a court order to clarify the person’s status as an heir or to clarify the status of the seller or the property before the person may convey good and indefeasible title to the property, the court in which the action is pending may waive payment of the liquidated damages and attorney’s fees under Subsection (b) if the court finds that the person is pursuing the action to establish good and indefeasible title with reasonable diligence.<br />
<br />
(d) In this section, “seller” includes a successor, assignee, personal representative, executor, or administrator of the seller.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.102 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
Amended by:<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 7, eff. September 1, 2015.<br />
<br />
§ 5.080 PROP. Liability for Disclosures<br />
<br />
For purposes of this subchapter, a disclosure required by this subchapter that is made by a seller’s agent is a disclosure made by the seller.<br />
<br />
Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.103 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.<br />
<br />
§ 5.081 PROP. Right to Convert Contract<br />
<br />
(a) A purchaser, at any time and without paying penalties or charges of any kind, is entitled to convert the purchaser’s interest in property under an executory contract into recorded, legal title in accordance with this section, regardless of whether the seller has recorded the executory contract.<br />
<br />
(b) If the purchaser tenders to the seller an amount of money equal to the balance of the total amount owed by the purchaser to the seller under the executory contract, the seller shall transfer to the purchaser recorded, legal title of the property covered by the contract.<br />
<br />
(c) Subject to Subsection (d), if the purchaser delivers to the seller of property covered by an executory contract a promissory note that is equal in amount to the balance of the total amount owed by the purchaser to the seller under the contract and that contains the same interest rate, due dates, and late fees as the contract:<br />
<br />
(1) the seller shall execute a deed containing any warranties required by the contract and conveying to the purchaser recorded, legal title of the property; and<br />
<br />
(2) the purchaser shall simultaneously execute a deed of trust that:<br />
<br />
(A) contains the same terms as the contract regarding the purchaser’s and seller’s duties concerning the property;<br />
<br />
(B) secures the purchaser’s payment and performance under the promissory note and deed of trust; and<br />
<br />
(C) conveys the property to the trustee, in trust, and confers on the trustee the power to sell the property if the purchaser defaults on the promissory note or the terms of the deed of trust.<br />
<br />
(d) On or before the 10th day after the date the seller receives a promissory note under Subsection (c) that substantially complies with that subsection, the seller shall:<br />
<br />
(1) deliver to the purchaser a written explanation that legally justifies why the seller refuses to convert the purchaser’s interest into recorded, legal title under Subsection (c); or<br />
<br />
(2) communicate with the purchaser to schedule a mutually agreeable day and time to execute the deed and deed of trust under Subsection (c).<br />
<br />
(e) A seller who violates this section is liable to the purchaser in the same manner and amount as a seller who violates Section 5.079 is liable to a purchaser. This subsection does not limit or affect any other rights or remedies a purchaser has under other law.<br />
<br />
(f) On the last date that all of the conveyances described by Subsections (b) and (c) are executed, the executory contract:<br />
<br />
(1) is considered completed; and<br />
<br />
(2) has no further effect.<br />
<br />
(g) The appropriate use of forms published by the Texas Real Estate Commission for transactions described by this section constitutes compliance with this section.<br />
<br />
(h) This section may not be construed to limit the purchaser’s interest in the property established by other law, if any, or any other rights of the purchaser under this subchapter.<br />
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Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 6, eff. September 1, 2005.<br />
<br />
Amended by:<br />
<br />
Acts 2015, 84th Leg., R.S., Ch. 996 (H.B. 311), Sec. 8, eff. September 1, 2015.<br />
<br />
§ 5.082 PROP. Request for Balance and Trustee<br />
<br />
(a) A purchaser under an executory contract, on written request, is entitled to receive the following information from the seller:<br />
<br />
(1) as of the date of the request or another date specified by the purchaser, the amount owed by the purchaser under the contract; and<br />
<br />
(2) if applicable, the name and address of the seller’s desired trustee for a deed of trust to be executed under Section 5.081.<br />
<br />
(b) On or before the 10th day after the date the seller receives from the purchaser a written request for information described by Subsection (a), the seller shall provide to the purchaser a written statement of the requested information.<br />
<br />
(c) If the seller does not timely respond to a request made under this section, the purchaser may:<br />
<br />
(1) determine or pay the amount owed under the contract, including determining the amount necessary for a promissory note under Section 5.081; and<br />
<br />
(2) if applicable, select a trustee for a deed of trust under Section 5.081.<br />
<br />
(d) For purposes of Subsection (c)(2), a purchaser must select a trustee that lives or has a place of business in the same county where the property covered by the executory contract is located.<br />
<br />
(e) Not later than the 20th day after the date a seller receives notice of an amount determined by a purchaser under Subsection (c)(1), the seller may contest that amount by sending a written objection to the purchaser. An objection under this subsection must:<br />
<br />
(1) be sent to the purchaser by regular and certified mail;<br />
<br />
(2) include the amount the seller claims is the amount owed under the contract; and<br />
<br />
(3) be based on written records kept by the seller or the seller’s agent that were maintained and regularly updated for the entire term of the executory contract.<br />
<br />
Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 6, eff. September 1, 2005.<br />
<br />
§ 5.083 PROP. Right to Cancel Contract for Improper Platting<br />
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(a) Except as provided by Subsection (c), in addition to other rights or remedies provided by law, the purchaser may cancel and rescind an executory contract at any time if the purchaser learns that the seller has not properly subdivided or platted the property that is covered by the contract in accordance with state and local law. A purchaser canceling and rescinding a contract under this subsection must:<br />
<br />
(1) deliver a signed, written notice of the cancellation and rescission to the seller in person; or<br />
<br />
(2) send a signed, written notice of the cancellation and rescission to the seller by telegram or certified or registered mail, return receipt requested.<br />
<br />
(b) If the purchaser cancels the contract as provided under Subsection (a), the seller, not later than the 10th day after the date the seller receives the notice of cancellation and rescission, shall:<br />
<br />
(1) deliver in person or send by telegram or certified or registered mail, return receipt requested, to the purchaser a signed, written notice that the seller intends to subdivide or plat the property properly; or<br />
<br />
(2) return to the purchaser all payments of any kind made to the seller under the contract and reimburse the purchaser for:<br />
<br />
(A) any payments the purchaser made to a taxing authority for the property; and<br />
<br />
(B) the value of any improvements made to the property by the purchaser.<br />
<br />
(c) A purchaser may not exercise the purchaser’s right to cancel and rescind an executory contract under this section if, on or before the 90th day after the date the purchaser receives the seller’s notice under Subsection (b)(1), the seller:<br />
<br />
(1) properly subdivides or plats the property; and<br />
<br />
(2) delivers in person or sends by telegram or certified or registered mail, return receipt requested, to the purchaser a signed, written notice evidencing that the property has been subdivided or platted in accordance with state and local law.<br />
<br />
(d) The seller may not terminate the purchaser’s possession of the property covered by the contract being canceled and rescinded before the seller pays the purchaser any money to which the purchaser is entitled under Subsection (b).<br />
<br />
Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 6, eff. September 1, 2005.<br />
<br />
§ 5.084 PROP. Right to Deduct<br />
<br />
If a seller is liable to a purchaser under this subchapter, the purchaser, without taking judicial action, may deduct the amount owed to the purchaser by the seller from any amounts owed to the seller by the purchaser under the terms of an executory contract.<br />
<br />
Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 6, eff. September 1, 2005.<br />
<br />
§ 5.085 PROP. Fee Simple Title Required; Maintenance of Fee Simple Title<br />
<br />
(a) A potential seller may not execute an executory contract with a potential purchaser if the seller does not own the property in fee simple free from any liens or other encumbrances.<br />
