Rent to Own Texas (real estate, foreclose, renter)

[zatanaz]

Hello there,
I'm seeking advice from the experts regarding the Rent to Own law in Texas.
I have a property that I want to lease with an option to buy.
I've read that the rent to own option is illegal in Texas since September 2005.
I've also read that you could do it for 180 days and you could extend it once. Is this true???
I read the bill but did not understand it 100%.
Is there any way around this law.
What if you do a straight lease agreement and do a future purchase contract separately. Is this possible/valid/legal???
Aslo, how do you determine the selling price 1-2 years from now??

Any ideas????

Thank you for your responses.

[momof2dfw]

You are correct that the "lease to own" or "rent to own" laws changed in Texas making them illegal. Too many times the renters never closed on the property. What you CAN do is basically "tote the note". You the owner of the property own the "note" and are the "lender". The mortgage payment made by the "buyer" is made to you instead of a bank. In other words you are providing "owner financing". This way there is not trying to determine a selling price for down the road and if the buyer negs on the loan you foreclose on them just like a bank would. Many people do this that have paid off properties that have another residence they live in. They do it to avoid a one time windfall of a large sum of money and the taxes associated w/ it. Even if the buyer has the money to pay cash or the means to bank finance the seller wants to avoid the lump sum taxes. A standard real estate contract would be used and a closing would still take place and the buyer would still have to pay closing costs and possibly a down payment if you requested one. But you hold the note just like a typical lender would. This is also much better than the "lease to own" as the property taxes then become in the name of the buyer instead of them staying in the name of the seller.

[zatanaz]

Thank you for your response.

I guess I forgot to include one very important detail.
I still have a lien on the house. It is not paid off.
I owe 52K and the present MV is 129K.
Can I still follow your advice or is this a completely different scenario???

[chay1970]

my mother lives in texas and had a written agreement with a renter. so if there is a written agreement and the renter has not signed it, can the owner choose to terminate the written agreement on the rent to own. I did not know it was illegal in texas

[Rakin]

Originally Posted by chay1970

my mother lives in texas and had a written agreement with a renter. so if there is a written agreement and the renter has not signed it, can the owner choose to terminate the written agreement on the rent to own. I did not know it was illegal in texas

I don't believe it's illegal but must be put together by an attorney. Any questions regarding rent to own get into major legal issues only a lawyer can answer.

If her agreement was not put together by an attorney and not signed I would think there is wide room for problems.

[nsumner]

Rakin is correct, they are not illegal, it is just illegal for Realtors to write them up without the assistance of an attorney.

If your mother signed it and the renter never signed it, then there is no agreement. I hope for her sake that she has at least a written lease agreement if she was to pursue eviction.

Naima

[rosscountry]

Originally Posted by momof2dfw

You are correct that the "lease to own" or "rent to own" laws changed in Texas making them illegal. Too many times the renters never closed on the property. What you CAN do is basically "tote the note". You the owner of the property own the "note" and are the "lender". The mortgage payment made by the "buyer" is made to you instead of a bank. In other words you are providing "owner financing". This way there is not trying to determine a selling price for down the road and if the buyer negs on the loan you foreclose on them just like a bank would. Many people do this that have paid off properties that have another residence they live in. They do it to avoid a one time windfall of a large sum of money and the taxes associated w/ it. Even if the buyer has the money to pay cash or the means to bank finance the seller wants to avoid the lump sum taxes. A standard real estate contract would be used and a closing would still take place and the buyer would still have to pay closing costs and possibly a down payment if you requested one. But you hold the note just like a typical lender would. This is also much better than the "lease to own" as the property taxes then become in the name of the buyer instead of them staying in the name of the seller.

momof2dfw is this quote still accurate based on todays laws? I am interested in the "tote the note" and would like to learn more

[derekv]

Texas seller financing. Texas real estate law (http://www.hancockmcgill.com/h&m%20article%20seller%20financing%20primer.htm - broken link)

This is a good primer on seller financing. Lease to own isn't illegal, the statute makes the lease contract convertible into a deed and deed of trust.

[susinger]

My questions has multi levels. My 85 yr old mother deeded over her property to my brother and myself. she had promised a friend he could buy the home, now we own the home and agree to sell to him if he can pay up front but he wants to pay a small up front amount and make monthly payments till the end of one yr and pay the balance. He has been living in the house since 9-2010 w/o making any payment or signing a contract. We tryed to evict after 4 month but he sued us for not selling him the house and the court would not issue a notice for evication after his law suite. 7 months later he wants us to owner finance the sell. We couldn't get him out when he didn't sign a contract the first time how hard will it be for us to take back the property if he is unable to fulfill the contract. His credit is bad and he already has creditors after him. We are only trying to do as our mother had promised to make her happy. This money will be used for any and all of her need going forward. Help!

[loves2read]

you should get advice from attorney for situation like this
not here
especially if it is all your mom's resources