If you're looking to purchase property in Dallas and considering a contract for deed, you may have questions about how to get started and what you need to know before proceeding. Before signing anything, it's important to have a clear understanding of what a contract for deed is, the applicable regulations, and what a contract for deed would look like in the state of Texas. To ensure a successful contract for deed in Dallas, seeking out counsel from experienced business attorneys is crucial. UpCounsel’s network of experienced lawyers is an excellent resource to guide you in creating, understanding, and executing a contract for deed in Dallas.

## What is a Contract for Deed?

A contract for deed (or ‘land contract’) is a contract between a buyer and seller in which the seller agrees to credit the buyer for the purchase price of a property and allows the buyer to take possession of the property while the buyer makes installments on the purchased property. The seller remains the legal owner of the property until the buyer pays the full purchase price of the property. Generally, the buyer will assume responsibility for taxes and insurance on the property and any necessary repairs which may be needed.

## How Does This Differ from Other Forms of Real Estate Purchases?

Unlike a traditional real estate purchase agreement or a mortgage, a contract for deed does not require the buyer to acquire financing from a financial institution or require escrow services. As a result, a contract for deed can sometimes offer more flexibility in terms of the agreement between the buyer and seller, such as allowing a buyer to take possession of a property for a lower purchase price provided the buyer makes installment payments.

However, because of the higher risks and potential issues, contract for deed’s are typically used where the buyer may have some difficulty in obtaining traditional financing. Moreover, the buyer must be able to pay the seller in the form of a lump sum or installments for the purchase of the property.

## What Does a Typical Contract for Deed Look Like in Dallas?

To create a valid and binding contract for deed, several documents must be signed between the buyer and seller. The buyer and the seller must agree to the terms of the sale in a document that properly outlines the necessary information such as: purchase price, property description, late fees, down payment, payment schedule, legal interest rate, names of the buyer and seller, etc.

The parties must then prepare a deed that transfers ownership to the buyer when the full purchase price has been paid. Additionally, a promissory note must be signed by the buyer that outlines the repayment schedule, payment amounts, and the interest rate on the loan.

Moreover, the seller must provide a deed of trust securing the real estate being sold that outlines all the agreed upon terms of the sale, including payment expiration dates, applicable default date, down payment amounts, and forfeiture procedures.

The parties must then enter into a memorandum of agreement that both parties have agreed on all the terms stated in the documents. This document also acts as a signature page for both parties to sign. The parties must also enter into an earnest money agreement, which is a promise made by the buyer to pay a certain sum of money in order to secure the performance of a contract.

For a contract for deed in Dallas to be valid, all the aforementioned documents must be written, signed, and notarized.

## What Are the Regulatory Implications?

It is important for both parties of a contract for deed to understand the state regulations in Texas regarding these types of agreements, as the regulations will vary depending on the locality. In Dallas, for example, a residential property under contract for deed is subject to the Texas Property Code Subsection 5.086, which outlines all the regulations that the buyer and seller must adhere to.

The regulations require the buyer to provide the seller with a written disclosure that lists the total purchase price of the property and all terms and conditions of the contract. The buyer must also be informed in writing of the amount of any late payments that are due along with the procedures for reinstating the contract should a payment go past due. The buyer must also receive specific notice if there are any duties or responsibilities that they may have in addition to making the installments payments. In particular, the buyer should be aware of the state laws that require the buyer to pay the taxes, insurance, and assessments relating to the property.

## What is Required to Create a Contract for Deed in Dallas?

Creating a valid and enforceable contract for deed in Dallas requires a thorough understanding of the law and the real estate agreement process. The buyer and seller should seek independent legal counsel to ensure that the agreement is fair and properly executed in accordance with the applicable regulations.

UpCounsel’s network of experienced business attorneys is well suited to provide valuable insights on the intricacies of a contract for deed. These attorneys can provide invaluable guidance and support in creating, understanding, and executing a contract for deed in Dallas that is valid and binding.

## Topics:

Contract for Deed, Dallas, Real Estate, Business Attorneys, UpCounsel