Texas Guides / Buying Land

Contract for deed in Texas: your rights as a buyer

Updated: 2026-10-23By Roberto Montes, founder, Nuestras TierrasLegal review: pending

In many Texas colonias, families buy land on installments: a down payment, a monthly payment, and a house built a little at a time. But the deed stays in the seller's name. That's a contract for deed, and Spanish speakers search for it as "contrato for deed," "terreno a plazos sin escritura" or "owner finance terreno Texas." This guide walks through what the law says the seller owes you, what you can do, and what to do if you're afraid you're about to lose the land.

What is a contract for deed, and when does the law protect you?

Texas law calls it an executory contract for conveyance. You promise to pay the price over time; the seller promises to deliver the deed when you finish. Until then, the seller is the owner of record.

When do these protections apply? Property Code §5.062 says they apply when the property is used, or will be used, as the home of the buyer or a close relative. A lot of one acre or less is presumed residential. They don't apply if the contract calls for delivering the deed within 180 days. And a buyer who is a close relative of the seller can waive several of these rules in writing.

Before you sign: what the seller owes you

This is what the statute requires (Property Code §§5.069–5.072). The seller must give you these before you sign:

• A survey completed within the past year, or a plat of a current survey.
• Copies of anything that affects title: liens, restrictive covenants and easements.
• A signed disclosure notice with checkboxes for drinkable water, sewer, septic approval, electricity, floodplain status and who maintains the roads. It opens by warning that if any item isn't checked, you may not be able to live on the property.
• A tax certificate from each taxing unit, and the insurance policy, if any.
• Written financing terms: price, interest rate, total interest, total of all payments, late charge, and a statement that there's no prepayment penalty.

If anything required by §5.069, §5.070 or §5.072 is missing, the law treats it as a deceptive trade practice and lets you cancel the contract and get a full refund of every payment. The contract must also be in writing; spoken promises don't count. If the seller said "I'll get you electricity later," put it in the contract.

Late fees can't exceed the lesser of 8% of the monthly payment or the actual cost of processing the late payment (§5.073). And you may cancel for any reason within 14 days of signing with written notice delivered in person or by certified mail; the seller must return your payments within 10 days (§5.074).

If you negotiated in Spanish, you get everything in Spanish

This rule matters enormously for Spanish-speaking buyers. Under §5.068, if the negotiations before signing were conducted primarily in a language other than English, the seller must give you a copy in that language of every written document in the deal, including the contract, the disclosure notices, the annual accounting statements and any notice of default. Keep proof that the deal happened in Spanish: text messages, ads, photos.

What's recommended in practice

These aren't statutory requirements, but the statutory disclosure itself and TexasLawHelp both recommend them:

• Get a title commitment and have a lawyer review it before signing.
• Buy an owner's policy of title insurance.
• Ask whether the land is in a recorded subdivision, and look it up in the county records and at the appraisal district. If taxes are past due, read our back-taxes guide.
• Always ask: whose name is the deed in today?

While you pay: recording and the January statement

The seller must record the contract within 30 days

Section 5.076 requires the seller to record the contract, with the §5.069 disclosure attached, in the county records no later than 30 days after signing. A seller who doesn't may owe you damages, capped at $500 for each calendar year of noncompliance.

Why it matters: under §5.079, a recorded contract is the same as a deed with a vendor's lien. Once it's recorded, the seller can no longer simply keep the property after a default; the seller must use the trustee's-sale process in §5.066.

In practice, TexasLawHelp warns that not every seller complies, so check the county records yourself. To be recorded, a document generally must be acknowledged before a notary (§12.001). In Bexar and Travis counties, recording costs $25 for the first page and $4 for each additional page.

The statement every January

Section 5.077 requires the seller to send you an annual accounting statement every January. If mailed, it must be postmarked by January 31. It must show what you've paid, what you still owe, how many payments remain, and any taxes and insurance the seller paid on your behalf from money collected from you.

A seller with fewer than two such transactions in 12 months who skips it owes you $100 per missed statement plus attorney's fees. A seller with two or more owes $250 for each day after January 31 (up to the property's fair market value) plus attorney's fees. Section 5.084 lets you deduct what the seller owes you from your payments without going to court; TexasLawHelp advises caution and talking to a lawyer first.

You can also ask in writing, at any time, what you owe. The seller has 10 days to answer in writing (§5.082).

Can they take the land if I fall behind?

Short answer: yes, but only by following the law. First the seller must send written notice by registered or certified mail, return receipt requested, in 14-point bold type. It must state the amount past due, the period it covers, any extra charges and what you must do to cure (§5.063). What happens next depends on your situation:

No contract can take this away: §5.065 applies "notwithstanding an agreement to the contrary," and §5.073 voids any clause that waives your rights under the subchapter.

