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Texas

Tex. Prop. Code §§ 5.061–5.085

Contract type

Executory contract

Cure period

30 days statutory

Recording

Required

County Clerk

Default remedy

Forfeiture or judicial foreclosure

Owner-Finance Land Contracts in Texas

Overview

Texas regulates installment land contracts — known in the statute as "executory contracts for conveyance" — more aggressively than any other state. The legislature responded to widespread abuse of contracts for deed in colonias and rural communities with sweeping reforms in 1995 and 2005, codified in Texas Property Code §§ 5.061 through 5.085 (Subchapter D of Chapter 5).

Governing Law

The controlling chapter is Tex. Prop. Code §§ 5.061–5.085. It applies to any executory contract for the conveyance of real property — meaning any agreement under which conveyance of legal title is delayed more than 180 days after execution.

A critical scoping rule: most of Subchapter D's strongest protections apply specifically to executory contracts for "residential" real property — generally land improved with, or intended to be improved with, a single-family dwelling. Pure vacant-land transactions where the buyer is not acquiring the parcel for residential use may fall outside the most onerous provisions, but the line is fact-specific.

What Must Be in the Contract

Section 5.069 mandates extensive pre-execution seller disclosures: a survey or recent plat, a title commitment or attorney's title opinion, the prior year's tax statement, a written notice of all encumbrances, and a disclosure of utility availability. Section 5.070 requires written disclosure of all liens and tax delinquency.

Recording the Buyer's Interest

Recording is mandatory, not optional. Under § 5.076, the seller must record the executed executory contract — not merely a memorandum — in the county clerk's office of the county where the land lies, within 30 days of execution. Failure to record exposes the seller to buyer remedies including statutory damages and rescission.

Default and Cure Period

Section 5.064 requires the seller to give the buyer at least 30 days' written notice of default and an opportunity to cure before declaring forfeiture. Acceleration clauses that bypass this cure period are unenforceable.

Seller Remedies on Default

Texas splits remedies sharply at a key threshold. If the buyer has paid less than 40% of the purchase price and has made fewer than 48 monthly payments, the seller may pursue statutory forfeiture under § 5.064. Once the buyer has paid 40% or more of the price OR made 48 or more monthly payments, § 5.066 prohibits forfeiture entirely. The seller's only remedy at that point is a foreclosure-style sale with proceeds applied to the debt and any surplus paid to the buyer.

Sellers must also provide an annual accounting statement under § 5.077. Failure to deliver after request triggers liquidated damages of $250 per day plus attorney fees. The buyer also has a right under § 5.079 to convert the executory contract to a recorded deed with vendor's lien at any time.

Vacant Land vs. Residential

Subchapter D's residential scope is the single most important question for a vacant-land seller. Where the parcel is genuinely unimproved, not zoned residential, and not being acquired by the buyer to build a home, Subchapter D's residential-specific protections may not apply — but the recording requirement and general contract law still do.

Practical Notes for Sellers

  • Record the full contract within 30 days.
  • Deliver every § 5.069 disclosure before signing.
  • Never sell on executory contract where the underlying land has a senior mortgage without lender consent (§ 5.085).
  • Send an annual accounting every January.
  • Assume that any default after 40% paid will require a foreclosure-style sale.
  • Use Texas-licensed counsel — the cost of doing it wrong in Texas is multiples higher than elsewhere.

Disclaimer

This page is a public-law summary for general informational purposes only. It is not legal advice. Owner-finance transactions are state-specific and fact-specific. Engage a licensed attorney in the parcel's state before drafting, signing, or recording any agreement.

Structured data

The legal mechanics of a Texas deal.

Governing statute
high confidence
Tex. Prop. Code §§ 5.061–5.085
Texas has the most comprehensive and buyer-protective executory contract statute in the country. The statute mandates disclosures, annual accounting, conversion-to-deed rights, and severe penalties for noncompliance.
Recording instrument
Executed executory contract (the contract itself, not just a memorandum)
Filed at the County Clerk. Recording is required to perfect the buyer's interest in the chain of title.
Cure period
30 days (statutory)
§ 5.064 requires at least 30 days' written notice and opportunity to cure before forfeiture. Once the buyer has paid 40% or made 48 monthly payments, § 5.066 prohibits forfeiture and requires foreclosure-style sale.
Default remedy
Forfeiture or judicial foreclosure
Pre-40%/48-payment: statutory forfeiture under § 5.064 with 30-day cure notice. Post-40%/48-payment: § 5.066 forbids forfeiture; seller must use foreclosure-style sale and account for surplus.
Notable requirements
  • § 5.069 seller pre-execution disclosures (survey, title, tax, encumbrances, utility availability)
  • § 5.070 disclosure of liens and tax delinquency
  • § 5.076 mandatory recording within 30 days of execution
  • § 5.077 mandatory annual accounting statement to buyer
  • § 5.079 buyer's right to convert to deed with vendor's lien at any time
  • § 5.085 fee simple title required (no senior lien without lender consent)
Prohibited or limited
  • Forfeiture after 40% paid or 48 monthly payments — prohibited under § 5.066
  • Selling on executory contract while underlying mortgage exists without lender consent — § 5.085
  • Failure to provide annual accounting — liquidated damages of $250/day after request, plus attorney fees
  • Most provisions cannot be waived by the buyer
Vacant land vs. residential
CRITICAL: Subchapter D's strongest protections apply to executory contracts for residential property. Sales of vacant unimproved land NOT intended for use as a buyer's residence may fall outside the residential-specific provisions, but the recording requirement and general contract rules still apply. Treat any sale to an individual buyer as if Subchapter D applies.

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Important disclaimer

This page is a public-law summary for general informational purposes only. It is not legal advice. Owner-finance transactions are state-specific and fact-specific. Engage a licensed attorney in Texas before drafting, signing, or recording any agreement. Statute citations and procedural notes may be incomplete or out of date — always verify against the current code.