Ask Me Help Desk - Contract for Deed and Homestead Rights

Hi, we live in TX where warranty deeds/contract for deeds are not really "noticed" . We have a contract for deed/for sale by owner contract with our current tenants but we still hold the mortgage note in our name. When we sold the proper to them the State of TX removed our homestead proper on the property. They did not file the warranty deed with the county, but they do have a signed copy for all involved. We are trying to find a way for them to claim "homestead" on the property as the taxes have increased greatly. The problem is that we are scared that once the taxes reflect the new owner's names that our mortgage company will call the loan due. Does anyone know a work around for this? Thanks, Stephanie

Make sure your contract for deed has you listed as the seller and them the buyers. Make sure your contract states all of your provisions. Make sure your mortgage company is listed in the 1st lien holder position for the proerty note and you as the second lien holder. Make sure you file this at the deed of records for your county. The seller is the owner of the house and if he defaults on the contract you get the house back. Give them 2 years to cash the note out. They should be able to take the homestead exemption at that point. As they will be paying the property taxes and insurance in their name. State all that in the contract.

YOU have to file the contrract for deed as the seller and you have to go to a closing with a title company... for this to be recognized by the deed of records office.

Quote:

Originally Posted by sheading

the seller is the owner of the house and if he defaults on the contract you get the house back. .

Another inaccurate response. True the seller retains ownership of the property, if the seller defaults, they still retain ownership. Even if the buyer defaults its not a matter getting the property "back" since they always had ownership.

To the OP:
Texas doesn't like contracts for sale. The only way the buyer could get the homestead exemption is they were the owner of the property. And if ownership transfers, that could trigger the due on sale clause of your mortgage. You might try to talk to your mortgage lender and see if they will help.

The seller retains ownership of the property, only by a lien holder position... unless and IF the buyer defaults on the contract for deed.. obviously because of that the seller would have the property back. Being a realtor and a loan office myself I know that and have done it many times... in contract for deed situations in many states... so I am talking from experience here... it is what I do for a living...

Also it isn't what TEXAS "likes" it is the right of the seller/buyer to sell his house as he sees fit as long as the mortgage company is in agreement... the TEXAS courthouse has to recognized the recorded document.

The minute you close a Contract for Deed at a title company... you OWN IT!!

The buyers is on the property tax docs and all... they own it...

That gives you the right to homestead... dot com... end of story...

Quote:

Originally Posted by sheading

The seller retains ownership of the property, only by a lien holder position...unless and IF the buyer defaults on the contract for deed..obviously because of that the seller would have the property back. Being a realtor and a loan office myself I know that and have done it many times.....in contract for deed situations in many states...so I am talking from experience here....it is what i do for a living...

Sorry, but I can't accept your claims since they go against everything I have learned.

Yes, the seller retains title to the property, but a lien holder does NOT have title to a property, a lien holder retains only an interest in the property that must be cleared before the property can be transferred. If title is transferred then it's a mortgage, not a contract for deed.

Quote:

Originally Posted by sheading

Also it isn't what TEXAS "likes" it is the right of the seller/buyer to sell his house as he sees fit as long as the morgage company is in agreement...the TEXAS courthouse has to recognized the recorded document.

Wrong again. Check out this site:
Owner Finance Homes Dallas Texas

And I quote; "

Texas lawmakers have cracked down on this unethical rent-to-own home scams by passing new strict laws that put lease purchase transactions in the same category as "contract for deeds", which are another way that shady real estate companies and home sellers have taken advantage of unsuspecting home sellers."

Contract for deed transactions are often on the shady side. They attract people with poor credit who can't find financing. The sellers often HOPE the buyers default, because the contract reverts to a rental lease and they can evict the (now) tenant more easily then foreclosing. Generally such contracts require a down payment and/or a higher than market rental.

Quote:

Originally Posted by sheading

The minute you close a Contract for Deed at a title company...you OWN IT!!!

But you generally DO NOT close on a contract for deed. Since title doesn't change no closing is necessary.

Quote:

Originally Posted by sheading

the buyers is on the property tax docs and all ...they own it....That gives you the right to homestead....... dot com....end of story...

