Sec. 5.022. FORM. (a) The following form or a form that is the same in substance conveys a fee simple estate in real property with a covenant of general warranty:

“The State of Texas,

“County of ____________________.

“Know all men by these presents, That I, __________________, of the __________________ (give name of city, town, or county), in the state aforesaid, for and in consideration of __________________ dollars, to me in hand paid by __________________, have granted, sold, and conveyed, and by these presents do grant, sell, and convey unto the said __________________, of the __________________ (give name of city, town, or county), in the state of __________________, all that certain __________________ (describe the premises). To have and to hold the above described premises, together with all and singular the rights and appurtenances thereto in any wise belonging, unto the said __________________, his heirs or assigns forever. And I do hereby bind myself, my heirs, executors, and administrators to warrant and forever defend all and singular the said premises unto the said __________________, his heirs, and assigns, against every person whomsoever, lawfully claiming or to claim the same, or any part thereof.

“Witness my hand, this __________________ day of __________________, A.D. 20___.

“Signed and delivered in the presence of ____________________”

(b) A covenant of warranty is not required in a conveyance.

(c) The parties to a conveyance may insert any clause or use any form not in contravention of law.

Acts 1983, 68th Leg., p. 3481, ch. 576, Sec. 1, eff. Jan. 1, 1984.

Sec. 5.016. CONVEYANCE OF RESIDENTIAL PROPERTY ENCUMBERED BY LIEN. (a) A person may not convey an interest in or enter into a contract to convey an interest in residential real property that will be encumbered by a recorded lien at the time the interest is conveyed unless, on or before the seventh day before the earlier of the effective date of the conveyance or the execution of an executory contract binding the purchaser to purchase the property, an option contract, or other contract, the person provides the purchaser and each lienholder a separate written disclosure statement in at least 12-point type that:(1) identifies the property and includes the name, address, and phone number of each lienholder;

(2) states the amount of the debt that is secured by each lien;

(3) specifies the terms of any contract or law under which the debt that is secured by the lien was incurred, including, as applicable:

(A) the rate of interest;

(B) the periodic installments required to be paid; and

(C) the account number;

(4) indicates whether the lienholder has consented to the transfer of the property to the purchaser;

(5) specifies the details of any insurance policy relating to the property, including:

(A) the name of the insurer and insured;

(B) the amount for which the property is insured; and

(C) the property that is insured;

(6) states the amount of any property taxes that are due on the property; and

(7) includes a statement at the top of the disclosure in a form substantially similar to the following:

WARNING: ONE OR MORE RECORDED LIENS HAVE BEEN FILED THAT MAKE A CLAIM AGAINST THIS PROPERTY AS LISTED BELOW. IF A LIEN IS NOT RELEASED AND THE PROPERTY IS CONVEYED WITHOUT THE CONSENT OF THE LIENHOLDER, IT IS POSSIBLE THE LIENHOLDER COULD DEMAND FULL PAYMENT OF THE OUTSTANDING BALANCE OF THE LIEN IMMEDIATELY. YOU MAY WISH TO CONTACT EACH LIENHOLDER FOR FURTHER INFORMATION AND DISCUSS THIS MATTER WITH AN ATTORNEY.

(b) A violation of this section does not invalidate a conveyance. Except as provided by Subsections (c) and (d), if a contract is entered into without the seller providing the notice required by this section, the purchaser may terminate the contract for any reason on or before the seventh day after the date the purchaser receives the notice in addition to other remedies provided by this section or other law.

(c) This section does not apply to a transfer:

(1) under a court order or foreclosure sale;

(2) by a trustee in bankruptcy;

(3) to a mortgagee by a mortgagor or successor in interest or to a beneficiary of a deed of trust by a trustor or successor in interest;

(4) by a mortgagee or a beneficiary under a deed of trust who has acquired the real property at a sale conducted under a power of sale under a deed of trust or a sale under a court-ordered foreclosure or has acquired the real property by a deed in lieu of foreclosure;

(5) by a fiduciary in the course of the administration of a decedent’s estate, guardianship, conservatorship, or trust;

(6) from one co-owner to one or more other co-owners;

(7) to a spouse or to a person or persons in the lineal line of consanguinity of one or more of the transferors;

(8) between spouses resulting from a decree of dissolution of marriage or a decree of legal separation or from a property settlement agreement incidental to one of those decrees;

(9) to or from a governmental entity;

(10) where the purchaser obtains a title insurance policy insuring the transfer of title to the real property; or

(11) to a person who has purchased, conveyed, or entered into contracts to purchase or convey an interest in real property four or more times in the preceding 12 months.

(d) A violation of this section is not actionable if the person required to give notice reasonably believes and takes any necessary action to ensure that each lien for which notice was not provided will be released on or before the 30th day after the date on which title to the property is transferred.

Added by Acts 2007, 80th Leg., R.S., Ch. 1056, Sec. 1, eff. January 1, 2008.

PROPERTY CODE

TITLE 2. CONVEYANCES

CHAPTER 5. CONVEYANCES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 5.001.  FEE SIMPLE.  (a)  An estate in land that is conveyed or devised is a fee simple unless the estate is limited by express words or unless a lesser estate is conveyed or devised by construction or operation of law.  Words previously necessary at common law to transfer a fee simple estate are not necessary.

(b)  This section applies only to a conveyance occurring on or after February 5, 1840.

Acts 1983, 68th Leg., p. 3480, ch. 576, Sec. 1, eff. Jan. 1, 1984.

Sec. 5.002.  FAILING AS A CONVEYANCE.  An instrument intended as a conveyance of real property or an interest in real property that, because of this chapter, fails as a conveyance in whole or in part is enforceable to the extent permitted by law as a contract to convey the property or interest.

Acts 1983, 68th Leg., p. 3480, ch. 576, Sec. 1, eff. Jan. 1, 1984.

Sec. 5.003.  PARTIAL CONVEYANCE.  (a)  An alienation of real property that purports to transfer a greater right or estate in the property than the person making the alienation may lawfully transfer alienates only the right or estate that the person may convey.

(b)  Neither the alienation by deed or will of an estate on which a remainder depends nor the union of the estate with an inheritance by purchase or descent affects the remainder.

Acts 1983, 68th Leg., p. 3480, ch. 576, Sec. 1, eff. Jan. 1, 1984.

Sec. 5.004.  CONVEYANCE BY AUTHORIZED OFFICER.  (a)  A conveyance of real property by an officer legally authorized to sell the property under a judgment of a court within the state passes absolute title to the property to the purchaser.

(b)  This section does not affect the rights of a person who is not or who does not claim under a party to the conveyance or judgment.

Acts 1983, 68th Leg., p. 3480, ch. 576, Sec. 1, eff. Jan. 1, 1984.

Sec. 5.005.  ALIENS.  An alien has the same real and personal property rights as a United States citizen.

Acts 1983, 68th Leg., p. 3481, ch. 576, Sec. 1, eff. Jan. 1, 1984.

Sec. 5.006.  ATTORNEY’S FEES IN BREACH OF RESTRICTIVE COVENANT ACTION.  (a)  In an action based on breach of a restrictive covenant pertaining to real property, the court shall allow to a prevailing party who asserted the action reasonable attorney’s fees in addition to the party’s costs and claim.

(b)  To determine reasonable attorney’s fees, the court shall consider:

(1)  the time and labor required;

(2)  the novelty and difficulty of the questions;

(3)  the expertise, reputation, and ability of the attorney;  and

(4)  any other factor.

Acts 1983, 68th Leg., p. 3481, ch. 576, Sec. 1, eff. Jan. 1, 1984.

Sec. 5.007.  VENDOR AND PURCHASER RISK ACT.  (a)  Any contract made in this state for the purchase and sale of real property shall be interpreted as including an agreement that the parties have the rights and duties prescribed by this section, unless the contract expressly provides otherwise.

(b)  If, when neither the legal title nor the possession of the subject matter of the contract has been transferred, all or a material part of the property is destroyed without fault of the purchaser or is taken by eminent domain, the vendor may not enforce the contract, and the purchaser is entitled to recover any portion of the contract price paid.

(c)  If, when either the legal title or the possession of the subject matter of the contract has been transferred, all or any part of the property is destroyed without fault of the vendor or is taken by eminent domain, the purchaser is not relieved from the duty to pay the contract price, nor is the purchaser entitled to recover any portion of the price already paid.

(d)  This section shall be interpreted and construed to accomplish its general purpose to make uniform the law of those states that enact the Uniform Vendor and Purchaser Risk Act.

(e)  This section may be cited as the Uniform Vendor and Purchaser Risk Act.

Added by Acts 1989, 71st Leg., ch. 1002, Sec. 1, eff. Sept. 1, 1989.

Sec. 5.008.  SELLER’S DISCLOSURE OF PROPERTY CONDITION.  (a)  A seller of residential real property comprising not more than one dwelling unit located in this state shall give to the purchaser of the property a written notice as prescribed by this section or a written notice substantially similar to the notice prescribed by this section which contains, at a minimum, all of the items in the notice prescribed by this section.

Text of subsection as amended by Acts 2007, 80th Leg., R.S., Ch. 1051, Sec. 11

(b)  The notice must be executed and must, at a minimum, read substantially similar to the following:

SELLER’S DISCLOSURE NOTICE

CONCERNING THE PROPERTY AT ___________________________________

(Street Address and City)

THIS NOTICE IS A DISCLOSURE OF SELLER’S KNOWLEDGE OF THE CONDITION OF THE PROPERTY AS OF THE DATE SIGNED BY SELLER AND IS NOT A SUBSTITUTE FOR ANY INSPECTIONS OR WARRANTIES THE PURCHASER MAY WISH TO OBTAIN.  IT IS NOT A WARRANTY OF ANY KIND BY SELLER OR SELLER’S AGENTS.

Seller __ is __ is not occupying the Property.

If unoccupied, how long since Seller has occupied the Property?

________________________________________________________________

1.  The Property has the items checked below:

Write Yes (Y), No (N), or Unknown (U).

Roof Type: ________________________________Age: _____(approx)

Are you (Seller) aware of any of the above items that are not in working condition, that have known defects, or that are in need of repair?  __ Yes  __ No  __ Unknown.

If yes, then describe.  (Attach additional sheets if necessary):

________________________________________________________________

________________________________________________________________

2.  Does the property have working smoke detectors installed in accordance with the smoke detector requirements of Chapter 766, Health and Safety Code?  __Yes  __No  __Unknown.

If the answer to the question above is no or unknown, explain.  (Attach additional sheets if necessary): _________________________

________________________________________________________________________________________________________________________________

3.  Are you (Seller) aware of any known defects/malfunctions in any of the following?

Write Yes (Y) if you are aware, write No (N) if you are not aware.

__ Other Structural Components (Describe): ____________________

________________________________________________________________

________________________________________________________________

If the answer to any of the above is yes, explain.  (Attach additional sheets if necessary):            _____________________________

________________________________________________________________

________________________________________________________________

4.  Are you (Seller) aware of any of the following conditions?

Write Yes (Y) if you are aware, write No (N) if you are not aware.

If the answer to any of the above is yes, explain.  (Attach additional sheets if necessary):            _____________________________

________________________________________________________________

________________________________________________________________

5.  Are you (Seller) aware of any item, equipment, or system in or on the property that is in need of repair?  __ Yes (if you are aware)  __ No (if you are not aware).  If yes, explain (attach additional sheets as necessary). ________________________________

6.  Are you (Seller) aware of any of the following?

Write Yes (Y) if you are aware, write No (N) if you are not aware.

If the answer to any of the above is yes, explain.  (Attach additional sheets if necessary):            _____________________________

________________________________________________________________

________________________________________________________________

_______________       ________________________________________

Date                     Signature of Seller

The undersigned purchaser hereby acknowledges receipt of the foregoing notice and acknowledges the property complies with the smoke detector requirements of Chapter 766, Health and Safety Code, or, if the property does not comply with the smoke detector requirements of Chapter 766, the buyer waives the buyer’s rights to have smoke detectors installed in compliance with Chapter 766.

