Owner financing, also called seller financing, is how a large share of homes and lots in El Paso County change hands, especially in the Lower Valley, Montana Vista, Horizon City and the colonias where buyers may not qualify for a bank loan. The seller acts as the lender: the buyer makes a down payment and monthly payments directly to the seller until the balance is paid. Done correctly, it is a legitimate and useful arrangement for both sides. Done with a two-page handwritten contrato or an old-style contract for deed, it exposes the seller to statutory penalties and leaves the buyer with no recorded ownership after years of payments.
Texas Property Code Chapter 5, Subchapter D, starting at Section 5.061, tightly regulates executory contracts, meaning contracts for deed, lease-purchase agreements and similar arrangements where the buyer takes possession but title does not pass until later. Sellers must give a seven-day notice before signing under Section 5.069, a Spanish-language version when negotiated in Spanish, an annual accounting under Section 5.077, and record the contract within 30 days under Section 5.076. Violations carry liquidated damages and give the buyer cancellation rights. The safer structure is a true sale: warranty deed with vendor's lien, promissory note and deed of trust, so the buyer owns the property and the seller holds a recorded lien. Texas Finance Code Chapters 156 and 157 and the federal SAFE Act also require a licensed residential mortgage loan originator for many seller-financed residential loans, with limited exemptions.
We structure the transaction to fit your situation and the law: for most El Paso sales that means a deed with vendor's lien, a note with a lawful interest rate and clear late-payment terms, a deed of trust naming a trustee so the seller can foreclose non-judicially if the buyer stops paying, and the federal and state disclosures. When an RMLO is required we connect you with one or use an available exemption. We also convert existing contracts for deed into deed-and-note financing, which Property Code Section 5.081 allows the buyer to demand. Everything is signed in our office and recorded with the El Paso County Clerk. No court appearance is involved. A seller who skips the attorney and relies on a form risks penalties that dwarf the fee, and a buyer who signs without review may never get their deed.
Contract for deed vs. deed with note and deed of trust
In a contract for deed, the seller keeps title and the buyer only gets a deed after the last payment. Texas law now treats these contracts so harshly toward sellers that most El Paso attorneys advise against them: missed disclosures cost up to $250 per day, and a buyer who has paid 40 percent or 48 monthly payments gains foreclosure-style protections under Section 5.066. In a deed-and-note structure, the buyer gets title immediately and the seller gets a first lien enforced through the deed of trust under Property Code Chapter 51. The seller's remedy on default is a non-judicial foreclosure with the notice periods that chapter requires, not a simple eviction.
Do you need a licensed mortgage originator (RMLO)?
Under the federal SAFE Act, Dodd-Frank and Texas Finance Code Chapters 156 and 157, a person who originates a residential mortgage loan, including a seller financing the buyer's home, generally must be licensed or work through an RMLO. Texas exempts an individual who finances no more than three properties in a twelve-month period under conditions set by the Texas Department of Savings and Mortgage Lending, and an owner selling their own homestead has additional room. The loan must still avoid balloon payments in many cases and use a fixed or properly adjustable rate. We tell you before drafting whether your El Paso sale fits an exemption or needs an RMLO, and we work with local originators when it does.
What's included
- Structuring advice: deed with note and deed of trust vs. executory contract, and RMLO analysis
- Warranty deed with vendor's lien reserved
- Promissory note with lawful interest, payment schedule and default terms
- Deed of trust naming a trustee, with Property Code Chapter 51 foreclosure provisions
- All Property Code Chapter 5 disclosures, in English and Spanish when required
- Signing and notarization in our El Paso office and recording with the El Paso County Clerk
- Amortization schedule and payment ledger template for the seller
How it works
Intake and structure
We learn the property, price, down payment, rate and term, check title at the El Paso County Clerk, and tell you whether the deal needs an RMLO or fits an exemption. Flat fee quoted.
Drafting and review
We prepare the deed, note, deed of trust and disclosures and review them line by line with both parties in English or Spanish so everyone understands the payment terms and default consequences.
Sign and record
Both sides sign before a notary at our office, we record the deed and deed of trust with the El Paso County Clerk, and deliver recorded copies and an amortization schedule.