Texas Real Estate Law Guide

There are many critical roles that an attorney can play during a real estate transaction. These can include:

• Drafting or reviewing purchase or sale agreements
• Resolving liens or title defects
• Preparing or reviewing closing documents
• Representing clients in negotiations

The attorney’s role will vary greatly depending on whether the matter is a private sale between the parties only or a bank-financed transaction closed through a title company. Many states require attorneys for closings. In Texas, it is not required to hire a real estate attorney when buying or selling a property. However, it is highly recommended, especially if it is a private sale between parties only.

No. Realtors are trained to help prepare a purchase/sale contract, and may discuss property value, market conditions, and logistics, but they cannot:

• Draft legal documents for closing the sale
• Interpret legal documents
• Advise on legal consequences of the documents
• Draft legal provisions
• Handle disputes or litigation

Only an attorney can provide legal advice. An attorney can also provide legal protection and, in some cases, is more cost-effective in the long run.

In Texas, buying or selling a home isn’t just exchanging money for a deed. It’s essential that contracts be precise, title concerns be resolved, and deadlines be met to prevent costly errors.

Many Texans seek assistance from a realtor, but in some instances, a real estate attorney might be a more suitable option. You should consult an attorney:

• If there are unique conditions to the purchase or sale or other complicating legal factors
• If the property you are considering is separate property, an estate sale, or “For Sale By Owner”
• If you need a contract to avoid disputes in the long run
• If you are buying through an LLC or trust
• If an issue arises during the inspection
• Or if the title search reveals problems

Attorneys reduce risk and protect your investment. Understanding which professional aligns with your needs can safeguard your interests from the initial offer through closing. If you decide an attorney is the right fit for you, you should hire them as early in the process as possible.

Read my blog HERE to learn the benefits of hiring an attorney prior to signing a contract.

If handled incorrectly, inspection issues can lead to significant costs for the buyer. To avoid being taken advantage of, you should hire an attorney to help if the seller is not being accommodating, to:

• Request repairs
• Negotiate a price reduction
• Ask for a closing credit
• If needed, cancel the contract under the inspection contingency

It can be incredibly frustrating when you have found the perfect property and signed the contract, only for the seller to back out at the last minute. Fortunately, there are a few steps you can take to recoup your losses. As the buyer, you might be able to:

• Enforce the contract through specific performance
• Sue for damages
• Recover the earnest money you paid
• Negotiate a settlement

The remedy depends on the contract terms and state law. An attorney can help you determine which steps best fit your situation.

On the flip side, buyers also cannot back out of contracts without facing legal consequences. Canceling a contract requires specific legal excuses, including denial of financing (if the contract provides for that contingency), inspection issues, or appraisal problems.

If this happens to you, as the seller, you may be able to:

• Keep the buyer’s earnest money
• Sue for breach of contract
• Seek specific performance (which means forcing the buyer to complete the purchase), although this is less common

Again, an attorney is your best bet for navigating such situations.

A defaulting debtor is a borrower who stops making payments on a seller-financed note or mortgage. As the lender, you can take legal action to recover funds. Remedies depend on the type of note and state foreclosure rules, but may include:

• Accelerating the loan and declaring the entire balance due on the note
• Foreclosure of your lien securing the note
• Eviction following foreclosure
• Personal judgment for balance of unpaid debt after foreclosure

An attorney can help enforce the debt properly and lawfully. It’s always best to have hired an attorney to draw up the note and lien documents to secure payment of your note in the event the borrower defaults on the debt.

READ: How To Foreclose On A Deadbeat Borrower 

Seller financing can be a good option if you want a monthly income stream and a decent interest rate on the note payable to you. It also may be an option if the buyer cannot obtain traditional financing, or if you want to sell faster than a traditional bank-financed sale would close. But it can carry substantial risks, including the buyer defaulting on payment and having to go through lengthy, complicated foreclosure procedures to regain the property.

Before agreeing to carry the note, you should always review:

• Buyer creditworthiness
• Down payment size
• Interest rate legality
• Foreclosure process
• The provisions of a note or deed of trust to secure payment of the note

Always involve an attorney to draft the note and deed of trust. Read my blog to learn more about this process.

A title search examines public records to ensure:

• The seller actually owns the property
• There are no claims, liens, or encumbrances against the property
• No boundary disputes or easements impair your intended use of the property

Liens, easements, and restrictive covenants follow the property, not the owner. So if the title search is skipped, these could become the buyer’s responsibility once they purchase the property. This also applies to the previous owner’s debts, unpaid property taxes, and HOA fees.

As a buyer, agreeing to pay for the title search as part of the purchase price could help with the sale of the property, especially in a buyer’s market. It also helps sellers build trust with potential buyers.

For these reasons, a title search protects both the buyer and lender and is essential before closing. Failure to have a title search performed leaves a buyer at substantial risk of unexpected problems down the road.

Title insurance helps protect buyers from potential problems with getting clear title to the property when they purchase real estate. When you purchase title insurance before you buy a property, title companies will search and alert you of any:

• Unpaid property taxes
• Unknown liens
• Fraud or forged documents
• Errors in public records
• Undiscovered heirs
• Boundary disputes

Title insurance is different from homeowner’s insurance, which protects you from losses due to fire, weather, or property damage. In Texas, title insurance coverage is the same regardless of which company you choose, even though prices may vary. Title companies must fight for you if someone were to dispute your ownership of the property in the future.

Title insurance is always a good idea for buyers, as it is a one-time fee and covers future claims. Sellers can also purchase “loan policy” or mortgage title insurance to protect their mortgage rights until the loan is paid off.

Absolutely. Commercial deals are much more complicated than buying a private home. They can involve:

• Complex leases
• Environmental concerns
• Zoning issues
• Financing structures
• Corporate entities
• Due diligence requirements

An attorney is essential for protecting your investment.