_______________       ________________________________________

Date                     Signature of Purchaser

Text of subsection as amended by Acts 2007, 80th Leg., R.S., Ch. 1256, Sec. 22

(b)  The notice must be executed and must, at a minimum, read substantially similar to the following:

SELLER’S DISCLOSURE NOTICE

CONCERNING THE PROPERTY AT ___________________________________

(Street Address and City)

THIS NOTICE IS A DISCLOSURE OF SELLER’S KNOWLEDGE OF THE CONDITION OF THE PROPERTY AS OF THE DATE SIGNED BY SELLER AND IS NOT A SUBSTITUTE FOR ANY INSPECTIONS OR WARRANTIES THE PURCHASER MAY WISH TO OBTAIN. IT IS NOT A WARRANTY OF ANY KIND BY SELLER OR SELLER’S AGENTS.

Seller __ is __ is not occupying the Property.

If unoccupied, how long since Seller has occupied the Property?

________________________________________________________________

1.  The Property has the items checked below:

Write Yes (Y), No (N), or Unknown (U).

Roof Type: ________________________________ Age: _____(approx)

Are you (Seller) aware of any of the above items that are not in working condition, that have known defects, or that are in need of repair?  __ Yes  __ No  __ Unknown.

If yes, then describe.  (Attach additional sheets if necessary):

________________________________________________________________

________________________________________________________________

2.  Are you (Seller) aware of any known defect/malfunctions in any of the following?

Write Yes (Y) if you are aware, write No (N) if you are not aware.

__ Other Structural Components (Describe): ____________________

________________________________________________________________

________________________________________________________________

If the answer to any of the above is yes, explain.  (Attach additional sheets if necessary):            _____________________________

________________________________________________________________

________________________________________________________________

3.  Are you (Seller) aware of any of the following conditions?

Write Yes (Y) if you are aware, write No (N) if you are not aware.

If the answer to any of the above is yes, explain.  (Attach additional sheets if necessary):            _____________________________

________________________________________________________________

________________________________________________________________

4.  Are you (Seller) aware of any item, equipment, or system in or on the property that is in need of repair?  __ Yes (if you are aware)  __ No (if you are not aware).  If yes, explain (attach additional sheets as necessary).                  _________________________________

5.  Are you (Seller) aware of any of the following?

Write Yes (Y) if you aware, write No (N) if you are not aware.

If the answer to any of the above is yes, explain.  (Attach additional sheets if necessary):            _____________________________

________________________________________________________________

________________________________________________________________

6.  If the property is located in a coastal area that is seaward of the Gulf Intracoastal Waterway or within 1,000 feet of the mean high tide bordering the Gulf of Mexico, the property may be subject to the Open Beaches Act or the Dune Protection Act (Chapter 61 or 63, Natural Resources Code, respectively) and a beachfront construction certificate or dune protection permit may be required for repairs or improvements.  Contact the local government with ordinance authority over construction adjacent to public beaches for more information.

__________________       _____________________________________

Date                        Signature of Seller

The undersigned purchaser hereby acknowledges receipt of the foregoing notice.

__________________       _____________________________________

Date                        Signature of Purchaser

Text of subsection as amended by Acts 2007, 80th Leg., R.S., Ch. 448, Sec. 1

(b)  The notice must be executed and must, at a minimum, read substantially similar to the following:

SELLER’S DISCLOSURE NOTICE

CONCERNING THE PROPERTY AT ___________________________________

(Street Address and City)

THIS NOTICE IS A DISCLOSURE OF SELLER’S KNOWLEDGE OF THE CONDITION OF THE PROPERTY AS OF THE DATE SIGNED BY SELLER AND IS NOT A SUBSTITUTE FOR ANY INSPECTIONS OR WARRANTIES THE PURCHASER MAY WISH TO OBTAIN. IT IS NOT A WARRANTY OF ANY KIND BY SELLER OR SELLER’S AGENTS.

Seller __ is __ is not occupying the Property.

If unoccupied, how long since Seller has occupied the Property?

________________________________________________________________

1.  The Property has the items checked below:

Write Yes (Y), No (N), or Unknown (U).

Roof Type: ________________________________ Age: _____(approx)

Are you (Seller) aware of any of the above items that are not in working condition, that have known defects, or that are in need of repair?  __ Yes  __ No  __ Unknown.

If yes, then describe.  (Attach additional sheets if necessary):

________________________________________________________________

________________________________________________________________

2.  Are you (Seller) aware of any known defect/malfunctions in any of the following?

Write Yes (Y) if you are aware, write No (N) if you are not aware.

__ Other Structural Components (Describe): ____________________

________________________________________________________________

________________________________________________________________

If the answer to any of the above is yes, explain.  (Attach additional sheets if necessary):            _____________________________

________________________________________________________________

________________________________________________________________

3.  Are you (Seller) aware of any of the following conditions?

Write Yes (Y) if you are aware, write No (N) if you are not aware.

If the answer to any of the above is yes, explain.  (Attach additional sheets if necessary):            _____________________________

________________________________________________________________

________________________________________________________________

4.  Are you (Seller) aware of any item, equipment, or system in or on the property that is in need of repair?  __ Yes (if you are aware)  __ No (if you are not aware).  If yes, explain (attach additional sheets as necessary).                  _________________________________

5.  Are you (Seller) aware of any of the following?

Write Yes (Y) if you aware, write No (N) if you are not aware.

If the answer to any of the above is yes, explain.  (Attach additional sheets if necessary):            _____________________________

________________________________________________________________

________________________________________________________________

__________________       _____________________________________

Date                                 Signature of Seller

The undersigned purchaser hereby acknowledges receipt of the foregoing notice.

__________________       _____________________________________

Date                              Signature of Purchaser

(c)  A seller or seller’s agent shall have no duty to make a disclosure or release information related to whether a death by natural causes, suicide, or accident unrelated to the condition of the property occurred on the property or whether a previous occupant had, may have had, has, or may have AIDS, HIV related illnesses, or HIV infection.

(d)  The notice shall be completed to the best of seller’s belief and knowledge as of the date the notice is completed and signed by the seller.  If the information required by the notice is unknown to the seller, the seller shall indicate that fact on the notice, and by that act is in compliance with this section.

(e)  This section does not apply to a transfer:

(1)  pursuant to a court order or foreclosure sale;

(2)  by a trustee in bankruptcy;

(3)  to a mortgagee by a mortgagor or successor in interest, or to a beneficiary of a deed of trust by a trustor or successor in interest;

(4)  by a mortgagee or a beneficiary under a deed of trust who has acquired the real property at a sale conducted pursuant to a power of sale under a deed of trust or a sale pursuant to a court ordered foreclosure or has acquired the real property by a deed in lieu of foreclosure;

(5)  by a fiduciary in the course of the administration of a decedent’s estate, guardianship, conservatorship, or trust;

(6)  from one co-owner to one or more other co-owners;

(7)  made to a spouse or to a person or persons in the lineal line of consanguinity of one or more of the transferors;

(8)  between spouses resulting from a decree of dissolution of marriage or a decree of legal separation or from a property settlement agreement incidental to such a decree;

(9)  to or from any governmental entity;

(10)  of a new residence of not more than one dwelling unit which has not previously been occupied for residential purposes; or

(11)  of real property where the value of any dwelling does not exceed five percent of the value of the property.

(f)  The notice shall be delivered by the seller to the purchaser on or before the effective date of an executory contract binding the purchaser to purchase the property.  If a contract is entered without the seller providing the notice required by this section, the purchaser may terminate the contract for any reason within seven days after receiving the notice.

Added by Acts 1993, 73rd Leg., ch. 356, Sec. 1, eff. Jan. 1, 1994.

Amended by:

Acts 2005, 79th Leg., Ch. 728, Sec. 17.001, eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch. 448, Sec. 1, eff. January 1, 2008.

Acts 2007, 80th Leg., R.S., Ch. 1051, Sec. 11, eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch. 1256, Sec. 22, eff. September 1, 2007.

Sec. 5.009.  DUTIES OF LIFE TENANT.  (a)  Subject to Subsection (b), if the life tenant of a legal life estate is given the power to sell and reinvest any life tenancy property, the life tenant is subject, with respect to the sale and investment of the property, to all of the fiduciary duties of a trustee imposed by the Texas Trust Code (Subtitle B, Title 9, Property Code)  or the common law of this state.

(b)  A life tenant may retain, as life tenancy property, any real property originally conveyed to the life tenant without being subject to the fiduciary duties of a trustee;  however, the life tenant is subject to the common law duties of a life tenant.

Acts 1993, 73rd Leg., ch. 846, Sec. 34, eff. Sept. 1, 1993.  Renumbered from Property Code Sec. 5.008 by Acts 1995, 74th Leg., ch. 76, Sec. 17.01(42), eff. Sept. 1, 1995.

Sec. 5.010.  NOTICE OF ADDITIONAL TAX LIABILITY.  (a)  A person who is the owner of an interest in vacant land and who contracts for the transfer of that interest shall include in the contract the following bold-faced notice:

NOTICE REGARDING POSSIBLE LIABILITY FOR ADDITIONAL TAXES

If for the current ad valorem tax year the taxable value of the land that is the subject of this contract is determined by a special appraisal method that allows for appraisal of the land at less than its market value, the person to whom the land is transferred may not be allowed to qualify the land for that special appraisal in a subsequent tax year and the land may then be appraised at its full market value.  In addition, the transfer of the land or a subsequent change in the use of the land may result in the imposition of an additional tax plus interest as a penalty for the transfer or the change in the use of the land.  The taxable value of the land and the applicable method of appraisal for the current tax year is public information and may be obtained from the tax appraisal district established for the county in which the land is located.

(b)  This section does not apply to a contract for a transfer:

(1)  under a court order or foreclosure sale;

(2)  by a trustee in bankruptcy;

(3)  to a mortgagee by a mortgagor or successor in interest or to a beneficiary of a deed of trust by a trustor or successor in interest;

(4)  by a mortgagee or a beneficiary under a deed of trust who has acquired the land at a sale conducted under a power of sale under a deed of trust or a sale under a court-ordered foreclosure or has acquired the land by a deed in lieu of foreclosure;

(5)  by a fiduciary in the course of the administration of a decedent’s estate, guardianship, conservatorship, or trust;

(6)  of only a mineral interest, leasehold interest, or security interest;  or

(7)  to or from a governmental entity.

(c)  The notice described by Subsection (a) is not required to be included in a contract for transfer of an interest in land if every transferee under the contract is:

(1)  a person who is a co-owner with an owner described by Subsection (a) of an undivided interest in the land;  or

(2)  a spouse or a person in the lineal line of consanguinity of an owner described by Subsection (a).

(d)  The notice described by Subsection (a) is not required to be given if in a separate paragraph of the contract the contract expressly provides for the payment of any additional ad valorem taxes and interest that become due as a penalty because of:

(1)  the transfer of the land;  or

(2)  a subsequent change in the use of the land.

(e)  If the owner fails to include in the contract the notice described by Subsection (a), the person to whom the land is transferred is entitled to recover from that owner an amount equal to the amount of any additional taxes and interest that the person is required to pay as a penalty because of:

(1)  the transfer of the land;  or

(2)  a subsequent change in the use of the land that occurs before the fifth anniversary of the date of the transfer.

Added by Acts 1997, 75th Leg., ch. 174, Sec. 1, eff. Jan. 1, 1998.

Sec. 5.011.  SELLER’S DISCLOSURE REGARDING POTENTIAL ANNEXATION.  (a)  A person who sells an interest in real property in this state shall give to the purchaser of the property a written notice that reads substantially similar to the following:

NOTICE REGARDING POSSIBLE ANNEXATION

If the property that is the subject of this contract is located outside the limits of a municipality, the property may now or later be included in the extraterritorial jurisdiction of a municipality and may now or later be subject to annexation by the municipality.  Each municipality maintains a map that depicts its boundaries and extraterritorial jurisdiction.  To determine if the property is located within a municipality’s extraterritorial jurisdiction or is likely to be located within a municipality’s extraterritorial jurisdiction, contact all municipalities located in the general proximity of the property for further information.

(b)  The seller shall deliver the notice to the purchaser before the date the executory contract binds the purchaser to purchase the property.  The notice may be given separately, as part of the contract during negotiations, or as part of any other notice the seller delivers to the purchaser.

