Owner Financing

Are owner financing transactions legal in Texas? The short answer is YES. Owner financing can be a very useful tool for both buyer and sellers in any real estate transaction. However, both buyers and sellers should be cautious because such transactions need to be executed appropriately. Hiring a competent attorney who understands every detail of an owner financing transaction is very important.

For sellers, you must be careful when conducting an owner financing because if done incorrectly, it could jeopardize your entire transaction and subsequently, your entire investment in the property.

In Texas, there is a very good reason why sellers must be careful. Over the last 20 years, laws written to protect buyers from unscrupulous lending. In other words, if you are a seller, you will be held to same standards as that of a bank. It becomes your responsibility and duty to practice due diligence in your methods. If, however, you do not follow the guidelines required, you may find yourself on the wrong end of punitive statutes. If done right from the start, it is a relatively inexpensive route, so do it right the first time.

Buyers beware! Why must a buyer beware? Buyers are in a very vulnerable position when an owner financing agreement is used unlike a regular real estate transaction. A buyer may find themselves in a position.

For example: You are the buyer in an owner financing transaction. You, as the buyer, make payments towards the property for the next 10-15 years. BUT, come the 15th year, a 3rd person has come in challenging your title to the property. He states he is the true owner because he holds legal title. Turns out, the buyer who initially sold you the property, did not even possess the right to sell you the property, therefore you do not possess a 100% clear title. Now you have a serious problem.

If you are a buyer, certainly you do not want to find yourself paying for multiple years only to find that the property you thought was yours, is not! You are investing thousands of your hard-earned dollars into the home, so it is very important to ensure title is free and clear before an agreement is signed. Protect yourself and ensure a clean transaction with an owner financing attorney at Guerra | Days Law Group.

Location: 22 Texas 8 Beltway Frontage Rd, Houston, TX 77060, USA

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