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HB 1823 & Seller Financing Alternatives in Texas

By Leroy Stevens,2014-07-08 11:17
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HB 1823 & Seller Financing Alternatives in Texas

HB 1823 & Seller Financing Alternatives in Texas

Follow-up to AIREO.com June 9th 2005 monthly meeting

    This is the worksheet Attorney Steve Tiemann prepared that summarizes seller financing alternatives in Texas, and the applicability of HB 1823. This page is best viewed printed out in a "landscape" format.

Alternatives for “Seller Financing” of Residential Property in Texas

    1. Residential Lease Agreement - until Purchaser can qualify for / obtain

    third-party financing

Important Issues to Consider Include:

    a. Landlord and Tenant laws contained in Chapter 92 of the Texas

    Property Code

    2. An Executory Contract which is a Residential Lease Agreement with a

    “simple option” to purchase - for a term of 3 years or less - entered into

    after January 1, 2006

Important Issues to Consider Include:

    a. Landlord and Tenant laws contained in Chapter 92 of the Texas

    Property Code

    b. Selected Executory Contract laws contained in Chapter 5,

    subchapter D. of the Texas Property Code

    i. Notice of Default to Purchaser / Section 5.063

    ii. Seller’s Remedies on Default / Section 5.064

    iii. Purchaser’s Right to Cure Default / Section 5.065

    iv. Certain Contract Terms Prohibited / Section 5.073

Added by HB 1823:

    v. Purchaser’s Right to Cancel Contract for Improper Platting /

    Section 5.083

    vi. Seller’s Fee Simple Title Required - Seller’s Maintenance of

    Fee Simple Title / Section 5.085

    3. An Executory Contract which is a Residential Lease Agreement with a

    “simple option” to purchase - for a term of more than 3 years - entered

    into after January 1, 2006

Important Issues to Consider Include:

    a. Landlord and Tenant laws contained in Chapter 92 of the Texas Property Code

    b. Selected Executory Contract laws contained in Chapter 5, subchapter D. of the Texas Property Code

    i. Notice of Default to Purchaser / Section 5.063

    ii. Seller’s Remedies on Default / Section 5.064

    iii. Purchaser’s Right to Cure Default / Section 5.065

    iv. Seller’s Disclosure of Property Condition / Section 5.069

    v. Seller’s Disclosure of Tax Payments and Insurance Coverage

    / Section 5.070

    vi. Seller’s Disclosure of Final Agreement / Section 5.072

    vii. Certain Contract Terms Prohibited / Section 5.073

    viii. Purchaser’s Right to Cancel Contract Without Cause - Seller’s

    Disclosure of Purchaser’s Right to Cancel / Section 5.074

    ix. Seller’s Recording Requirements - Contract and Property

    Condition Disclosure / Section 5.076

    x. Seller’s Annual Accounting Statements / Section 5.077

    xi. Disposition of Insurance Proceeds to Seller and Purchaser /

    Section 5.078

    xii. Seller’s Deadline for Title Transfer / Section 5.079

    c. Added by HB 1823

    i. Purchaser’s Right to Cancel Contract for Improper Platting /

    Section 5.083

    ii. Purchaser’s Right to Deduct Amounts Owed by the Seller /

    Section 5.084

    iii. Seller’s Fee Simple Title Required - Seller’s Maintenance of

    Fee Simple Title / Section 5.085

    4. A Complete Executory Contract which has a term of 180 days or less -

    entered into before September 1, 2005

    Important Issues to Consider Include:

    a. General real estate transaction laws

    i. Written Executory Contract

    ii. Written Disclosures by the Seller regarding the property

    condition

    iii. Title Insurance Commitment and Title Insurance Policy -

    when requested or required by the Purchaser

    iv. Written Warranty Deed from the Seller to the Purchaser

    v. Written Promissory Note from the Purchaser to the Seller

    vi. Written Deed of Trust from the Purchaser to the Trustee for

    the Seller

    vii. Closing of the Transaction / Execution of Documents

    viii. Recording of the Warranty Deed and Deed of Trust in the

    Deed Records of the County where the property is located

    5. A Complete Executory Contract which has a term of 180 days or less -

    entered into after September 1, 2005

    Important Issues to Consider Include:

    a. A General real estate transaction laws

    i. Written Executory Contract

    ii. Written Disclosures by the Seller regarding the property

    condition

    iii. Title Insurance Commitment and Title Insurance Policy -

    when requested or required by the Purchaser

    iv. Written Warranty Deed from the Seller to the Purchaser

    v. Written Promissory Note from the Purchaser to the Seller

    vi. Written Deed of Trust from the Purchaser to the Trustee for

    the Seller

    vii. Closing of the Transaction / Execution of Documents

    viii. Recording of the Warranty Deed and Deed of Trust in the

    Deed Records of the County where the property is located

    6. A Complete Executory Contract which has a term of more than 180 days -

    entered into before September 1, 2005

    Important Issues to Consider Include:

