Often, I'm asked this question. It may be acceptable in other states but this practice is strongly discouraged by the Texas Real Estate Commission to protect you - the consumer.
In fact, Texas legislation has made it a difficult transaction because of previous instances where unscrupulous sellers abused the executory contract for deed/lease-option to the disadvantage of buyers.
In the September/October 2013 issue of AUSTIN REALTOR magazine, Don R. Hancock, a partner in Hancock & McGill LLP, attorneys at law explains it all.
It's always been a risk to the buyer and now it's a risk to the seller as well. The conditions under which such a contract can be executed are restrictive to the seller and if the seller does not comply with the terms he/she commits a deceptive trade practice and is subject to treble damages and more.
The buyer was at risk when the seller collected a down-payment and then would foreclose at the first opportunity, keeping the 20% downpayment. Oh, buyer beware! You probably didn't realize the seller would expect a large downpayment and charge above market value interest rates.
The best way to purchase a home is to keep your credit rating high by paying your bills on time, keep your debt ratio low, save money for a downpayment and contact a REALTOR.
Austin, Texas. Robin Scott, BROKER. Certified Residential Specialist, Accredited Buyer's Representative, Seller's Representative Specialist. 512.589.7988.
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