(c)  This section does not apply to a transfer:

(1)  under a court order or foreclosure sale;

(2)  by a trustee in bankruptcy;

(3)  to a mortgagee by a mortgagor or successor in interest or to a beneficiary of a deed of trust by a trustor or successor in interest;

(4)  by a mortgagee or a beneficiary under a deed of trust who has acquired the land at a sale conducted under a power of sale under a deed of trust or a sale under a court-ordered foreclosure or has acquired the land by a deed in lieu of foreclosure;

(5)  by a fiduciary in the course of the administration of a decedent’s estate, guardianship, conservatorship, or trust;

(6)  from one co-owner to another co-owner of an undivided interest in the real property;

(7)  to a spouse or a person in the lineal line of consanguinity of the seller;

(8)  to or from a governmental entity;

(9)  of only a mineral interest, leasehold interest, or security interest;  or

(10)  of real property that is located wholly within a municipality’s corporate boundaries.

(d)  If the notice is delivered as provided by this section, the seller has no duty to provide additional information regarding the possible annexation of the property by a municipality.

(e)  If an executory contract is entered into without the seller providing the notice required by this section, the purchaser may terminate the contract for any reason within the earlier of:

(1)  seven days after the date the purchaser receives the notice;  or

(2)  the date the transfer occurs.

Added by Acts 1999, 76th Leg., ch. 529, Sec. 1, eff. Jan. 1, 2000.

Sec. 5.012.  NOTICE OF OBLIGATIONS RELATED TO MEMBERSHIP IN PROPERTY OWNERS’ ASSOCIATION.  (a)  A seller of residential real property that is subject to membership in a property owners’ association and that comprises not more than one dwelling unit located in this state shall give to the purchaser of the property a written notice that reads substantially similar to the following:

NOTICE OF MEMBERSHIP IN PROPERTY OWNERS’ ASSOCIATION CONCERNING THE PROPERTY AT (street address) (name of residential community)

As a purchaser of property in the residential community in which this property is located, you are obligated to be a member of a property owners’ association.  Restrictive covenants governing the use and occupancy of the property and a dedicatory instrument governing the establishment, maintenance, and operation of this residential community have been or will be recorded in the Real Property Records of the county in which the property is located.  Copies of the restrictive covenants and dedicatory instrument may be obtained from the county clerk.

You are obligated to pay assessments to the property owners’ association.  The amount of the assessments is subject to change.  Your failure to pay the assessments could result in a lien on and the foreclosure of your property.

(b)  The seller shall deliver the notice to the purchaser before the date the executory contract binds the purchaser to purchase the property.  The notice may be given separately, as part of the contract during negotiations, or as part of any other notice the seller delivers to the purchaser.  If the notice is included as part of the executory contract or another notice, the title of the notice prescribed by this section, the references to the street address and date in the notice, and the purchaser’s signature on the notice may be omitted.

(c)  This section does not apply to a transfer:

(1)  under a court order or foreclosure sale;

(2)  by a trustee in bankruptcy;

(3)  to a mortgagee by a mortgagor or successor in interest or to a beneficiary of a deed of trust by a trustor or successor in interest;

(4)  by a mortgagee or a beneficiary under a deed of trust who has acquired the land at a sale conducted under a power of sale under a deed of trust or a sale under a court-ordered foreclosure or has acquired the land by a deed in lieu of foreclosure;

(5)  by a fiduciary in the course of the administration of a decedent’s estate, guardianship, conservatorship, or trust;

(6)  from one co-owner to another co-owner of an undivided interest in the real property;

(7)  to a spouse or a person in the lineal line of consanguinity of the seller;

(8)  to or from a governmental entity;

(9)  of only a mineral interest, leasehold interest, or security interest;  or

(10)  of a real property interest in a condominium.

(d)  If an executory contract is entered into without the seller providing the notice required by this section, the purchaser may terminate the contract for any reason within the earlier of:

(1)  seven days after the date the purchaser receives the notice;  or

(2)  the date the transfer occurs as provided by the executory contract.

(e)  The purchaser’s right to terminate the executory contract under Subsection (d) is the purchaser’s exclusive remedy for the seller’s failure to provide the notice required by this section.

Added by Acts 1999, 76th Leg., ch. 1420, Sec. 1, eff. Jan. 1, 2000.

Sec. 5.013.  SELLER’S DISCLOSURE OF LOCATION OF CONDITIONS UNDER SURFACE OF UNIMPROVED REAL PROPERTY.  (a)  A seller of unimproved real property to be used for residential purposes shall provide to the purchaser of the property a written notice disclosing the location of a transportation pipeline, including a pipeline for the transportation of natural gas, natural gas liquids, synthetic gas, liquefied petroleum gas, petroleum or a petroleum product, or a hazardous substance.

(b)  The notice must state the information to the best of the seller’s belief and knowledge as of the date the notice is completed and signed by the seller.  If the information required to be disclosed is not known to the seller, the seller shall indicate that fact in the notice.

(c)  The notice must be delivered by the seller on or before the effective date of an executory contract binding the purchaser to purchase the property.  If a contract is entered without the seller providing the notice as required by this section, the purchaser may terminate the contract for any reason not later than the seventh day after the effective date of the contract.

(d)  This section applies to any seller of unimproved real property, including a seller who is the developer of the property and who sells the property to others for resale.

(e)  In this section, “hazardous substance” and “hazardous waste” have the meanings assigned by Section 361.003, Health and Safety Code.

(f)  A seller is not required to give the notice if:

(1)  the seller is obligated under an earnest money contract to furnish a title insurance commitment to the buyer prior to closing;  and

(2)  the buyer is entitled to terminate the contract if the buyer’s objections to title as permitted by the contract are not cured by the seller prior to closing.

Added by Acts 1997, 75th Leg., ch. 1239, Sec. 1, eff. Sept. 1, 1997.  Renumbered from Property Code Sec. 5.010 by Acts 2001, 77th Leg., ch. 1420, Sec. 21.001(95), eff. Sept. 1, 2001.

Sec. 5.014.  NOTICE OF OBLIGATIONS RELATED TO PUBLIC IMPROVEMENT DISTRICT.  (a)  A seller of residential real property that is located in a public improvement district established under Chapter 372, Local Government Code, and that consists of not more than one dwelling unit located in this state shall give to the purchaser of the property a written notice that reads substantially similar to the following:

NOTICE OF OBLIGATION TO PAY PUBLIC IMPROVEMENT DISTRICT ASSESSMENT TO (municipality or county levying assessment) CONCERNING THE PROPERTY AT (street address)

As a purchaser of this parcel of real property you are obligated to pay an assessment to a municipality or county for an improvement project undertaken by a public improvement district under Chapter 372, Local Government Code.  The assessment may be due annually or in periodic installments.  More information concerning the amount of the assessment and the due dates of that assessment may be obtained from the municipality or county levying the assessment.

The amount of the assessments is subject to change.  Your failure to pay the assessments could result in a lien on and the foreclosure of your property.

(b)  The seller shall deliver the notice required under Subsection (a) to the purchaser before the effective date of an executory contract binding the purchaser to purchase the property.  The notice may be given separately, as part of the contract during negotiations, or as part of any other notice the seller delivers to the purchaser.  If the notice is included as part of the executory contract or another notice, the title of the notice prescribed by this section, the references to the street address and date in the notice, and the purchaser’s signature on the notice may be omitted.

(c)  This section does not apply to a transfer:

(1)  under a court order or foreclosure sale;

(2)  by a trustee in bankruptcy;

(3)  to a mortgagee by a mortgagor or successor in interest or to a beneficiary of a deed of trust by a trustor or successor in interest;

(4)  by a mortgagee or a beneficiary under a deed of trust who has acquired the land at a sale conducted under a power of sale under a deed of trust or a sale under a court-ordered foreclosure or has acquired the land by a deed in lieu of foreclosure;

(5)  by a fiduciary in the course of the administration of a decedent’s estate, guardianship, conservatorship, or trust;

(6)  from one co-owner to another co-owner of an undivided interest in the real property;

(7)  to a spouse or a person in the lineal line of consanguinity of the seller;

(8)  to or from a governmental entity;

(9)  of only a mineral interest, leasehold interest, or security interest;  or

(10)  of a real property interest in a condominium.

(d)  If an executory contract is entered into without the seller providing the notice required by this section, the purchaser may terminate the contract for any reason not later than the earlier of:

(1)  the seventh day after the date the purchaser receives the notice;  or

(2)  the date the transfer occurs as provided by the executory contract.

(e)  The purchaser’s right to terminate the executory contract under Subsection (d) is the purchaser’s exclusive remedy for the seller’s failure to provide the notice required by this section.

Added by Acts 2005, 79th Leg., Ch. 1085, Sec. 1, eff. January 1, 2006.

Sec.  5.015.  PROHIBITED FEES.  A person who has a right of first refusal in real property that is a condominium subject to Chapter 81 or Chapter 82 may not charge a fee for declining to exercise that right, such as a fee for providing written evidence of the declination.

Added by Acts 2005, 79th Leg., Ch. 825, Sec. 14, eff. September 1, 2005.

Renumbered from Property Code, Section 5.014 by Acts 2007, 80th Leg., R.S., Ch. 921, Sec. 17.001(63), eff. September 1, 2007.

Text of section as added by Acts 2007, 80th Leg., R.S., Ch. 843, Sec. 1

For text of section as added by Acts 2007, 80th Leg., R.S., Ch. 1056, Sec. 1, see other Sec. 5.016.

Sec. 5.016.  DISCLOSURE OF ABSENCE OF CERTAIN WARRANTIES.  (a)  A seller of residential real property that is exempt from Title 16 under Section 401.005 shall give to the purchaser of the property a written notice that reads substantially similar to the following:

NOTICE OF NONAPPLICABILITY OF CERTAIN WARRANTIES

AND BUILDING AND PERFORMANCE STANDARDS

The property that is subject to this contract is exempt from Title 16, Property Code, including the provisions of that title that provide statutory warranties and building and performance standards.

(b)  A notice required by this section shall be delivered by the seller to the purchaser on or before the effective date of an executory contract binding the purchaser to purchase the property.  If a contract is entered into without the seller providing the notice, the purchaser may terminate the contract for any reason on or before the seventh day after the date the purchaser receives the notice.

(c)  This section does not apply to a transfer:

(1)  under a court order or foreclosure sale;

(2)  by a trustee in bankruptcy;

(3)  to a mortgagee by a mortgagor or successor in interest or to a beneficiary of a deed of trust by a trustor or successor in interest;

(4)  by a mortgagee or a beneficiary under a deed of trust who has acquired the land at a sale conducted under a power of sale under a deed of trust or a sale under a court-ordered foreclosure or has acquired the land by a deed in lieu of foreclosure;

(5)  by a fiduciary in the course of the administration of a decedent’s estate, guardianship, conservatorship, or trust;

(6)  from one co-owner to another co-owner of an undivided interest in the real property;

(7)  to a spouse or a person in the lineal line of consanguinity of the seller;

(8)  to or from a governmental entity; or

(9)  of only a mineral interest, leasehold interest, or security interest.

Added by Acts 2007, 80th Leg., R.S., Ch. 843, Sec. 1, eff. September 1, 2007.

Text of section as added by Acts 2007, 80th Leg., R.S., Ch. 1056, Sec. 1

For text of section as added by Acts 2007, 80th Leg., R.S., Ch. 843, Sec. 1, see other Sec. 5.016.

Sec. 5.016.  CONVEYANCE OF RESIDENTIAL PROPERTY ENCUMBERED BY LIEN.  (a)  A person may not convey an interest in or enter into a contract to convey an interest in residential real property that will be encumbered by a recorded lien at the time the interest is conveyed unless, on or before the seventh day before the earlier of the effective date of the conveyance or the execution of an executory contract binding the purchaser to purchase the property, an option contract, or other contract, the person provides the purchaser and each lienholder a separate written disclosure statement in at least 12-point type that:

(1)  identifies the property and includes the name, address, and phone number of each lienholder;

(2)  states the amount of the debt that is secured by each lien;

(3)  specifies the terms of any contract or law under which the debt that is secured by the lien was incurred, including, as applicable:

(A)  the rate of interest;

(B)  the periodic installments required to be paid; and

(C)  the account number;

(4)  indicates whether the lienholder has consented to the transfer of the property to the purchaser;

(5)  specifies the details of any insurance policy relating to the property, including:

(A)  the name of the insurer and insured;

(B)  the amount for which the property is insured; and

(C)  the property that is insured;

(6)  states the amount of any property taxes that are due on the property; and

(7)  includes a statement at the top of the disclosure in a form substantially similar to the following:

WARNING:  ONE OR MORE RECORDED LIENS HAVE BEEN FILED THAT MAKE A CLAIM AGAINST THIS PROPERTY AS LISTED BELOW.  IF A LIEN IS NOT RELEASED AND THE PROPERTY IS CONVEYED WITHOUT THE CONSENT OF THE LIENHOLDER, IT IS POSSIBLE THE LIENHOLDER COULD DEMAND FULL PAYMENT OF THE OUTSTANDING BALANCE OF THE LIEN IMMEDIATELY.  YOU MAY WISH TO CONTACT EACH LIENHOLDER FOR FURTHER INFORMATION AND DISCUSS THIS MATTER WITH AN ATTORNEY.

(b)  A violation of this section does not invalidate a conveyance.  Except as provided by Subsections (c) and (d), if a contract is entered into without the seller providing the notice required by this section, the purchaser may terminate the contract for any reason on or before the seventh day after the date the purchaser receives the notice in addition to other remedies provided by this section or other law.

(c)  This section does not apply to a transfer:

(1)  under a court order or foreclosure sale;

(2)  by a trustee in bankruptcy;

(3)  to a mortgagee by a mortgagor or successor in interest or to a beneficiary of a deed of trust by a trustor or successor in interest;

(4)  by a mortgagee or a beneficiary under a deed of trust who has acquired the real property at a sale conducted under a power of sale under a deed of trust or a sale under a court-ordered foreclosure or has acquired the real property by a deed in lieu of foreclosure;

(5)  by a fiduciary in the course of the administration of a decedent’s estate, guardianship, conservatorship, or trust;

(6)  from one co-owner to one or more other co-owners;

(7)  to a spouse or to a person or persons in the lineal line of consanguinity of one or more of the transferors;

(8)  between spouses resulting from a decree of dissolution of marriage or a decree of legal separation or from a property settlement agreement incidental to one of those decrees;

(9)  to or from a governmental entity;

(10)  where the purchaser obtains a title insurance policy insuring the transfer of title to the real property; or

(11)  to a person who has purchased, conveyed, or entered into contracts to purchase or convey an interest in real property four or more times in the preceding 12 months.

(d)  A violation of this section is not actionable if the person required to give notice reasonably believes and takes any necessary action to ensure that each lien for which notice was not provided will be released on or before the 30th day after the date on which title to the property is transferred.

Added by Acts 2007, 80th Leg., R.S., Ch. 1056, Sec. 1, eff. January 1, 2008.

Sec. 5.017.  FEE FOR FUTURE CONVEYANCE OF RESIDENTIAL REAL PROPERTY AND RELATED LIEN PROHIBITED.  (a)  In this section, “property owners’ association” has the meaning assigned by Section 209.002.

(b)  A deed restriction or other covenant running with the land applicable to the conveyance of residential real property that requires a transferee of residential real property or the transferee’s heirs, successors, or assigns to pay a declarant or other person imposing the deed restriction or covenant on the property or a third party designated by a transferor of the property a fee in connection with a future transfer of the property is prohibited.  A deed restriction or other covenant running with the land that violates this section or a lien purporting to encumber the land to secure a right under a deed restriction or other covenant running with the land that violates this section is void and unenforceable.  For purposes of this section, a conveyance of real property includes a conveyance or other transfer of an interest or estate in residential real property.

(c)  This section does not apply to a deed restriction or other covenant running with the land that requires a fee associated with the conveyance of property in a subdivision that is payable to:

(1)  a property owners’ association that manages or regulates the subdivision or the association’s managing agent if the subdivision contains more than one platted lot;

(2)  an entity organized under Section 501(c)(3), Internal Revenue Code of 1986; or

(3)  a governmental entity.

Added by Acts 2007, 80th Leg., R.S., Ch. 1056, Sec. 1, eff. January 1, 2008.

SUBCHAPTER B. FORM AND CONSTRUCTION OF INSTRUMENTS

Sec. 5.021.  INSTRUMENT OF CONVEYANCE.  A conveyance of an estate of inheritance, a freehold, or an estate for more than one year, in land and tenements, must be in writing and must be subscribed and delivered by the conveyor or by the conveyor’s agent authorized in writing.

Acts 1983, 68th Leg., p. 3481, ch. 576, Sec. 1, eff. Jan. 1, 1984.

Sec. 5.022.  FORM.  (a)  The following form or a form that is the same in substance conveys a fee simple estate in real property with a covenant of general warranty:

“The State of Texas,

“County of ____________________.

“Know all men by these presents, That I, __________________, of the __________________ (give name of city, town, or county), in the state aforesaid, for and in consideration of __________________ dollars, to me in hand paid by __________________, have granted, sold, and conveyed, and by these presents do grant, sell, and convey unto the said __________________, of the __________________ (give name of city, town, or county), in the state of __________________, all that certain __________________ (describe the premises).  To have and to hold the above described premises, together with all and singular the rights and appurtenances thereto in any wise belonging, unto the said __________________, his heirs or assigns forever.  And I do hereby bind myself, my heirs, executors, and administrators to warrant and forever defend all and singular the said premises unto the said __________________, his heirs, and assigns, against every person whomsoever, lawfully claiming or to claim the same, or any part thereof.

“Witness my hand, this __________________ day of __________________, A.D. 19___.

“Signed and delivered in the presence of ____________________”

(b)  A covenant of warranty is not required in a conveyance.

(c)  The parties to a conveyance may insert any clause or use any form not in contravention of law.

Acts 1983, 68th Leg., p. 3481, ch. 576, Sec. 1, eff. Jan. 1, 1984.

Sec. 5.023.  IMPLIED COVENANTS.  (a)  Unless the conveyance expressly provides otherwise, the use of “grant” or “convey” in a conveyance of an estate of inheritance or fee simple implies only that the grantor and the grantor’s heirs covenant to the grantee and the grantee’s heirs or assigns:

(1)  that prior to the execution of the conveyance the grantor has not conveyed the estate or any interest in the estate to a person other than the grantee;  and

(2)  that at the time of the execution of the conveyance the estate is free from encumbrances.

(b)  An implied covenant under this section may be the basis for a lawsuit as if it had been expressed in the conveyance.

Acts 1983, 68th Leg., p. 3482, ch. 576, Sec. 1, eff. Jan. 1, 1984.

Sec. 5.024.  ENCUMBRANCES.  “Encumbrance” includes a tax, an assessment, and a lien on real property.

Acts 1983, 68th Leg., p. 3482, ch. 576, Sec. 1, eff. Jan. 1, 1984.

Sec. 5.025.  WOOD SHINGLE ROOF.  To the extent that a deed restriction applicable to a structure on residential property requires the use of a wood shingle roof, the restriction is void.

Acts 1983, 68th Leg., p. 3482, ch. 576, Sec. 1, eff. Jan. 1, 1984.

Sec. 5.026.  DISCRIMINATORY PROVISIONS.  (a)  If a restriction that affects real property, or a provision in a deed that conveys real property or an interest in real property, whether express or incorporated by reference, prohibits the use by or the sale, lease, or transfer to a person because of race, color, religion, or national origin, the provision or restriction is void.

(b)  A court shall dismiss a suit or part of a suit to enforce a provision that is void under this section.

Acts 1983, 68th Leg., p. 3483, ch. 576, Sec. 1, eff. Jan. 1, 1984.

SUBCHAPTER C. FUTURE ESTATES

Sec. 5.041.  FUTURE ESTATES.  A person may make an inter vivos conveyance of an estate of freehold or inheritance that commences in the future, in the same manner as by a will.

Acts 1983, 68th Leg., p. 3483, ch. 576, Sec. 1, eff. Jan. 1, 1984.

Sec. 5.042.  ABOLITION OF COMMON-LAW RULES.  (a)  The common-law rules known as the rule in Shelley’s case, the rule forbidding a remainder to the grantor’s heirs, the doctrine of worthier title, and the doctrine or rule prohibiting an existing lien upon part of a homestead from extending to another part of the homestead not charged with the debts secured by the existing lien upon part of the homestead do not apply in this state.

(b)  A deed, will, or other conveyance of property in this state that limits an interest in the property to a particular person or to a class such as the heirs, heirs of the body, issue, or next of kin of the conveyor or of a person to whom a particular interest in the same property is limited is effective according to the intent of the conveyor.

(c)  Status as an heir or next of kin of a conveyor or the failure of a conveyor to describe a person in a conveyance other than as a member of a class does not affect a person’s right to take or share in an interest as a conveyee.

(d)  Subject to the intention of a conveyor, which controls unless limited by law, the membership of a class described in this section and the participation of a member in a property interest conveyed to the class are determined under this state’s laws of descent and distribution.

(e)  This section does not apply to a conveyance taking effect before January 1, 1964.

Acts 1983, 68th Leg., p. 3483, ch. 576, Sec. 1, eff. Jan. 1, 1984.  Amended by Acts 1999, 76th Leg., ch. 1510, Sec. 5, eff. Sept. 1, 1999.

Sec. 5.043.  REFORMATION OF INTERESTS VIOLATING RULE AGAINST PERPETUITIES.  (a)  Within the limits of the rule against perpetuities, a court shall reform or construe an interest in real or personal property that violates the rule to effect the ascertainable general intent of the creator of the interest.  A court shall liberally construe and apply this provision to validate an interest to the fullest extent consistent with the creator’s intent.

(b)  The court may reform or construe an interest under Subsection (a) of this section according to the doctrine of cy pres by giving effect to the general intent and specific directives of the creator within the limits of the rule against perpetuities.

(c)  If an instrument that violates the rule against perpetuities may be reformed or construed under this section, a court shall enforce the provisions of the instrument that do not violate the rule and shall reform or construe under this section a provision that violates or might violate the rule.

(d)  This section applies to legal and equitable interests, including noncharitable gifts and trusts, conveyed by an inter vivos instrument or a will that takes effect on or after September 1, 1969, and this section applies to an appointment made on or after that date regardless of when the power was created.

Acts 1983, 68th Leg., p. 3484, ch. 576, Sec. 1, eff. Jan. 1, 1984.  Amended by Acts 1991, 72nd Leg., ch. 895, Sec. 16, eff. Sept. 1, 1991.

SUBCHAPTER D. EXECUTORY CONTRACT FOR CONVEYANCE

Sec. 5.061.  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.

Sec. 5.062.  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, 5.081, 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, Sec. 2, eff. September 1, 2005.

Sec. 5.0621.  CONSTRUCTION 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, Sec. 3, eff. September 1, 2005.

Sec. 5.063.  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.

Sec. 5.064.  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;  and

(3)  Section 5.066 does not apply.

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.

Sec. 5.065.  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 that section.

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.

Sec. 5.066.  EQUITY PROTECTION;  SALE OF PROPERTY.  (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, 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.

(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:

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) A TRUSTEE DESIGNATED BY THE SELLER HAS THE RIGHT TO SELL YOUR PROPERTY AT A PUBLIC AUCTION.

(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.

(d)  The trustee or a substitute trustee designated by the seller must conduct the sale as prescribed by Section 51.002.  The seller must:

(1)  convey to a purchaser at a sale conducted under this section fee simple title to the real property;  and

(2)  warrant that the property is free from any encumbrance.

(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.

(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.

(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.

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.

Sec. 5.067.  PLACEMENT OF LIEN FOR UTILITY SERVICE.  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.

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.

Sec. 5.068.  FOREIGN LANGUAGE REQUIREMENT.  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.

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.

Sec. 5.069.  SELLER’S DISCLOSURE OF PROPERTY CONDITION.  (a)  Before an executory contract is signed by the purchaser, the seller shall provide the purchaser with:

(1)  a survey, which was completed within the past year, or plat of a current survey of the real property;

(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

(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:

WARNING

IF ANY OF THE ITEMS BELOW HAVE NOT BEEN CHECKED, YOU MAY NOT BE ABLE TO LIVE ON THE PROPERTY.

