Owner Financing and Real Estate Laws in Texas

New to Real Estate · Southwest · Member since 2019 · 23 posts · 28 votes

Can anyone give me insight on how YOU work with the real estate laws that limit OWNER FINANCING in Texas when buying and selling properties?

I saw this article that says that you must have a special license to be able to sell with owner finance, and there are other restrictions. They are also limiting lease-option too. Can you tell me how YOU work with all of that?

https://lonestarlandlaw.com/owner-finance-in-texas-residential-sales-transactions/

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Collin Corrington

Investor · San Antonio, TX · Member since 2016 · 242 posts · 126 votes

I've been witness to 100's of owner finance deals here in San Antonio. Yes, there are some laws that you must be aware of.

Simply put, you need to prevent any predatory lending. So, ability to repay is something that must be very well documented. You can do 1 deal a year on your own without any help on the back of a bar napkin if you'd like. But after that you fall into the same category as a bank.

My advice, get an RMLO that understands what you're trying to do. Use a RMLO everytime! And listen to them! Then, have a well defined set of underwriting guidelines that you follow to stay consistent.

If you need an RMLO recommendation I have a great one.

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Joseph CacciapagliaBusiness Member
Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
6y
I've only done a few owner finance deals. After breaking just about every rule on my first deal (please don't tell anyone), I now just start every owner finance transaction with a call to my attorney. There are many different ways to structure "owner financing", and the rules vary depending on your structure. In my market, there are a couple attorneys that specialize in doing creative financing deals. I would recommend finding one in your market. They'll have form contracts, recommendations for licensed mortgage loan officers (to qualify your buyers/borrowers) and loan servicers, and be able to explain all the different variations that you might run into. Sadly, I don't think the typical real estate attorney is very useful for these deals (and I used to be one).
[email protected]979-218-2286
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Bonnie Jones
OP
New to Real Estate · Southwest · Member since 2019 · 23 posts · 28 votes
6y
Joseph, thanks so much for your input. Can I call you for more information?
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Collin Corrington
Investor · San Antonio, TX · Member since 2016 · 242 posts · 126 votes
6y
I've been witness to 100's of owner finance deals here in San Antonio. Yes, there are some laws that you must be aware of.
Simply put, you need to prevent any predatory lending. So, ability to repay is something that must be very well documented. You can do 1 deal a year on your own without any help on the back of a bar napkin if you'd like. But after that you fall into the same category as a bank.
My advice, get an RMLO that understands what you're trying to do. Use a RMLO everytime! And listen to them! Then, have a well defined set of underwriting guidelines that you follow to stay consistent.
If you need an RMLO recommendation I have a great one.
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Bonnie Jones
OP
New to Real Estate · Southwest · Member since 2019 · 23 posts · 28 votes
6y
Collin, thank you so much for the great advice! Yes, I will take your recommendation for an RMLO.
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Rick Pozos
Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
6y
Hi @Bonnie Jones, I guess it depends on how many owner finance deals you plan to do in a year. There are exceptions to the licensure requirement or using an rmlo. Myself, I have done several owner financing deals over the years, but never more than 1 in a year.
I dont know the exact number, but if you plan on doing a bunch and that is where you are marketing, then I would say yes to getting with an rmlo and be in strict compliance with Dodd-Frank and all the many rules of owner finance. If I saw that I was doing more owner financing, I would definitely comply with all the regs.
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Bonnie Jones
OP
New to Real Estate · Southwest · Member since 2019 · 23 posts · 28 votes
6y
@ Rick Pozos , thanks so much for the advice. I do plan to do more than 1 owner financing deal per year, so I will definitely contact an RMLO.
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Joseph CacciapagliaBusiness Member
Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
6y
Originally posted by @Bonnie Jones:
Joseph, thanks so much for your input. Can I call you for more information?

You are more than welcome to call me. I'm always happy to talk real estate. However, I'm not much of an authority on these type of deals. I've really just done a few. It sounds like Collin would be a much better resource for this type of deal.
[email protected]979-218-2286
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