Contract For Deed
A contract for deed is a special type of real estate contract involving a buyer and seller in which the seller hands over possession but not legal title of a property to a buyer. The transfer of title takes place after all contractual obligations including full payment of the property has been made to the seller. For example, if you are a buyer or seller in the city of San Antonio and wish to either purchase or sell property under a contract for deed agreement, then you must understand the full implications of entering into such an agreement under San Antonio Real Estate Law.
As an instrument and a legal arrangement, the contract for deed has its origins in the development of residential neighborhoods called colonias back in the 1950s. Developers bought large tracts of land and developed low cost housing units. These real estate developers gave possession of the units to underprivileged sections of the population in exchange for a down payment and monthly installment. People who could not afford institutional financing were able to secure possession of a house sans the legal title.
In recent times, the success of a contract for deed has depended on the degree of good faith built into the agreement. If the buyer and the seller have honest intentions and agree not just to the letter, but also to the spirit of the law behind the contract for deed, then it increases the chance of successful results between both parties. However there have been a number of cases where unscrupulous brokers and sellers have pawned off properties that are either encumbered or have an ambiguous legal history.
In order to protect the interests of buyers under a contract for deed, The Texas Legislature has made a number of changes to the existing laws that govern contract for deeds. The seller is now responsible for disclosing information relating to but not limited to the title, condition and insurance status of the property in question. The seller faces stiff penalties in case of non-conformity to the stipulated legal requirements. The purchaser of the property in question has the right to repudiate the contract and render it void ab initio. In addition, the seller is also obliged to include a notice of buyer’s right to cancel the contract within a period of 14 days of the contract coming into force.
A contract for deed agreement should factor not only the interests of the buyer, but also that of the seller. For instance, if the buyer is defaulting on numerous house payments or on other contractual obligations, then the seller should have the right to repossess the property or call for foreclosure.
If you are a resident of San Antonio and wish to buy or sell property under a contract for deed then a San Antonio Real Estate attorney can provide you with professional help. Such guidance will help inform you on both your rights and duties under the law.