    a. Executory Contract laws contained in Chapter 5, subchapter D. of

    the Texas Property Code

    i. Notice of Default to Purchaser / Section 5.063

    ii. Seller’s Remedies on Default / Section 5.064

    iii. Purchaser’s Right to Cure Default / Section 5.065

    iv. Purchaser’s Equity Protection - Seller’s Sale of Property

    Through Foreclosure / Section 5.066

    v. Seller’s Disclosure of Property Condition / Section 5.069

    vi. Seller’s Disclosure of Tax Payments and Insurance Coverage

    / Section 5.070

    vii. Seller’s Disclosure of Financing Terms / Section 5.071

    viii. Seller’s Disclosure of Final Agreement / Section 5.072

    ix. Certain Contract Terms Prohibited / Section 5.073

    x. Purchaser’s Right to Cancel Contract Without Cause - Seller’s

    Disclosure of Purchaser’s Right to Cancel / Section 5.074

    xi. Seller’s Recording Requirements - Contract and Property

    Condition Disclosure / Section 5.076

    xii. Seller’s Annual Accounting Statements / Section 5.077

    xiii. Disposition of Insurance Proceeds to Seller and Purchaser /

    Section 5.078

    xiv. Seller’s Deadline for Title Transfer / Section 5.079

    b. Added by HB 1823

    i. Purchaser’s Right to Convert Contract / Section 5.081

    ii. Purchaser’s Right to Request Balance Owed and Seller’s

    Desired Trustee / Section 5.082

    iii. Purchaser’s Right to Cancel Contract for Improper Platting /

    Section 5.083

    iv. Purchaser’s Right to Deduct Amounts Owed by the Seller /

    Section 5.084

    7. A Complete Executory Contract which has a term of more than 180 days -

    entered into after September 1, 2005

    Important Issues to Consider Include:

    a. Executory Contract laws contained in Chapter 5, subchapter D. of the Texas Property Code

    i. Notice of Default to Purchaser / Section 5.063 ii. Seller’s Remedies on Default / Section 5.064

    iii. Purchaser’s Right to Cure Default / Section 5.065

    iv. Purchaser’s Equity Protection - Seller’s Sale of Property

    Through Foreclosure / Section 5.066

    v. Seller’s Disclosure of Property Condition / Section 5.069

    vi. Seller’s Disclosure of Tax Payments and Insurance Coverage

    / Section 5.070

    vii. Seller’s Disclosure of Financing Terms / Section 5.071

    viii. Seller’s Disclosure of Final Agreement / Section 5.072

    ix. Certain Contract Terms Prohibited / Section 5.073 x. Purchaser’s Right to Cancel Contract Without Cause - Seller’s

    Disclosure of Purchaser’s Right to Cancel / Section 5.074

    xi. Seller’s Recording Requirements - Contract and Property

    Condition Disclosure / Section 5.076

    xii. Seller’s Annual Accounting Statements / Section 5.077

    xiii. Disposition of Insurance Proceeds to Seller and Purchaser /

    Section 5.078

    xiv. Seller’s Deadline for Title Transfer / Section 5.079

    b. Added by HB 1823

    i. Purchaser’s Right to Convert Contract / Section 5.081

    ii. Purchaser’s Right to Request Balance Owed and Seller’s

    Desired Trustee / Section 5.082

    iii. Purchaser’s Right to Cancel Contract for Improper Platting /

    Section 5.083

    iv. Purchaser’s Right to Deduct Amounts Owed by the Seller /

    Section 5.084

    v. Seller’s Fee Simple Title Required - Seller’s Maintenance of

    Fee Simple Title / Section 5.085

    8. Traditional Seller Financing when the property has no debt / no lender’s

    lien placed against it

    Important Issues to Consider Include:

    a. General real estate transaction laws

    i. Written Purchase and Sale Agreement

    ii. Written Disclosures by the Seller regarding the property

    condition

    iii. Title Insurance Commitment and Title Insurance Policy -

    when requested or required by the Purchaser

    iv. Written Warranty Deed from the Seller to the Purchaser

    v. Written Promissory Note from the Purchaser to the Seller

    vi. Written Deed of Trust from the Purchaser to the Trustee for

    the Seller

    vii. Closing of the Transaction / Execution of Documents

    viii. Recording of the Warranty Deed and Deed of Trust in the

    Deed Records of the County where the property is located

    9. Traditional Seller Financing when the property already has debt / lender’s

    lien placed against it

    Important Issues to Consider Include:

    a. General real estate transaction laws

    i. Written Purchase and Sale Agreement

    ii. Written Disclosures by the Seller regarding the property

    condition

    iii. Title Insurance Commitment and Title Insurance Policy -

    when requested or required by the Purchaser

    iv. Written Assumption Warranty Deed from the Seller to the

    Purchaser

    v. Assumption of the existing loan / debt the by the Purchaser

    vi. Written Promissory Note from the Purchaser to the Seller

    vii. Written Deed of Trust from the Purchaser to the Trustee for

    the Seller

    viii. Closing of the Transaction / Execution of Documents

    ix. Recording of the Warranty Deed and Deed of Trust in the

    Deed Records of the County where the property is located b. Potential legal issues with Purchaser’s assumption of the existing

    loan / debt - Lender’s Consent

c. Potential legal issues with Due-on-Sale terms - Lender’s Consent

    d. Potential legal issues with a second-lien mortgage - Lender’s

    Priority and Lender’s Consent

    10. Seller Financing with a Wraparound Mortgage

    Important Issues to Consider Include:

    a. General real estate transaction laws

    i. Written Purchase and Sale Agreement

    ii. Written Disclosures by the Seller Regarding the Property

    Condition

    iii. Title Insurance Commitment and Title Insurance Policy -

    when requested or required by the Purchaser

    iv. Written Warranty Deed from the Seller to the Purchaser

    v. Written Wraparound Promissory Note from the Purchaser to

    the Seller

    vi. Written Wraparound Deed of Trust from the Purchaser to

    the Trustee for the Seller

    vii. Closing of the Transaction / Execution of Documents

    viii. Recording of the Warranty Deed and Deed of Trust in the

    Deed Records of the County where the property is located b. Potential legal issues with Due-on-Sale terms - Lender’s Consent

    c. Potential legal issues with a second-lien mortgage - Lender’s

    Priority and Lender’s Consent

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