Texas Rent-to-Own

II. EXECUTORY CONTRACT FOR CONVEYANCE – SELLER’S REMEDIES

1. If you as a purchaser in a rent to own situation are in default by breaking the agreement then the seller may enforce the contract by rescinding the contract or enforce by you, the purchaser, forfeiting the property and have the debt owed accelerated ONLY IF:

• i. The seller notified you, the purchaser in the rent to own contract by rule discussed above, of:
• a. The seller’s intent to enforce a remedy in the contract; AND
• b. The right to cure the default within the 30 day period;
• ii. You, the purchaser, do not cure the default within 30 days
• iii. You, the purchaser, have PAID LESS THAN 40% of the amount due under the rent to own contract or LESS THAN the equivalent of 48 monthly payments under the rent to own contract, or no matter how much has been paid the rent to own contract has been recorded with the county clerk’s office in that county, the seller must sell the property through a trustee the purchaser’s interest in the property. IF THESE ITEMS APPLY THEN THE SELLER IN A RENT TO OWN CONTRACT CANNOT SIMPLY RESCIND, FORFEIT AGAINST YOU, AND SIMPLY TAKE THE PROPERTY BACK.

If this is the situation then the seller in a rent to own contract must provide this 60 day notice:

NOTICE

YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO BUY YOUR PROPERTY. UNLESS YOU TAKE THE ACTION SPECIFIED IN THIS NOTICE BY (date) A TRUSTEE DESIGNATED BY THE SELLER HAS THE RIGHT TO SELL YOUR PROPERTY AT A PUBLIC AUCTION

• If negotiations that precede the execution of an executory contract are conducted in a language other than English, the sell shall provide a copy in that language of all written documents relating to the transaction, including the contract, disclosure notices, annual accounting statements, and a notice of default required.
  

III. EXECUTORY CONTRACTS FOR CONVEYANCE – SELLER’S DISCLOSURES

1. Seller’s Disclosures – before a rent to own contract is signed a seller SHALL provide the purchaser with:

1. A survey completed within the last year or plat of a current survey;
2. A legible copy of any document that describes an encumbrance or other claim like how the property can be used or an easement if one exists on the property;
3. Written notice – attached to the rent to own contract – tell you, the purchaser in a rent to own contract, informing the purchaser about the condition of the property. This written notice must be signed by both seller and purchaser in a rent to own contract that looks something like this:

WARNING

IF ANY OF THE ITEMS BELOW HAVE NOT BEEN CHECKED, YOU MAY NOT BE ABLE TO LIVE ON THE PROPERTY.

SELLER’S DISCLOSURE NOTICE

CONCERNING THE PROPERTY AT (street address or legal description and city)

THIS DOCUMENT STATES CERTAIN APPLICABLE FACTS ABOUT THE PROPERTY YOU ARE CONSIDERING PURCHASING.

CHECK ALL THE ITEMS THAT ARE APPLICABLE OR TRUE:

___ The property is in a recorded subdivision.

___  The property has water service that provides potable water.

___  The property has sewer service.

___  The property has been approved by the appropriate municipal, county, or state agency for installation of a septic system.

___  The property has electric service.

___  The property is not in a floodplain.

___  The roads to the boundaries of the property are paved and maintained by:

___  the seller;

___  the owner of the property on which the road exists;

___  he municipality;

___  the county; or

___  the state.

___  No individual or entity other than the seller:

(1) owns the property;

(2) has a claim of ownership to the property; or

(3) has an interest in the property.

___  No individual or entity has a lien filed against the property.

___  There are no restrictive covenants, easements, or other title exceptions or encumbrances that prohibit construction of a house on the property.

NOTICE: SELLER ADVISES PURCHASER TO:

(1) OBTAIN A TITLE ABSTRACT OR TITLE COMMITMENT COVERING THE PROPERTY AND HAVE THE ABSTRACT OR COMMITMENT REVIEWED BY AN ATTORNEY BEFORE SIGNING A CONTRACT OF THIS TYPE; AND

(2) PURCHASE AN OWNER’S POLICY OF TITLE INSURANCE COVERING THE PROPERTY.

