Texas Lease Option Law – HB1823 – Update

There have been a lot of people requesting more information on the lease option law that was passed recently here in Texas.  For the people (like me) that like to understand all the details of everything you can read Bryan Dunklin’s Commentary
and Steve Tiemann’s Commentary.

For the rest of you, here is the net effect. 

Do Not Do Lease Options in Texas.

That is it.  There are a lot of other options available to you to sell property, but if you decide to do a lease with an option on a property and have a disagreement with the tenant – you will likely lose the home and maybe more.  If you lease-option the house with any financing tied to it – you are breaking the law.

Our solution is to sell our properties on owner financing and wrap the mortgage.  The downside of this is that you have to foreclose on the property if you stop getting paid.  The upside is that (1) it is legal and (2) the foreclosure process in Texas is fairly quick.

7 thoughts on “Texas Lease Option Law – HB1823 – Update

  1. I,am not a person in the real estate buissiness.
    only am trying to sell our house, the potental leasers .ask to have a lease option,giving them a year to inprove there ability to qualify for a new loan,as thay said thay have a low score.cant qualify at this year.there is a existing loan now in sellers name.? do we have go by. Please reply

  2. I was wondering if you would answer these questions for me. You mentioned that your solution is to sell owner finance and wrap mortgage. What strategy do you use to buy property? Can you buy a house useing a subject to and sell using a wrap around mortgage? Is that allowed or is there an easier way?
    I’d really appreciate your feed back.

    Thanks,

    Rudy

  3. Rudy–yes, that’s exactly how you do it–buy sub-to, then sell on a wrap. Use a good note servicing company, and make sure the first contract is favorable to you as the buyer, and the second one is favorable to you the seller. Feel free to contact me–my team is very experienced in all the details of doing wraps, sub-to’s, and mortgage assignments.

    ~Michelle Ellis

  4. Michelle- I need to do this on a property in TX near Dallas which I own, but still have a mortgage on…my renter wishes to buy but has less-than-stellar credit issues due to a divorce back in 2006. I need information on the so-called “sub-to’s, wraps, and mortgage assignments. How can I get in touch with you?

  5. Michelle,

    I am interested in buying a property subject to and selling it on a wrap. Can you help me do this?

    Richard Peter
    214-365-0042

    Also, I have found a condo that was in a fire. The HOA restored the outside and inside building to sheet rock state. But there are no cabinets, bath fixtures, etc. I need 20K to finish this out, but cannot find financing(credit issues, etc.) Is there a way to make this work. Owner willing to sell on a subject to.

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