Not usually! The buyers may be required to pay the taxes as part of the contract. But since they don't have title, they can't deduct taxes, interest OR get a homestead exemption.

There are many threads here where contract for deeds are discussed. I suggest you browse some of them and learn the true facts.

I just did a house this way so I know that is not true...
Have to say..

It depends on how that Contract for deed is written up...

May be people in Texas do not know how to write up a real legal contract for sale... that is not my problem... our contracts are legal and lenghty and they are fair to the buyer and seller... this is a real.. and legit business deal.. not a scam... you must be talking about land scammers... that is a different deal altogether...
And as I said before.. if you have done this correctly you will definitely be closing the Contract For Deed at a title company and the buyer is on the title not the seller which puts the buyer in the owner position for everything... I just did a contract like this in Arizona and it is working fine... so it can be done!

Quote:

Originally Posted by sheading

I just did a house this way so I know that is not true....
have to say..

It depends on how that Contract for deed is written up...

May be people in Texas do not know how to write up a real legal contract for sale.....that is not my problem...our contracts are legal and lenghty and they are fair to the buyer and seller...this is a real..and legit business deal..not a scam...you must be talking about land scammers....that is a different deal altogether...
And as I said before..if you have done this correctly you will definitely be closing the Contract For Deed at a title company and the buyer is on the title not the seller which puts the buyer in the owner position for everything....I just did a contract like this in Arizona and it is working fine...so it can be done!

Then its NOT a contract for deed. Here's one definition of a contract for deed:
Land contract - Wikipedia, the free encyclopedia
Here's another:
contract for deed - Definition of contract for deed at YourDictionary.com
And here's yet a third (specific to Minn):
www.RonOrr.com | Contract for Deed Definition
And finally, here's one specifically for Arizona:
Arizona Contract for Deed - FindLegalForms.com

So either you are using the term incorrectly or you don't know what you are talking about! Either way you are clearly wrong and need to do some research before you make a further fool of yourself.

Sorry I have an Arizona contract for deed I just did one and it is filed at the Yavapai court house in the buyers name and it closed at the Lawyers Title... in Prescott, AZ

I have proof of the whole transaction... what do you have??

Quote:

Originally Posted by sheading

I have proof of the whole transaction.... what do you have???

Did you not read my last post? What I have is FOUR different websites that define a contract for deed, the way I have defined it. One of those websites is specific to Arizona!!

I'm not going to dispute that you executed some instrument that transferred title. But I will strenuously dispute that it was a contract for deed. As the websites I've linked state, a contract for deed (often called other things like elase purchase, contract for sale, etc) is a specific real estate sales instrument where the seller retains title. As Lisa stated in another thread, what it sounds like you are doing is owner financed mortgages, where the owner is taking a second mortgage.

NO that is not what I am doing... lets be done with this...

Quote:

Originally Posted by sheading

NO that is not what I am doing....lets be done with this....

Yes let's be done with this. Admit that you are wrong and its done. I can't understand why you think four separate websites all giving the same definition don't prove anything. You are in denial and digging yourself a deeper hole.

Please everyone, all of the answers by sheading are so bad I have considered delete them.

There is no "lien" since there is no transfer of deed. Next in a contract for deed the buyer is NEVER given a deed at the time of purchase, only a contract. If a seller gives a deed transfer it is not a contract for deed, but a owner finance and the home would have to be owned free and clear to do that.

So first the signed contract may be filed at the court house, but since there would be no deed at all done at this time, the taxes stay in the original owners name, and yes you lose your homestead exemption.

I am a realtor... thats why... I have a license to know that...

Don't make threats you will regret!

Quote:

Originally Posted by sheading

I am a realtor ....thats why...I have a license to know that....

Don't make threats you will regret!!

Let me put it this way. If someone claimed to be a lawyer, yet stated that murder was not a crime, others would then question their claim to be a lawyer. Therefore, your claim to be a licensed realtor is suspect when you claim to know something that has been proven to be untrue.

We are not making threats, we are warning you of the consequences of continually posting inaccurate information.