Texas · owner financing
Texas owner financing, explained.
A plain-English guide to owner financing (also called seller financing) in Texas — statute, recording, default remedies, interest caps, and where deals actually happen.
Tex. Prop. Code Ch. 5, Subchapter D (§§ 5.061–5.085)
Seller must record the executory contract in the county deed records within 30 days of execution per Tex. Prop. Code § 5.076; failure is a deceptive trade practice. Recording fees vary by county (typically $26 first page).
Hybrid. Forfeiture/rescission permitted but heavily restricted: if buyer has paid 40% or more of purchase price (or 48+ monthly payments), seller must foreclose under Tex. Prop. Code § 5.066. 30-day notice and right to cure required under § 5.063–5.065.
Is owner financing legal in Texas?
Texas recognizes contracts for deed (also called 'executory contracts for conveyance') and heavily regulates them, particularly for residential property used as a buyer's residence.
How do you record a owner financing agreement in Texas?
Seller must record the executory contract in the county deed records within 30 days of execution per Tex. Prop. Code § 5.076; failure is a deceptive trade practice. Recording fees vary by county (typically $26 first page).
What happens if the buyer defaults?
Hybrid. Forfeiture/rescission permitted but heavily restricted: if buyer has paid 40% or more of purchase price (or 48+ monthly payments), seller must foreclose under Tex. Prop. Code § 5.066. 30-day notice and right to cure required under § 5.063–5.065.
What is the maximum interest rate?
10% default; up to 18% for written contracts under Tex. Fin. Code § 303 (residential CFDs subject to additional federal limits)
What disclosures are required?
Extensive: annual accounting statement (§ 5.077), disclosure of liens and tax/insurance status (§ 5.070), seller's disclosure of property condition, lead-based paint, and Spanish-language copy if negotiated in Spanish (§ 5.068).
Who's protected — buyer vs. seller
Buyer protections
Among the strongest in the U.S. Right to convert to recorded deed/lien at any time (§ 5.081); statutory damages for noncompliance; mandatory recording; protection from forfeiture after 40% paid; restrictions on contracts in subdivisions without water/sewer/utilities (colonias).
Seller protections
May retain payments as liquidated damages prior to 40% threshold; may pursue forfeiture with proper notice and cure period; may accelerate upon default.
Where in the state do these deals happen?
Historically used heavily in colonias along the Texas-Mexico border for rural/unimproved land; also used for owner-financed sales in rural East Texas and for mobile home/land packages.
Texas cities
Per-city market notes for owner financing buyers and sellers.
Notable case law
Flores v. Millennium Interests, Ltd., 185 S.W.3d 427 (Tex. 2005); Morton v. Nguyen, 412 S.W.3d 506 (Tex. 2013).
Looking at a Texas deal?
Send the parcel and the terms — we'll walk through whether owner financing fits, how to record it, and what the cure period looks like if things go sideways.
Talk to WyattEducational content only. Statute citations are public-record research, not legal advice. Texas contracts and remedies are fact-specific — consult a licensed Texas real-estate attorney before signing anything.