SELLER’S DISCLOSURE NOTICE

CONCERNING THE PROPERTY AT (street address or legal description and city)

THIS DOCUMENT STATES CERTAIN APPLICABLE FACTS ABOUT THE PROPERTY YOU ARE CONSIDERING PURCHASING.

CHECK ALL THE ITEMS THAT ARE APPLICABLE OR TRUE:

_____  The property is in a recorded subdivision.

_____  The property has water service that provides potable water.

_____  The property has sewer service.

_____  The property has been approved by the appropriate municipal, county, or state agency for installation of a septic system.

_____  The property has electric service.

_____  The property is not in a floodplain.

_____  The roads to the boundaries of the property are paved and maintained by:

_____  the seller;

_____  the owner of the property on which the road exists;

_____  the municipality;

_____  the county; or

_____  the state.

_____  No individual or entity other than the seller:

(1)  owns the property;

(2)  has a claim of ownership to the property; or

(3)  has an interest in the property.

_____  No individual or entity has a lien filed against the property.

_____  There are no restrictive covenants, easements, or other title exceptions or encumbrances that prohibit construction of a house on the property.

NOTICE:  SELLER ADVISES PURCHASER TO:

(1) OBTAIN A TITLE ABSTRACT OR TITLE COMMITMENT COVERING

THE PROPERTY AND HAVE THE ABSTRACT OR COMMITMENT REVIEWED

BY AN ATTORNEY BEFORE SIGNING A CONTRACT OF THIS TYPE; AND

(2) PURCHASE AN OWNER’S POLICY OF TITLE INSURANCE

COVERING THE PROPERTY.

(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.

(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.

(d)  The seller’s failure to provide information required by this section:

(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

(2)  entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller.

(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.

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.

Sec. 5.070.  SELLER’S DISCLOSURE OF TAX PAYMENTS AND INSURANCE COVERAGE.  (a)  Before an executory contract is signed by the purchaser, the seller shall provide the purchaser with:

(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

(2)  a legible copy of any insurance policy, binder, or other evidence relating to the property that indicates:

(A)  the name of the insurer and the insured;

(B)  a description of the property insured;  and

(C)  the amount for which the property is insured.

(b)  The seller’s failure to provide information required by this section:

(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

(2)  entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller.

(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.

Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.071.  SELLER’S DISCLOSURE OF FINANCING TERMS.  Before an executory contract is signed by the purchaser, the seller shall provide to the purchaser a written statement that specifies:

(1)  the purchase price of the property;

(2)  the interest rate charged under the contract;

(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;

(4)  the total amount of principal and interest to be paid under the contract;

(5)  the late charge, if any, that may be assessed under the contract;  and

(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.

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.

Sec. 5.072.  ORAL AGREEMENTS PROHIBITED.  (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.

(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.

(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.

(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:

THIS EXECUTORY CONTRACT REPRESENTS THE FINAL AGREEMENT BETWEEN THE SELLER AND PURCHASER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

____________________________         ____________________________

(Date)                                   (Signature of Seller)

____________________________         ____________________________

(Date)                                (Signature of Purchaser)

(e)  The seller’s failure to provide the notice required by this section:

(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

(2)  entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller.

(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.

Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.073.  CONTRACT TERMS, CERTAIN WAIVERS PROHIBITED.  (a)  A seller may not include as a term of the executory contract a provision that:

(1)  imposes an additional late-payment fee that exceeds the lesser of:

(A)  eight percent of the monthly payment under the contract; or

(B)  the actual administrative cost of processing the late payment;

(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;

(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;

(4)  forfeits an option fee or other option payment paid under the contract for a late payment; or

(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.

(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.

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.

Amended by:

Acts 2005, 79th Leg., Ch. 978, Sec. 4, eff. September 1, 2005.

Sec. 5.074.  PURCHASER’S RIGHT TO CANCEL CONTRACT WITHOUT CAUSE.  (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.

(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:

(1)  return to the purchaser the executed contract and any property exchanged or payments made by the purchaser under the contract;  and

(2)  cancel any security interest arising out of the contract.

(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:

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.

(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:

(date of contract)

NOTICE OF CANCELLATION

YOU MAY CANCEL THE EXECUTORY CONTRACT FOR ANY REASON WITHOUT ANY PENALTY OR OBLIGATION BY (date).

(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).

(2)  THE SELLER SHALL, NOT LATER THAN THE 10TH DAY AFTER THE DATE THE SELLER RECEIVES YOUR CANCELLATION NOTICE:

(A)  RETURN THE EXECUTED CONTRACT AND ANY PROPERTY EXCHANGED OR PAYMENTS MADE BY YOU UNDER THE CONTRACT;  AND

(B)  CANCEL ANY SECURITY INTEREST ARISING OUT OF THE CONTRACT.

I ACKNOWLEDGE RECEIPT OF THIS NOTICE OF CANCELLATION FORM.

_________________________            _________________________

(Date)                                  (Purchaser’s Signature)

I HEREBY CANCEL THIS CONTRACT.

_________________________            _________________________

(Date)                                  (Purchaser’s Signature)

(e)  The seller may not request the purchaser to sign a waiver of receipt of the notice of cancellation form required by this section.

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.

Sec. 5.075.  PURCHASER’S RIGHT TO PLEDGE INTEREST IN PROPERTY ON CONTRACTS ENTERED INTO BEFORE SEPTEMBER 1, 2001.  (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.

(b)  Loans that improve the safety of the property and improvements on the property include loans for:

(1)  improving or connecting a residence to water service;

(2)  improving or connecting a residence to a wastewater system;

(3)  building or improving a septic system;

(4)  structural improvements in the residence;  and

(5)  improved fire protection.

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.

Sec. 5.076.  RECORDING REQUIREMENTS.  (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.

(b)  Section 12.002(c) does not apply to an executory contract filed for record under this section.

(c)  If the executory contract is terminated for any reason, the seller shall record the instrument that terminates the contract.

(d)  The county clerk shall collect the filing fee prescribed by Section 118.011, Local Government Code.

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.

Sec. 5.077.  ANNUAL ACCOUNTING STATEMENT.  (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.

(b)  The statement must include the following information:

(1)  the amount paid under the contract;

(2)  the remaining amount owed under the contract;

(3)  the number of payments remaining under the contract;

(4)  the amounts paid to taxing authorities on the purchaser’s behalf if collected by the seller;

(5)  the amounts paid to insure the property on the purchaser’s behalf if collected by the seller;

(6)  if the property has been damaged and the seller has received insurance proceeds, an accounting of the proceeds applied to the property;  and

(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).

(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:

(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

(2)  reasonable attorney’s fees.

(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:

(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

(2)  reasonable attorney’s fees.

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.

Amended by:

Acts 2005, 79th Leg., Ch. 978, Sec. 5, eff. September 1, 2005.

Sec. 5.078.  DISPOSITION OF INSURANCE PROCEEDS.  (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:

(1)  the executory contract for conveyance and the term of the contract;  and

(2)  the name and address of the other party to the contract.

(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.

(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.

(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.

(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.

Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.079.  TITLE TRANSFER.  (a)  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.

(b)  A seller who violates Subsection (a) is liable to the purchaser for:

(1)  liquidated damages in the amount of:

(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

(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

(2)  reasonable attorney’s fees.

(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.

(d)  In this section, “seller” includes a successor, assignee, personal representative, executor, or administrator of the seller.

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.

Sec. 5.080.  LIABILITY FOR DISCLOSURES.  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.

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.

Sec. 5.081.  RIGHT TO CONVERT CONTRACT.  (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.

(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.

(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:

(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

(2)  the purchaser shall simultaneously execute a deed of trust that:

(A)  contains the same terms as the contract regarding the purchaser’s and seller’s duties concerning the property;

(B)  secures the purchaser’s payment and performance under the promissory note and deed of trust; and

(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.

(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:

(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

(2)  communicate with the purchaser to schedule a mutually agreeable day and time to execute the deed and deed of trust under Subsection (c).

(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.

(f)  On the last date that all of the conveyances described by Subsections (b) and (c) are executed, the executory contract:

(1)  is considered completed; and

(2)  has no further effect.

(g)  The appropriate use of forms published by the Texas Real Estate Commission for transactions described by this section constitutes compliance with this section.

Added by Acts 2005, 79th Leg., Ch. 978, Sec. 6, eff. September 1, 2005.

Sec. 5.082.  REQUEST FOR BALANCE AND TRUSTEE.  (a)  A purchaser under an executory contract, on written request, is entitled to receive the following information from the seller:

(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

(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.

(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.

(c)  If the seller does not timely respond to a request made under this section, the purchaser may:

(1)  determine or pay the amount owed under the contract, including determining the amount necessary for a promissory note under Section 5.081; and

(2)  if applicable, select a trustee for a deed of trust under Section 5.081.

(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.

(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:

(1)  be sent to the purchaser by regular and certified mail;

(2)  include the amount the seller claims is the amount owed under the contract; and

(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.

Added by Acts 2005, 79th Leg., Ch. 978, Sec. 6, eff. September 1, 2005.

Sec. 5.083.  RIGHT TO CANCEL CONTRACT FOR IMPROPER PLATTING.  (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:

(1)  deliver a signed, written notice of the cancellation and rescission to the seller in person; or

(2)  send a signed, written notice of the cancellation and rescission to the seller by telegram or certified or registered mail, return receipt requested.

(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:

(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

(2)  return to the purchaser all payments of any kind made to the seller under the contract and reimburse the purchaser for:

(A)  any payments the purchaser made to a taxing authority for the property; and

(B)  the value of any improvements made to the property by the purchaser.

(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:

(1)  properly subdivides or plats the property; and

(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.

(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).

Added by Acts 2005, 79th Leg., Ch. 978, Sec. 6, eff. September 1, 2005.

Sec. 5.084.  RIGHT TO DEDUCT.  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.

Added by Acts 2005, 79th Leg., Ch. 978, Sec. 6, eff. September 1, 2005.

Sec. 5.085.  FEE SIMPLE TITLE REQUIRED; MAINTENANCE OF FEE SIMPLE TITLE.  (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.

(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:

(1)  placed on the property because of the conduct of the purchaser;

(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

(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:

(A)  the seller, not later than the third day before the date the contract is executed, notifies the purchaser in a separate written disclosure:

(i)  of the name, address, and phone number of the lienholder or, if applicable, servicer of the loan;

(ii)  of the loan number and outstanding balance of the loan;

(iii)  of the monthly payments due on the loan and the due date of those payments; and

(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;

(B)  the lien:

(i)  is attached only to the property sold to the purchaser under the contract; and

(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;

(C)  the lienholder:

(i)  does not prohibit the property from being encumbered by an executory contract; and

(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

(D)  the following covenants are placed in the executory contract:

(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);

(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

(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.

(c)  A violation of this section:

(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

(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:

(A)  the return of all payments of any kind made to the seller under the contract; and

(B)  reimbursement for:

(i)  any payments the purchaser made to a taxing authority for the property; and

(ii)  the value of any improvements made to the property by the purchaser.

(d)  A seller is not liable under this section if:

(1)  a lien is placed on the property by a person other than the seller; and

(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.

Added by Acts 2005, 79th Leg., Ch. 978, Sec. 6, eff. September 1, 2005.

SUBCHAPTER F. REQUIREMENTS FOR CONVEYANCES OF MINERAL OR ROYALTY INTERESTS

Sec. 5.151.  DISCLOSURE IN OFFER TO PURCHASE MINERAL INTEREST.  (a)  A person who mails to the owner of a mineral or royalty interest an offer to purchase only the mineral or royalty interest, it being understood that for the purpose of this section the taking of an oil, gas, or mineral lease shall not be deemed a purchase of a mineral or royalty interest, and encloses an instrument of conveyance of only the mineral or royalty interest and a draft or other instrument, as defined in Section 3.104, Business & Commerce Code, providing for payment for that interest shall include in the offer a conspicuous statement printed in a type style that is approximately the same size as 14-point type style or larger and is in substantially the following form:

BY EXECUTING AND DELIVERING THIS INSTRUMENT YOU ARE SELLING ALL OR A PORTION OF YOUR MINERAL OR ROYALTY INTEREST IN (DESCRIPTION OF PROPERTY BEING CONVEYED).

