The Weaver Law Firm

Houston 713.454.7875

san antonio 210.807.8932

Contract for Deed vs. Seller Finance Real Estate Transaction

What is a Contract for Deed and why do I generally prefer a seller finance transaction? A contract for deed is what the Texas Property Code refers to as an executory contract. Executory contracts are essentially real estate transactions where the seller maintains title to the property until the buyer makes payment in full. Once the buyer pays for the real property in full, the seller then transfers title to the buyer by deed at closing. The seller usually makes payment on the "contract for deed" over a period of years. Contracts for deed, lease-purchases, and lease-options for longer than 180 days are unambiguously defined as executory contracts.

In a seller finance transaction, the seller delivers a deed (i.e. title) to the buyer at a time designated by contract. At closing, the buyer will provide the seller with a promissory note (i.e. to promise to pay a certain amount, over a period of time at a particular interest rate) and a deed of trust. The deed of trust allows the seller to foreclose on the property if the buyer defaults on the note. This provides the seller with the security needed in the event the buyer defaults. I understand that at times the seller would prefer a "contract for deed" transaction in order to hold on to title until the buyer pays in full. Still, I generally prefer the seller finance transaction because the seller has security and because the Texas Property Code has extensive rules and penalties regarding executory contracts.

I recently received a call that came with the statement, "I want to sell my property and receive payments from the buyer, but if something happens to me like from a car accident, I want the payments to go to my children." Real estate lawyers with experience in seller finance transactions can help clients with similar situations. You might find that a lawyer with experience in both personal injury cases and real estate transactions will be able to discuss the connection between real estate transactions and probate law. Families that suffer from wrongful death incidents often find that they need an attorney with real estate experience. 

If you have questions about the sale of real property in Texas, feel free to contact a Texas real estate lawter.

  Article By Richard Weaver

No Comments

Leave a comment
Comment Information

awards & recognition

  • Avvo Rating 10.0 superb
  • Houstonia Top lawyers
  • Super Lawyers

houston
1800 Bering Drive, Suite 1050
Houston, TX 77057

Toll Free: 866-597-2280
Houston Law Office Map

san antonio

8000 I.H. 10 West, Suite 600

San Antonio, Texas 78230

Phone: 210-807-8932
Fax: 713-513-5566

By Appointment Only