<br />
(b) Except as provided by this subsection, a seller, or the seller’s heirs or assigns, must maintain fee simple title free from any liens or other encumbrances to property covered by an executory contract for the entire duration of the contract. This subsection does not apply to a lien or encumbrance placed on the property that is:<br />
<br />
(1) placed on the property because of the conduct of the purchaser;<br />
<br />
(2) agreed to by the purchaser as a condition of a loan obtained to place improvements on the property, including utility or fire protection improvements; or<br />
<br />
(3) placed on the property by the seller prior to the execution of the contract in exchange for a loan used only to purchase the property if:<br />
<br />
(A) the seller, not later than the third day before the date the contract is executed, notifies the purchaser in a separate written disclosure:<br />
<br />
(i) of the name, address, and phone number of the lienholder or, if applicable, servicer of the loan;<br />
<br />
(ii) of the loan number and outstanding balance of the loan;<br />
<br />
(iii) of the monthly payments due on the loan and the due date of those payments; and<br />
<br />
(iv) in 14-point type that, if the seller fails to make timely payments to the lienholder, the lienholder may attempt to collect the debt by foreclosing on the lien and selling the property at a foreclosure sale;<br />
<br />
(B) the lien:<br />
<br />
(i) is attached only to the property sold to the purchaser under the contract; and<br />
<br />
(ii) secures indebtedness that, at no time, is or will be greater in amount than the amount of the total outstanding balance owed by the purchaser under the executory contract;<br />
<br />
(C) the lienholder:<br />
<br />
(i) does not prohibit the property from being encumbered by an executory contract; and<br />
<br />
(ii) consents to verify the status of the loan on request of the purchaser and to accept payments directly from the purchaser if the seller defaults on the loan; and<br />
<br />
(D) the following covenants are placed in the executory contract:<br />
<br />
(i) a covenant that obligates the seller to make timely payments on the loan and to give monthly statements to the purchaser reflecting the amount paid to the lienholder, the date the lienholder receives the payment, and the information described by Paragraph (A);<br />
<br />
(ii) a covenant that obligates the seller, not later than the third day the seller receives or has actual knowledge of a document or an event described by this subparagraph, to notify the purchaser in writing in 14-point type that the seller has been sent a notice of default, notice of acceleration, or notice of foreclosure or has been sued in connection with a lien on the property and to attach a copy of all related documents received to the written notice; and<br />
<br />
(iii) a covenant that warrants that if the seller does not make timely payments on the loan or any other indebtedness secured by the property, the purchaser may, without notice, cure any deficiency with a lienholder directly and deduct from the total outstanding balance owed by the purchaser under the executory contract, without the necessity of judicial action, 150 percent of any amount paid to the lienholder.<br />
<br />
(c) A violation of this section:<br />
<br />
(1) is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Business & Commerce Code, and is actionable in a public or private suit brought under Subchapter E, Chapter 17, Business & Commerce Code; and<br />
<br />
(2) in addition to other rights or remedies provided by law, entitles the purchaser to cancel and rescind the executory contract and receive from the seller:<br />
<br />
(A) the return of all payments of any kind made to the seller under the contract; and<br />
<br />
(B) reimbursement for:<br />
<br />
(i) any payments the purchaser made to a taxing authority for the property; and<br />
<br />
(ii) the value of any improvements made to the property by the purchaser.<br />
<br />
(d) A seller is not liable under this section if:<br />
<br />
(1) a lien is placed on the property by a person other than the seller; and<br />
<br />
(2) not later than the 30th day after the date the seller receives notice of the lien, the seller takes all steps necessary to remove the lien and has the lien removed from the property.<br />
<br />
Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 6, eff. September 1, 2005.<br />
<br />
TEXAS CASE LAW<br />
<br />
Texas legislature strictly regulates contracts for deed by statute; this can be seen in PabloMartinez v. Doccarett, 865 S.W.2d 161 and Holcombe v. Lorino, 124 Tex. 446 (Tex. 1935)
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