(b)  A person who conveys a mineral or royalty interest as provided by Subsection (a) may bring suit against the purchaser of the interest if:

(1)  the purchaser did not give the notice required by Subsection (a);  and

(2)  the person has given 30 days’ written notice to the purchaser that a suit will be filed unless the matter is otherwise resolved.

(c)  A plaintiff who prevails in a suit under Subsection (b) may recover from the initial purchaser of the mineral or royalty interest the greater of:

(1)  $100;  or

(2)  an amount up to the difference between the amount paid by the purchaser for the mineral or royalty interest and the fair market value of the mineral or royalty interest at the time of the sale.

(d)  The prevailing party in a suit under Subsection (b) may recover:

(1)  court costs;  and

(2)  reasonable attorney’s fees.

(e)  A person must bring a suit under Subsection (b) not later than the second anniversary of the date the person executed the conveyance.

(f)  The remedy provided under this section shall be in addition to any other remedies existing under law, excluding rescission or other remedies that would make the conveyance of the mineral or royalty interest void or of no force and effect.

Added by Acts 1999, 76th Leg., ch. 1200, Sec. 1, eff. Sept. 1, 1999.

TEXAS PROPERTY CODE

CHAPTER 5. CONVEYANCES.

SUBCHAPTER D. EXECUTORY CONTRACT FOR CONVEYANCE

Sec. 5.061.  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.

Sec. 5.062.  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, 5.081, 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, Sec. 2, eff. September 1, 2005.

Sec. 5.0621.  CONSTRUCTION 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, Sec. 3, eff. September 1, 2005.

Sec. 5.063.  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.

Sec. 5.064.  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;  and

(3)  Section 5.066 does not apply.

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.

Sec. 5.065.  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 that section.

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.

Sec. 5.066.  EQUITY PROTECTION;  SALE OF PROPERTY.  (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, 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.

(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:

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) A TRUSTEE DESIGNATED BY THE SELLER HAS THE RIGHT TO SELL YOUR PROPERTY AT A PUBLIC AUCTION.

(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.

(d)  The trustee or a substitute trustee designated by the seller must conduct the sale as prescribed by Section 51.002.  The seller must:

(1)  convey to a purchaser at a sale conducted under this section fee simple title to the real property;  and

(2)  warrant that the property is free from any encumbrance.

(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.

(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.

(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.

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.

Sec. 5.067.  PLACEMENT OF LIEN FOR UTILITY SERVICE.  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.

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.

Sec. 5.068.  FOREIGN LANGUAGE REQUIREMENT.  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.

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.

Sec. 5.069.  SELLER’S DISCLOSURE OF PROPERTY CONDITION.  (a)  Before an executory contract is signed by the purchaser, the seller shall provide the purchaser with:

(1)  a survey, which was completed within the past year, or plat of a current survey of the real property;

(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

(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:

WARNING

IF ANY OF THE ITEMS BELOW HAVE NOT BEEN CHECKED, YOU MAY NOT BE ABLE TO LIVE ON THE PROPERTY.

SELLER’S DISCLOSURE NOTICE

CONCERNING THE PROPERTY AT (street address or legal description and city)

THIS DOCUMENT STATES CERTAIN APPLICABLE FACTS ABOUT THE PROPERTY YOU ARE CONSIDERING PURCHASING.

CHECK ALL THE ITEMS THAT ARE APPLICABLE OR TRUE:

_____  The property is in a recorded subdivision.

_____  The property has water service that provides potable water.

_____  The property has sewer service.

_____  The property has been approved by the appropriate municipal, county, or state agency for installation of a septic system.

_____  The property has electric service.

_____  The property is not in a floodplain.

_____  The roads to the boundaries of the property are paved and maintained by:

_____  the seller;

_____  the owner of the property on which the road exists;

_____  the municipality;

_____  the county; or

_____  the state.

_____  No individual or entity other than the seller:

(1)  owns the property;

(2)  has a claim of ownership to the property; or

(3)  has an interest in the property.

_____  No individual or entity has a lien filed against the property.

_____  There are no restrictive covenants, easements, or other title exceptions or encumbrances that prohibit construction of a house on the property.

NOTICE:  SELLER ADVISES PURCHASER TO:

(1) OBTAIN A TITLE ABSTRACT OR TITLE COMMITMENT COVERING

THE PROPERTY AND HAVE THE ABSTRACT OR COMMITMENT REVIEWED

BY AN ATTORNEY BEFORE SIGNING A CONTRACT OF THIS TYPE; AND

(2) PURCHASE AN OWNER’S POLICY OF TITLE INSURANCE

COVERING THE PROPERTY.

(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.

(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.

(d)  The seller’s failure to provide information required by this section:

(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

(2)  entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller.

(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.

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.

Sec. 5.070.  SELLER’S DISCLOSURE OF TAX PAYMENTS AND INSURANCE COVERAGE.  (a)  Before an executory contract is signed by the purchaser, the seller shall provide the purchaser with:

(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

(2)  a legible copy of any insurance policy, binder, or other evidence relating to the property that indicates:

(A)  the name of the insurer and the insured;

(B)  a description of the property insured;  and

(C)  the amount for which the property is insured.

(b)  The seller’s failure to provide information required by this section:

(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

(2)  entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller.

(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.

Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.071.  SELLER’S DISCLOSURE OF FINANCING TERMS.  Before an executory contract is signed by the purchaser, the seller shall provide to the purchaser a written statement that specifies:

(1)  the purchase price of the property;

(2)  the interest rate charged under the contract;

(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;

(4)  the total amount of principal and interest to be paid under the contract;

(5)  the late charge, if any, that may be assessed under the contract;  and

(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.

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.

Sec. 5.072.  ORAL AGREEMENTS PROHIBITED.  (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.

(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.

(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.

(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:

THIS EXECUTORY CONTRACT REPRESENTS THE FINAL AGREEMENT BETWEEN THE SELLER AND PURCHASER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

____________________________         ____________________________

(Date)                                   (Signature of Seller)

____________________________         ____________________________

(Date)                                (Signature of Purchaser)

(e)  The seller’s failure to provide the notice required by this section:

(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

(2)  entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller.

(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.

Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.073.  CONTRACT TERMS, CERTAIN WAIVERS PROHIBITED.  (a)  A seller may not include as a term of the executory contract a provision that:

(1)  imposes an additional late-payment fee that exceeds the lesser of:

(A)  eight percent of the monthly payment under the contract; or

(B)  the actual administrative cost of processing the late payment;

(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;

(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;

(4)  forfeits an option fee or other option payment paid under the contract for a late payment; or

(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.

(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.

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.

Amended by:

Acts 2005, 79th Leg., Ch. 978, Sec. 4, eff. September 1, 2005.

Sec. 5.074.  PURCHASER’S RIGHT TO CANCEL CONTRACT WITHOUT CAUSE.  (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.

(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:

(1)  return to the purchaser the executed contract and any property exchanged or payments made by the purchaser under the contract;  and

(2)  cancel any security interest arising out of the contract.

(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:

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.

(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:

(date of contract)

NOTICE OF CANCELLATION

YOU MAY CANCEL THE EXECUTORY CONTRACT FOR ANY REASON WITHOUT ANY PENALTY OR OBLIGATION BY (date).

(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).

(2)  THE SELLER SHALL, NOT LATER THAN THE 10TH DAY AFTER THE DATE THE SELLER RECEIVES YOUR CANCELLATION NOTICE:

(A)  RETURN THE EXECUTED CONTRACT AND ANY PROPERTY EXCHANGED OR PAYMENTS MADE BY YOU UNDER THE CONTRACT;  AND

(B)  CANCEL ANY SECURITY INTEREST ARISING OUT OF THE CONTRACT.

I ACKNOWLEDGE RECEIPT OF THIS NOTICE OF CANCELLATION FORM.

_________________________            _________________________

(Date)                                  (Purchaser’s Signature)

I HEREBY CANCEL THIS CONTRACT.

_________________________            _________________________

(Date)                                  (Purchaser’s Signature)

(e)  The seller may not request the purchaser to sign a waiver of receipt of the notice of cancellation form required by this section.

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.

Sec. 5.075.  PURCHASER’S RIGHT TO PLEDGE INTEREST IN PROPERTY ON CONTRACTS ENTERED INTO BEFORE SEPTEMBER 1, 2001.  (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.

(b)  Loans that improve the safety of the property and improvements on the property include loans for:

(1)  improving or connecting a residence to water service;

(2)  improving or connecting a residence to a wastewater system;

(3)  building or improving a septic system;

(4)  structural improvements in the residence;  and

(5)  improved fire protection.

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.

Sec. 5.076.  RECORDING REQUIREMENTS.  (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.

(b)  Section 12.002(c) does not apply to an executory contract filed for record under this section.

(c)  If the executory contract is terminated for any reason, the seller shall record the instrument that terminates the contract.

(d)  The county clerk shall collect the filing fee prescribed by Section 118.011, Local Government Code.

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.

Sec. 5.077.  ANNUAL ACCOUNTING STATEMENT.  (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.

(b)  The statement must include the following information:

(1)  the amount paid under the contract;

(2)  the remaining amount owed under the contract;

(3)  the number of payments remaining under the contract;

(4)  the amounts paid to taxing authorities on the purchaser’s behalf if collected by the seller;

(5)  the amounts paid to insure the property on the purchaser’s behalf if collected by the seller;

(6)  if the property has been damaged and the seller has received insurance proceeds, an accounting of the proceeds applied to the property;  and

(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).

(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:

(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

(2)  reasonable attorney’s fees.

(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:

(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

(2)  reasonable attorney’s fees.

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.

Amended by:

Acts 2005, 79th Leg., Ch. 978, Sec. 5, eff. September 1, 2005.

Sec. 5.078.  DISPOSITION OF INSURANCE PROCEEDS.  (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:

(1)  the executory contract for conveyance and the term of the contract;  and

(2)  the name and address of the other party to the contract.

(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.

(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.

(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.

(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.

Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.079.  TITLE TRANSFER.  (a)  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.

(b)  A seller who violates Subsection (a) is liable to the purchaser for:

(1)  liquidated damages in the amount of:

(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

(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

(2)  reasonable attorney’s fees.

(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.

(d)  In this section, “seller” includes a successor, assignee, personal representative, executor, or administrator of the seller.

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.

Sec. 5.080.  LIABILITY FOR DISCLOSURES.  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.

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.

Sec. 5.081.  RIGHT TO CONVERT CONTRACT.  (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.

(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.

(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:

(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

(2)  the purchaser shall simultaneously execute a deed of trust that:

(A)  contains the same terms as the contract regarding the purchaser’s and seller’s duties concerning the property;

(B)  secures the purchaser’s payment and performance under the promissory note and deed of trust; and

(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.

(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:

(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

(2)  communicate with the purchaser to schedule a mutually agreeable day and time to execute the deed and deed of trust under Subsection (c).

(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.

(f)  On the last date that all of the conveyances described by Subsections (b) and (c) are executed, the executory contract:

(1)  is considered completed; and

(2)  has no further effect.

(g)  The appropriate use of forms published by the Texas Real Estate Commission for transactions described by this section constitutes compliance with this section.

Added by Acts 2005, 79th Leg., Ch. 978, Sec. 6, eff. September 1, 2005.

Sec. 5.082.  REQUEST FOR BALANCE AND TRUSTEE.  (a)  A purchaser under an executory contract, on written request, is entitled to receive the following information from the seller:

(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

(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.

(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.

(c)  If the seller does not timely respond to a request made under this section, the purchaser may:

(1)  determine or pay the amount owed under the contract, including determining the amount necessary for a promissory note under Section 5.081; and

(2)  if applicable, select a trustee for a deed of trust under Section 5.081.

(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.

(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:

(1)  be sent to the purchaser by regular and certified mail;

(2)  include the amount the seller claims is the amount owed under the contract; and

(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.

Added by Acts 2005, 79th Leg., Ch. 978, Sec. 6, eff. September 1, 2005.

Sec. 5.083.  RIGHT TO CANCEL CONTRACT FOR IMPROPER PLATTING.  (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:

(1)  deliver a signed, written notice of the cancellation and rescission to the seller in person; or

(2)  send a signed, written notice of the cancellation and rescission to the seller by telegram or certified or registered mail, return receipt requested.

(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:

(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

(2)  return to the purchaser all payments of any kind made to the seller under the contract and reimburse the purchaser for:

(A)  any payments the purchaser made to a taxing authority for the property; and

(B)  the value of any improvements made to the property by the purchaser.

(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:

(1)  properly subdivides or plats the property; and

(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.

(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).

Added by Acts 2005, 79th Leg., Ch. 978, Sec. 6, eff. September 1, 2005.

Sec. 5.084.  RIGHT TO DEDUCT.  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.

Added by Acts 2005, 79th Leg., Ch. 978, Sec. 6, eff. September 1, 2005.

Sec. 5.085.  FEE SIMPLE TITLE REQUIRED; MAINTENANCE OF FEE SIMPLE TITLE.  (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.

(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:

(1)  placed on the property because of the conduct of the purchaser;

(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

(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:

(A)  the seller, not later than the third day before the date the contract is executed, notifies the purchaser in a separate written disclosure:

(i)  of the name, address, and phone number of the lienholder or, if applicable, servicer of the loan;

(ii)  of the loan number and outstanding balance of the loan;

(iii)  of the monthly payments due on the loan and the due date of those payments; and

(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;

(B)  the lien:

(i)  is attached only to the property sold to the purchaser under the contract; and

(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;

(C)  the lienholder:

(i)  does not prohibit the property from being encumbered by an executory contract; and

(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

(D)  the following covenants are placed in the executory contract:

(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);

(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

(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.

(c)  A violation of this section:

(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

(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:

(A)  the return of all payments of any kind made to the seller under the contract; and

(B)  reimbursement for:

(i)  any payments the purchaser made to a taxing authority for the property; and

(ii)  the value of any improvements made to the property by the purchaser.

(d)  A seller is not liable under this section if:

(1)  a lien is placed on the property by a person other than the seller; and

(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.

Added by Acts 2005, 79th Leg., Ch. 978, Sec. 6, eff. September 1, 2005.

Once again, you can now download forms and contracts from this website. As before, each bundle will contain all the documents necessary to complete the transaction, and as always, if you purchase a bundle you will get unlimited email support from me.

Seller’s Wraparound Mortgage Bundle 

Includes:

Seller - Wraparound Mortgage READ ME
Seller - Purchase and Sale Agreement
Seller - Notice of Conveyance Encumbered by Lien
Seller - Authorization to Release Loan Information
Seller - Special Warranty Deed with Vendor's Lien
Seller - Note Secured by Wraparound Mortgage
Seller - Deed of Trust (Wraparound Mortgage)
Seller - Closing Statement and Due-on-Sale Acknowledgment
Seller - Bill of Sale

Price: $97.00

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Buyer’s Wraparound Mortgage Bundle 

Includes:

Buyer - Wraparound Mortgage READ ME
Buyer - Purchase and Sale Agreement
Buyer - Authorization to Release Loan Information
Buyer - Limited Power of Attorney for Real Estate
Buyer - (General) Warranty Deed
Buyer - Note Secured by Wraparound Mortgage
Buyer - Deed of Trust (Wraparound Mortgage)
Buyer - Closing Agreement and Due-on-Sale Acknowledgment
Buyer - Bill of Sale and Assignment

Price: $97.00

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If you have a basic understanding of owner financing in general and wraparound mortgages in particular, you can sell your house on a wrap, hopefully faster and at a better price than waiting for all cash or a new loan. Like the garden-variety real estate sale, selling on a wrap involves a contract, an inspection period, and a closing, but because there will be no new bank financing (and possibly no title insurance), the entire transaction could take 7 days or less. If you have a buyer who’s ready to sign up, here’s a step-by-step guide to selling your a house on a wraparound mortgage.

READ ME – Wraparound Mortgage

This article can be downloaded for free here or on my downloads page. You can also download any or all of the contract forms you will need to sell your house on a wrap.

The following documents need to be signed and/or delivered before the closing:

Agreement for Purchase and Sale of Real Estate

This document does not convey ownership of real estate, it is simply a promise for you to sell and for the buyer to buy the property under certain conditions. Ask the buyer to make two separate payments to you – an option fee, which is non-refundable but allows the buyer to terminate for any reason within a certain time period, and earnest money, which is refundable during an inspection period when the buyer is allowed to inspect the property, review title, and possibly renegotiate the terms of the sale. Once the inspection period ends, the earnest money “goes hard” and is non-refundable unless the seller defaults. This document can be recorded but as the seller, you do not want the buyer to record it and create a “cloud” on your title, so the form includes a clause preventing the recording of the agreement.

Notice of Conveyance Encumbered by Lien

If you or the buyer is buying title insurance, this disclosure is not required. If neither party is buying title insurance, then you must deliver the notice to the buyer and the lender at least 7 days before the effective date of your Agreement. To do this, give the notice to your buyer at the same time you sign the contract, but make the effective date of the contract at least 7 days after the date you sign it, then fax or scan/e-mail the notice to the lender that same day. (Or if you mail the notice to the lender, make your effective date at least 10 days after the signing date.) Or just buy the title policy and save yourself all this hassle. This document is not recorded.

Authorization to Release Loan Information

As the seller, you do not have to give the buyer this document and it is not required for the transaction, but if the buyer asks for it, it is a fair request. The buyer is well within his rights to confirm your mortgage information before he actually takes over responsibility for paying it off.

Once these documents are executed, make a copy for the buyer and a copy for the title company, attorney, or whoever is going to conduct your closing. If neither you nor the buyer is going to buy title insurance, then you can proceed to closing as soon as the inspection period ends.

The following documents need to be signed at closing:

Special Warranty Deed With Vendor’s Lien

This is the document that conveys title to the property. Even though the first mortgage is not being paid off, you are selling the property to the buyer and the buyer is taking legal title to the property. The vendor’s lien creates a lien against the property that will allow the vendor (you) to foreclose if the buyer fails to pay you the note as promised. This document needs to be signed and notarized because it will be recorded in the county’s property records. The buyer should record the original deed and have the recorded original mailed or delivered to the buyer, with a copy to you or your trustee.

Note Secured by Wraparound Mortgage

You are the lender or payee and the buyer is the borrower or maker. This document is not recorded.

Deed of Trust to Secure Assumption

This is the actual “wraparound mortgage,” but it is officially called a deed of trust in Texas. In a technical legal sense, the Grantor (the borrower/buyer) conveys the property to a Trustee (usually an attorney) to hold for the benefit of the Beneficiary (you, the seller/lender). This document secures the buyer’s promise to pay the note by creating a lien against the property you are selling. (This lien is fairly redundant to the vendor’s lien in the special warranty deed, because in most cases, the seller and the lender are not the same entity. So this is a bit of a belt-and-suspenders approach, but too much protection is far better than too little.) The deed of trust also secures the buyer’s promise to pay your mortgage, even if the buyer is paying your lender directly. If the buyer fails to pay either the first mortgage (to the lender) or the second mortgage (to you), you would be able to foreclose. This document needs to be signed and notarized because it will be recorded in the county’s property records. You keep the original, record it and have the recorded original mailed to you or your trustee, with a copy to the buyer.

Closing Agreement and Due-on-Sale Acknowledgment

This is a crucial document that must be signed and initialed by both the seller and the buyer. It is an acknowledgment by both parties that the underlying mortgage (the first one, held by the original lender) is not being paid off at closing. This means that the mortgage is still in the seller’s name and must still be paid every month. It also means, most likely, that the conveyance of the property will trigger the “due-on-sale” clause, which would allow the original lender to accelerate its note or “call the note due.” If either of those things happens (the first mortgage does not get paid or the first lender accelerates the note), then the lender could foreclose on the property, which would wreck the seller’s credit and wipe out the seller’s wraparound mortgage and the buyer’s ownership of the property. So everyone needs to understand this and sign and initial this document. This document will not be recorded, but the seller needs to keep a signed original of this document and keep it in a very safe place (preferably a scanned digital copy and an actual signed original).

Bill of Sale and Assignment

This is not a required document and as the seller, you do not have to volunteer to sign this agreement, but if the buyer asks for it, it is certainly a valid request. The bill of sale conveys the personal property that is located on the property (basically, everything that is not nailed down – or make that everything that is not permanently nailed down). Usually the personalty is addressed in the purchase and sale agreement, and if not, presumably you will have removed any personal property you want to keep before the closing. However, if there are any leases, security deposits, escrow accounts, vendor contracts or other agreements associated with the property, this document would assign those items to the buyer.

As I outlined in my previous article about lease options, the Texas legislature has made it very difficult to sell a house on a “rent-to-own” or lease-purchase basis. The statute – Texas Property Code Chapter 5, Subchapter D, beginning with Section 5.061 - prohibits any executory contract for the sale of residential property if the property already has a mortgage on it, and sets out draconian penalties for any violations of the technical statutory requirements. For these reasons, I have generally advised my clients not to sell their houses with lease options and instead offer owner financing such as a wraparound mortgage.

However, it is possible to sell your Texas house on a lease purchase, and in fact, that may be the best solution for some sellers and buyers. You just want to make sure you keep your transaction “out of the statute,” so you don’t have to jump through all those legislative hoops. And luckily enough, there is a statutory exception that will allow you to sell your house rent-to-own without worrying about having to give all the money back if you don’t follow every single technical requirement for the code.

Landlord-Seller 00 – READ ME Lease Option

This article, titled “Landlord-Seller 00 – READ ME Lease Option,” can be downloaded for $0.01 here or on my downloads page. (I wanted it to be free, but the shopping cart wouldn’t let me.) You can also download any or all of the contract forms you will need to sell your house with a lease option.

These are the documents you will need to sell your house rent-to-own:

Landlord-Seller 01 – Residential Lease Application

Even though you are qualifying your applicants as tenants, you are really qualifying them as buyers. Assuming you want them to buy your house, you are looking for tenants who can afford the eventual mortgage payments and all the other expenses of home ownership, especially if you end up selling them the house with owner financing. So you will want to see verified gross monthly income of at least 3% of the eventual purchase price (or, in other words, three times the estimated “monthly nut” of owning the house).

Landlord-Seller 02 – Residential Lease Agreement

This lease agreement does not mention the option to purchase and vice versa. This is not required by law, but it’s just a good idea to illustrate to your tenant-buyers that the option to purchase is completely separate from the lease, and that paying rent and otherwise being a good tenant is not what entitles them to purchase the house. It’s also worth mentioning that although the option to purchase itself needs to expire within 180 days of the effective date, the lease itself can be longer, so you can offer someone a 12-month lease with a 6-month option to purchase, just so long as they understand (and acknowledge in writing) that the option only lasts 179 days regardless of the length of the lease.

Now, I often get asked if it is legal to give the tenant-buyer a long lease (e.g., 3 years), and provide that the option does not begin until a date 6 months before the end of the lease (e.g., 2 1/2 years into the 3-year lease). The answer is: yes, it is legal, but that transaction will fall under the executory contract statute. Section 5.062(c) of the Texas Property Code says the statute does not apply to a 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.

So you cannot extend the closing date of the actual sale past 180 days in any case without being subject to all the statutory requirements. No thanks.

Landlord-Seller 03 – Option Agreement to Purchase Real Estate

This is obviously the crucial document in the transaction, the document that grants the tenant-buyer the right to buy the property. It is absolutely critical that the option agreement specify that the deed must be executed and recorded on or before 179 days after the effective date of the option, that there are absolutely no renewals or extensions of the option, and that the option consideration is absolutely non-refundable under any circumstances. This document doesn’t have any particular statutory requirements, but I would recommend putting some of the important language in bold all caps and having the optionees initial those paragraphs. This Option Agreement favors the Landlord-Seller very heavily.

Landlord-Seller 04 – Quitclaim Deed

The form of this deed is attached as an exhibit to my form of option agreement to be used whenever the tenant-buyers do not exercise the option to buy the property. Even though the option agreement specifies that it terminates automatically and that recording the option agreement is strictly prohibited and will also terminate the option automatically, it is a good idea to get the non-purchasing tenant-buyers to sign a quitclaim deed so that there is no doubt that they have no legal or equitable interest in the property.

If the tenant-buyers do exercise the option to purchase the property, congratulations! Most don’t. If they do, then you will need to execute a purchase and sale agreement quickly, and you may in fact be selling the house on a wrap or other owner financing now. If so, you will now need some of my seller financing forms, e.g., the wraparound mortgage documents.

