Texas · contract for deed
Texas contract for deed, explained.
A plain-English guide to contract for deed (also called land contract) 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 contract for deed 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 contract for deed 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 contract for deed 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 contract for deed 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.