How to convert the contract into a deed in your name

Since 2005, §5.081 has given buyers a powerful right: at any time, without penalties or charges, you can convert the contract into recorded legal title in your name, whether or not the seller recorded it. You can pay off the balance, or swap the contract for a promissory note with the same interest rate, due dates and late fees. With the note, you become the owner of record, with a mortgage to the same seller and the same payments. The steps, in order:

1. Request your balance in writing. Ask for the amount owed as of a date and the trustee the seller wants named in the deed of trust. The seller has 10 days to answer (§5.082). If not, you may calculate the balance yourself and pick a trustee who lives or does business in the same county; the seller then has 20 days to object in writing.
2. Prepare the note and deed of trust. The statute says that properly using Texas Real Estate Commission (TREC) forms counts as compliance. A lawyer, legal aid or a title company can help.
3. Deliver the note. Within 10 days, the seller must either give you a written, legally justified explanation for refusing or schedule a time to sign.
4. Sign and record. The seller signs the deed and you sign the deed of trust, and both are recorded. From then on, the contract has no further effect.

A seller who doesn't comply, or who doesn't deliver the deed within 30 days of your final payment, owes $250 a day from day 31 to day 90 and $500 a day after that, plus attorney's fees (§§5.079, 5.081). Under the law, "seller" includes the seller's heirs. If the buyer is the one who dies, the contract rights are part of the buyer's estate: see our probate guide.

Colonias, the 2001 and 2005 reforms, and the Colony Ridge case

In 2001, the House Research Organization's analysis of SB 198 described contracts for deed as a commonly used means of buying a home in colonias and other low-income communities. The bill extended border-county protections, including the Spanish-copy rule, statewide. In 2005, HB 1823 added the right to convert (§5.081), to request the balance (§5.082), to cancel for improper platting (§5.083), to deduct what the seller owes (§5.084), and the requirement that the seller hold title free of liens (§5.085). Sources: SB 198 analysis and HB 1823 analysis.

A 2012 University of Texas study for the Texas Department of Housing and Community Affairs (TDHCA), which surveyed more than 1,300 households, found that as many as 1 in 5 families who recently bought land in the counties studied may have used an unrecorded contract for deed (UT News, 2012). See more in Texas key figures.

The Colony Ridge case, as context

In December 2023, the U.S. Department of Justice and the Consumer Financial Protection Bureau sued Colony Ridge, a developer in Liberty County near Houston. The complaint alleged that the company advertised almost exclusively in Spanish, offered seller financing with no credit check and a small deposit, and began foreclosures on at least 30% of seller-financed lots within three years of purchase (Department of Justice). Colony Ridge denied the allegations.

In February 2026, a $68 million settlement with the federal government and the State of Texas was announced, with no admission of wrongdoing. According to the Texas Tribune, $48 million goes to infrastructure such as roads and drainage and $20 million to law enforcement (Texas Tribune; Texas Attorney General). In April 2026, U.S. District Judge Alfred H. Bennett of the Southern District of Texas criticized the settlement; the case was dismissed with prejudice and the court declined to retain oversight (National Mortgage News).

If you already have a contract for deed: what to do now

1. Gather your papers. The contract, disclosures, receipts for every payment, messages with the seller and the listing or ads.
2. Check whether it was recorded. Search the county clerk's records where the land is. If it's not there, get legal help.
3. Request your balance in writing, ideally by certified mail, and keep a copy.
4. Insist on the January statement. If it didn't arrive, note it: the law entitles you to compensation.
5. Consider converting to a deed under §5.081. Talk first with a lawyer or free legal help.
6. If you get a default notice, count the days and get legal help the same day.

Main sources: Texas Property Code chapter 5, subchapter D (§§5.061–5.085) and §12.001; TexasLawHelp.org; legislative analyses of SB 198 (2001) and HB 1823 (2005); TDHCA Contract for Deed Prevalence Project (2012); Department of Justice, Texas Attorney General, Texas Tribune and National Mortgage News on Colony Ridge; Bexar and Travis county fee schedules. This guide will be updated when the law changes.

Costs and timing

Bexar fees in effect since January 1, 2024, per the county. Deadlines come from Texas Property Code chapter 5, subchapter D. Approximate costs; they can change. Call the county clerk before you go.

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Nuestras Tierras, https://nuestrastierras.org/en/texas/guides/contract-for-deed/. Updated: 2026-10-23. Legal review: pending. General information, not legal advice.