Landlord-Seller 05 - Lease Option Bundle

This is a bundle of all of the documents listed above, including the READ ME article.

The purchase price for all downloads includes free updates forever.
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Buying a house with a wraparound mortgage is one of many ways to buy real estate with owner financing. Any time a seller will finance part of the purchase of a home, it’s usually a good thing, especially if it means you, the buyer, don’t have to apply for a new bank loan. There are some seller financing options that tend to be a better deal for the buyer, particularly buying the house “subject to” the underlying mortgage and paying the seller a cash down payment and/or giving the seller a note for his equity. But buying on a wrap is certainly a good option too.

If you have a basic understanding of owner financing in general and wraparound mortgages in particular, you can buy a house on a wrap, hopefully faster and with less hassle than applying for a new bank loan. Like the garden-variety real estate sale, buying on a wrap involves a contract, an inspection period, and a closing, but because there will be no new bank financing (and possibly no title insurance), the entire transaction could take 7 days or less. If you have a seller who has agreed to sell you his house on a wrap, here’s a step-by-step guide to buying your a house with a wraparound mortgage.

The following documents need to be signed and/or delivered before the closing:

Agreement for Purchase and Sale of Real Estate – Buyer-Friendly

This document does not convey ownership of real estate, it is simply a promise for you to buy and for the seller to sell the property under certain conditions. This agreement allows you 30 days to inspect the property and the relevant documents and terminate for any reason or no reason at all within that option period. It also contains an agreement for the seller to convey all the personal property on the premises to you and a number of other pro-buyer provisions. If you are concerned that the seller may try to sell the property to someone else if a better deal comes along, you may want to record the agreement (or a memorandum of the agreement) with the county clerk, which would create a “cloud” on the title and allow you to enforce your agreement in several different ways.

Notice of Conveyance Encumbered by Lien

This document is of no real concern to you as the buyer. If either you or the seller is buying title insurance, this disclosure is not required, and even if there will be no new title policy, the obligations and potential liabilities for non-disclosure fall on the seller, not you. If you’re interested in this sort of thing, you can take a look at the Texas statute that requires the disclosure and establishes the penalties for the seller who fails to comply.

Authorization to Release Loan Information

You will definitely want this document when you sign the contract so that you can confirm all the information about the first mortgage (the seller’s mortgage that is not being paid off). Usually, requesting a copy of the latest statement will tell you the current principal balance, interest rate, monthly payment, and any amount in arrears, and sometimes will include information about the tax and insurance escrows, if any.

Limited Power of Attorney for Real Estate

It is okay to ask for this document at contract signing, but it’s certainly fine to wait until closing to get the seller’s signature. When the seller executes the POA and names you as the seller’s attorney-in-fact, it gives you the legal right to “stand in the shoes” of the seller in any situation relating to the property. You can do anything with the property that the seller could do – sell it, lease it, service the first mortgage, communicate directly with the first mortgage lender, etc. It is not absolutely necessary that you have a POA for this transaction, and some sellers may object pretty strongly, but you are taking full responsibility for the property and you should want full control over the property. If you don’t comply with the terms of your agreement, however, the seller would be able to revoke the POA and foreclose if necessary.

The following documents need to be signed at closing:

(General) Warranty Deed

This is the document that conveys title to the property. Even though the first mortgage is not being paid off, you are buying the property and taking legal title. The general warranty in this deed is the most expansive warranty of title allowed by law; the seller is warranting to you, the buyer, that no party has any superior claim of title to the property, including claims that may have arisen before the seller bought the property himself. The seller may reasonably request a vendor’s lien be included in the deed, but may not, because the seller will have a lien against the property when the deed of trust is recorded (see below). This document needs to be signed and notarized because it will be recorded in the county’s property records. You should record the original deed and have the recorded original mailed or delivered to you, with a copy to the seller.

Note Secured by Wraparound Mortgage

You are the borrower or maker and the seller is the lender or payee. This document is not recorded.

Deed of Trust (Wraparound Mortgage)

This is the actual document that secures your promise to pay the note by creating a lien against the property you are buying. If you do not pay the note as promised or otherwise default, the seller could accelerate the note, although this form does not include a power of sale that would allow the seller to foreclose easily. The seller may ask for a deed of trust and want to include a power of sale, which is standard. The seller may also ask for language in the deed of trust to secure your assumption of the obligations in the first mortgage (even though you are not formally assuming that mortgage, just agreeing to make the payments on it). This document needs to be signed and notarized because it will be recorded in the county’s property records. The seller should record the original and have the recorded original mailed or delivered to the seller, with a copy to you.

Closing Agreement and Due-on-Sale Acknowledgment

This is a crucial document that must be signed and initialed by both the seller and the buyer. It is an acknowledgment by both parties that the underlying mortgage (the first one, held by the original lender) is not being paid off at closing. This means that the mortgage is still in the seller’s name and must still be paid every month. It also means, most likely, that the conveyance of the property will trigger the “due-on-sale” clause, which would allow the original lender to accelerate its note or “call the note due.” If either of those things happens (the first mortgage does not get paid or the first lender accelerates the note), then the lender could foreclose on the property, which would wreck the seller’s credit and wipe out the seller’s wraparound mortgage and the buyer’s ownership of the property. So everyone needs to understand this and sign and initial this document. This document will not be recorded, but the seller needs to keep a signed original of this document and keep it in a very safe place (preferably a scanned digital copy and an actual signed original).

Limited Power of Attorney for Real Estate

If the seller has not already executed this document, the buyer should request it at closing. (See above.)

Bill of Sale and Assignment

The buyer’s purchase agreement should specify the personal property that will be conveyed along with the real estate, and if there are any leases, deposits, escrow accounts, vendor contracts, or other agreements associated with the property, the buyer should get an assignment of all of them at closing.

The Texas legislature is at it again. Just a couple of years after severely restricting the ability of real estate investors to sell residential property on a lease option or contract for deed, our representatives have passed a law requiring a massive disclosure whenever a seller conveys a house without paying off the underlying mortgage(s). NOTE: this disclosure is not required if the buyer gets a title insurance policy, so if you always insist on title insurance when you sell a property, you won’t have to worry about this.

Texas Property Code § 5.016, which became effective on January 1, 2008, applies whenever a seller sells, or contracts to sell, an interest in residential real property “that will be encumbered by a recorded lien at the time the interest is conveyed.” That means the statute applies any time a residential property is sold without paying off the existing mortgage or other liens. So if you are selling a house “subject to” the existing mortgage, or selling on a wraparound mortgage, or – theoretically – even conveying a property to the dreaded Ron Legrand “land trust,” you will have to comply with this new law.

You know, technically speaking, a lease is an interest in land, so you could argue this law even applies to residential leases! But I’m sure that’s not what the legislature intended, and I can’t see anyone successfully arguing that this statute should apply to landlords. So let’s just worry about sellers.

 If your residential sales contract falls under the statute, then you must give the buyer and each lienholder a separate written disclosure statement in at least 12-point type that:

(1) identifies the property and includes the name, address, and phone number of each lienholder;
(2) states the amount of the debt that is secured by each lien;
(3) specifies the terms of any contract or law under which the debt that is secured by the lien was incurred, including, as applicable:
(A) the rate of interest;
(B) the periodic installments required to be paid; and
(C) the account number;
(4) indicates whether the lienholder has consented to the transfer of the property to the purchaser;
(5) specifies the details of any insurance policy relating to the property, including:
(A) the name of the insurer and insured;
(B) the amount for which the property is insured; and
(C) the property that is insured;
(6) states the amount of any property taxes that are due on the property; and
(7) includes a statement at the top of the disclosure in a form substantially similar to the following: 

WARNING: ONE OR MORE RECORDED LIENS HAVE BEEN FILED THAT MAKE A CLAIM AGAINST THIS PROPERTY AS LISTED BELOW. IF A LIEN IS NOT RELEASED AND THE PROPERTY IS CONVEYED WITHOUT THE CONSENT OF THE LIENHOLDER, IT IS POSSIBLE THE LIENHOLDER COULD DEMAND FULL PAYMENT OF THE OUTSTANDING BALANCE OF THE LIEN IMMEDIATELY. YOU MAY WISH TO CONTACT EACH LIENHOLDER FOR FURTHER INFORMATION AND DISCUSS THIS MATTER WITH AN ATTORNEY.

Yikes! That’s a hefty disclosure. Not only that, but the disclosure must be delivered at least 7 days before the effective date of the sale or the effective date of the contract, whichever is earlier. Whoa – did I say before the effective date of the contract? Yes indeed, that’s what the statute says, even if it may not be what the legislature meant. This certainly throws a wrench in the plans of investors who want to sell their properties within 7 days.

So what should an investor do to comply with the statute? Well, the easiest solution is to insist on title insurance for the buyer, which is an exception to the disclosure requirement. Of course, that adds cost and complexity to the transaction. If that’s not an option, then the best thing to do is probably to deliver the disclosure – to the buyer and lienholder – with the executed contract, but make the “effective date” of the contract 7 days later. You can still close at any time after that, even on the effective date of the contract, if need be. But remember that the statute also says that if the buyer does not receive the notice with the contract, he can cancel the contract for any reason up to seven days after receiving the notice.

Selling with seller financing or on a wraparound mortgage is still an excellent way for Texas real estate investors to maximize their profits and minimize management headaches, and I recommend it to many of my clients. But take care that you’re doing it right, either with title insurance or all the proper disclosures.

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Most people are familiar with the Latin phrase caveat emptor, which means “buyer beware,” but investors and other homeowners attempting to sell their houses on a “rent to own,” lease option, or lease purchase should learn a new phrase: caveat vendor, or “seller beware.”

The Texas legislature has made it extremely difficult to sell a residential property on a lease option and comply with all the statutory provisions in the Texas Property Code. Chapter 5, Subchapter D of the Code applies to certain “executory contracts for conveyance,” meaning a real estate transaction where title (deed) does not transfer to the buyer immediately. And a 2006 amendment to this subchapter makes it clear that these provisions apply to lease purchase agreements in Texas:

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. Tex. Prop. Code § 5.062(a)(2).

So the statute applies to lease options, but there are a number of exceptions and carve-outs that define what lease option sellers must do (and make the statute almost impossible to read).

First of all, the statute does not apply at all to rent to own contracts with a term of 180 days or less, so if your tenant-buyer can exercise the option within 180 days, you don’t have to worry about the statute.

However, if the option term is more than 180 days but less than three years, the landlord-seller must jump through a lot of hoops to comply with the statute.

First and most importantly, § 5.085(a) of the Property Code provides that 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.”  That seems to say that a seller cannot lease-option his property if there is a mortgage on it!

But hold the phone, because subsection (b) of 5.085 seems to indicate that there is an exception for purchase money mortgages (a deed of trust securing the payment of money used to buy the house).

Subsection (b) says that you can lease option a house with a mortgage on it if:

1. The mortgage was used to purchase the house; and
2. The seller gives the buyer a written disclosure not less than 3 days before the lease-purchase contract is signed (click here to download a disclosure that complies with the statute); and
3. The lien covers only the property being sold and secures a payment amount that is never greater than the amount owed by the buyer; and
4. the lienholder (lender) does not object to the executory contract and 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
5. the contract contains certain specified covenants (click here to download a rent-to-own contract that complies with the statute).

And that’s not all. In addition to all of those requirements, if the tenant-buyer defaults on a payment under the contract, the seller must provide a specific written notice of default to the tenant-buyer and allow the tenant-buyer at least 30 days to cure the default. Click here for a notice of default that complies with the statute.

Finally, section 5.073 of the Property Code prohibits landlord-sellers from including certain terms in the lease-purchase contract (such as the forfeiture of the option fee for a late payment). Click here to download a contract that complies with the statute.

So there’s a lot to do if you’re planning to sell your house on a lease option. If you don’t comply with all of these statutory requirements, you could end up forfeiting every penny that the tenant-buyer pays you, or have to pay treble damages and attorney’s fees, or something else horrible.  

Click here to download the contracts, forms and notices you need to legally sell your house on a lease option in Texas, or contact me to talk more about legally selling your house on a lease option, lease purchase, or rent-to-own program.