___________   _____________________________

(date)                 (Signature of Seller)

___________   ______________________________

(date)                  (Signature of Purchaser)

• iv. If the seller does not provide these disclosures IT IS A FALSE, MISLEADING, OR DECEPTIVE ACT as set out in the Texas Deceptive Trade Practices Act. If the seller does not provide this it entitles the purchaser in a rent to own contract to receive a full refund of all payments made to the seller
  

IV. EXECUTORY CONTRACTS FOR CONVEYANCE – SELLER’S DISCLOSURES CONT’D

Seller’s Disclosures Cont’d – before a rent to own contract is signed a seller SHALL provide the purchaser with:

1. a tax certificate from the collector for each taxing unit that collects taxes due on the property as provided by Section 31.08, Tax Code; and

2. a legible copy of any insurance policy, binder, or other evidence relating to the property that indicates:

1. the name of the insurer and the insured;
2. a description of the property insured; and
3. the amount for which the property is insured.

THE SELLER’S FAILURE TO DO THIS AND PROVIDE THIS INFORMATION TO A RENT TO OWN PURCHASER IS A FALSE, MISLEADING, OR DECEPTIVE ACT OR PRACTICE AS SET OUT IN THE TEXAS DECEPTIVE TRADE PRACTICES ACT AND ENTITLES THE PURCHASER TO CANCEL AND RESCIND THE EXECUTORY CONTRACT AND RECEIVE A FULL REFUND OF ALL PAYMENTS MADE TO THE SELLER.

V. EXECUTORY CONTRACTS FOR CONVEYANCE – SELLER’S DISCLOSURES CONT’D

Seller’s Disclosures Cont’d – before a rent to own contract is signed a seller SHALL provide the purchaser with the following:

1. Financing Information – In a rent to own situation a seller must disclose to the purchaser:

1. The purchase price;
2. Interest rate charged under the contract
3. The dollar amount of the interest charged during the term of the rent to own contract, or an estimation of that amount if the interest rate is variable;
4. The total amount of principal AND interest to be paid under the rent to own contract;
5. Any late charge that may be assessed; and
6. The FACT that the seller cannot charge a prepayment penalty if the purchaser elects to pay off the rent to own contract early.

See TEX. PROP. CODE § 5.071

1. No Oral Agreement – A rent to own contract is not enforceable unless the contract is in writing and signed by the party to be bound or by that party’s authorized representative. The rights and obligations of the parties to a contract are determined solely by the written contract, and any oral agreements between the parties are superseded by and merged into the contract which may not be varied by any oral agreements or discussions that occur before or at the time of the execution of the contract.

1. The seller shall include in a separate document or in a provision of the contract a statement printed in 14-point boldfaced type or 14-point uppercase typewritten letters that reads substantially similar to the following:

THIS EXECUTORY CONTRACT REPRESENTS THE FINAL AGREEMENT BETWEEN THE SELLER AND PURCHASER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

___________   _____________________________

(date)                 (Signature of Seller)

___________   ______________________________

(date)                  (Signature of Purchaser)

1. The seller’s failure to provide the above notice is a FALSE, MISLEADING, OR DECEPTIVE ACT OR PRACTICE WITHIN THE MEANING OF THE TEXAS DECEPTIVE TRADE PRACTICES ACT AND THE PURCHASER IN A RENT TO OWN CONTRACT MAY SUE UNDER THOSE PROVISIONS.
2. The seller’s failure to provide the above notice ENTITLES the purchaser in a rent to own contract to cancel and rescind the executory contract (rent to own) and receive a full refund of all payments made to the seller.
   

VI.      ORAL AGREEMENTS NO ALLOWED – Seller’s Disclosures Cont’d

1.   A rent to own contract is not allowed unless the contract is in writing and signed by the party to be bound or by that party’s authorized representative. This mean that no matter what was discussed or said when the contract was being signed does not count and is not part of the rent to own contract. Tex. Prop. Code Ann. § 5.072(a) – (c).

2.   In a separate document or in part of the rent to own contract a statement printed in 14 point boldfaced type or 14 point uppercase typewritten letters that reads substantially similar to the following:

THIS EXECUTORY CONTRACT REPRESENTS THE FINAL AGREEMENT BETWEEN THE SELLER AND PURCHASER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

___________   _____________________________

(date)                 (Seller Signature)

___________   ______________________________

(date)                 (Seller Buyer)

3.  The seller’s failure to provide the notice is required by this section:

a.   Is a false misleading or deceptive act or practice within the meaning of the Texas Deceptive Trade Practices Act and entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller.