Selling a Contract for Deed in Texas: What Are Your Options?

Contracts for deed have a long and complicated history in Texas real estate. If you hold the seller's side of a contract for deed — also known as a land contract, an installment land contract, or an agreement for deed — you are collecting payments from a buyer who is purchasing your property over time without yet receiving legal title. It is a form of owner financing that predates the more common promissory note and deed of trust structure, and while Texas law has placed significant restrictions on contracts for deed in recent years, thousands of these instruments still exist across the state.

The question many contract-for-deed holders eventually ask is whether they can sell their interest and convert those future payments into a lump sum of cash. The answer is yes — but selling a contract for deed involves considerations that are distinct from selling a standard promissory note. The legal framework is different, the buyer pool is more specialized, and the due diligence process addresses issues that do not arise with conventional note transactions.

This guide walks you through your options for selling a contract for deed in Texas, explains how buyers evaluate these instruments, and gives you practical strategies to position your contract for the best possible outcome. Whether your contract is on a house, a piece of land, a mobile home on acreage, or any other type of Texas property, you will have a clear understanding of the process and what to expect.

What Is a Contract for Deed and How Does It Differ From a Note and Deed of Trust?

A contract for deed is an agreement where the seller retains legal title to the property while the buyer makes installment payments over time. When the buyer completes all payments under the contract, the seller then transfers title via a deed. Until that point, the seller remains the legal owner of the property even though the buyer has possession and equitable interest.

The Key Structural Difference

In a standard seller-financed transaction using a promissory note and deed of trust, the buyer receives title to the property at closing. The deed is recorded in the buyer's name, and the seller holds a lien through the deed of trust as security for the loan. If the buyer defaults, the seller must foreclose — a formal legal process — to recover the property.

In a contract for deed, the seller never transfers title until the contract is fully paid. The buyer has possession and an equitable interest, but legal title stays with the seller throughout the payment period. Historically, this meant that if the buyer defaulted, the seller could simply cancel the contract and retake the property without going through foreclosure. Texas law has changed this significantly in recent years, but the fundamental title structure remains the key distinction.

Texas Regulations on Contracts for Deed

Texas has enacted substantial protections for buyers under contracts for deed, primarily through Property Code Chapter 5. These regulations, which have been strengthened several times since 2005, include requirements that the contract be recorded with the county clerk, that the seller provide the buyer with an annual accounting statement, that the seller provide a disclosure of the property's condition and any known defects, that the buyer has specific rights to cure a default before the contract can be terminated, and that if the buyer has paid 40 percent or more of the purchase price or made 48 or more monthly payments, the seller must use the judicial foreclosure process to terminate the contract.

These regulations are designed to protect buyers, but they also affect sellers who want to sell their contracts on the secondary market. Buyers of contracts for deed will verify that all regulatory requirements have been met, and contracts that are out of compliance may need remediation before they can be sold. Non-compliance does not necessarily make a contract unsellable, but it does introduce complications that can affect pricing and timeline.

Your Options for Selling a Contract for Deed in Texas

If you hold the seller's side of a contract for deed and want to convert it to cash, you have several paths forward.

Option 1: Sell the Contract Directly to a Note Buyer

The most straightforward option is selling your contract for deed to an experienced note buyer who is familiar with these instruments. In this transaction, you assign your rights under the contract to the buyer, who steps into your position as the seller under the contract for deed. The property buyer continues making payments under the same terms, but those payments now go to the new contract holder.

This is the simplest path to cash and the one most contract holders pursue. The key is finding a buyer who understands contracts for deed and the Texas regulatory framework that governs them. Not every note buyer has this expertise, so you may need to be selective in who you approach. Longhorn Note Buyers has been purchasing real estate paper in Texas since 2007 and has the experience to evaluate and purchase contracts for deed across all property types.

Option 2: Convert the Contract to a Note and Deed of Trust, Then Sell

Another option is to convert the contract for deed into a standard promissory note and deed of trust before selling. This involves transferring title to the buyer via a deed, having the buyer execute a promissory note for the remaining balance, and recording a deed of trust to secure the note against the property. After conversion, you hold a standard note and deed of trust that can be sold on the broader secondary market with access to a larger pool of buyers.

The advantage of this approach is that standard notes and deeds of trust are more familiar to buyers and generally command better pricing than contracts for deed. The disadvantage is that the conversion process requires the buyer's cooperation, involves legal fees and recording costs, and takes time. If the buyer is unwilling to cooperate, this option is not available. If they are willing, the improved marketability of the resulting note can more than offset the conversion costs.

Option 3: Partial Sale of Contract Payments

Just as with standard notes, you can sell a portion of the remaining payments under your contract for deed while retaining the rest. This gives you a lump sum of cash now while preserving future income. Partial sales of contracts for deed work the same way as partial note sales — you assign the right to receive a defined number of payments to the buyer, and after those payments are collected, the contract reverts to you for the remaining term.

This option can be particularly attractive if the discount on a full sale of your contract is steeper than you are comfortable with. By selling fewer payments, you reduce the buyer's risk exposure and potentially improve the percentage discount, while keeping a long-term income stream intact. For a detailed comparison of full and partial approaches, see this analysis of full vs. partial note sales.

How Buyers Evaluate Contracts for Deed

Buyers of contracts for deed apply a framework that incorporates all the standard note evaluation factors plus additional considerations unique to the contract structure.

Regulatory Compliance

The first thing a buyer will assess is whether your contract complies with Texas Property Code Chapter 5. Was the contract properly recorded? Have you provided annual accounting statements to the buyer? Were all required disclosures made at the time of execution? Is the contract in the proper form required by law?

A contract that is fully compliant with Texas law is significantly easier to sell than one with compliance gaps. If you are unsure about your contract's compliance status, it may be worth having an attorney review it before approaching buyers. Addressing any issues proactively is far better than having them surface during due diligence.

Title and Ownership Verification

Because the seller retains title in a contract for deed, the buyer of the contract needs to verify your ownership of the property and confirm that there are no liens, judgments, or encumbrances that could affect the title. This is similar to a standard title search, but with the additional complexity that the property buyer has an equitable interest that must be accounted for.

A clean title with no surprises is essential for a successful contract sale. Any title defects — unpaid taxes, mechanic's liens, judgments, or competing claims — will need to be resolved before the transaction can close.

Property Value and Equity Position

The current market value of the property and the equity position are evaluated the same way as for any note transaction. The remaining balance on the contract divided by the property's current value gives the LTV ratio, which tells the buyer how much collateral protection exists. Lower LTV ratios support better pricing. If the property has appreciated since the contract was executed, that appreciation improves your position. For an in-depth look at valuation factors, this guide on what determines note value in Texas covers the key principles.

Payment History

The buyer's payment track record under the contract is just as important as it is for any other type of real estate paper. Consistent, on-time payments demonstrate reliability and reduce the buyer's risk perception. The length of the payment history — seasoning — directly affects pricing. A contract with three or more years of perfect payments is a very different asset than one with six months of history and a couple of late payments.

Property Type and Location

Contracts for deed are found across all property types in Texas, but they are especially common on rural land, mobile homes on acreage, and lower-value residential properties. The property type and location affect the contract's value the same way they would for a standard note — properties in strong markets with broad buyer appeal command better pricing than remote or specialized properties with limited resale potential.

Pricing Expectations for Contracts for Deed

Contracts for deed generally sell at slightly deeper discounts than equivalent notes and deeds of trust. There are several reasons for this pricing difference.

First, the contract structure itself introduces complexity that standard notes do not have. The title situation, the regulatory compliance requirements, and the unique termination and foreclosure rules create additional work and risk for the buyer. Second, the pool of buyers for contracts for deed is smaller than for standard notes, which reduces competitive pressure on pricing. Third, many contracts for deed involve property types — rural land, manufactured homes, lower-value properties — that carry steeper discounts regardless of the instrument type.

As a general guide, well-structured contracts for deed with strong compliance, good payment histories, and solid property collateral might sell at discounts of 20 to 35 percent. Contracts with compliance issues, shorter payment histories, or challenging collateral may see discounts of 35 to 50 percent or more. Every contract is different, and the only way to know your specific pricing is to submit it for a professional evaluation.

Preparing Your Contract for Deed for Sale

The preparation process for selling a contract for deed is more extensive than for a standard note because of the additional documentation and compliance requirements.

Assemble Your Documentation

Gather the following documents: the original executed contract for deed, proof of recording with the county clerk, all annual accounting statements provided to the buyer, the original property condition disclosure, a complete payment history with dates and amounts, current property tax records confirming taxes are current, proof of hazard insurance on the property, any amendments or modifications to the original contract, and evidence of your current ownership of the property via a recent title search or title insurance policy.

If any of these documents are missing, take steps to obtain or reconstruct them before approaching buyers. The more complete your package, the faster the evaluation and the stronger the pricing. For general documentation guidance, this checklist of documents needed to sell a note in Texas is a useful resource.

Verify Compliance With Texas Property Code

Before you approach buyers, honestly assess whether your contract complies with current Texas regulations. If the contract was executed before the most recent regulatory updates, it may not meet current requirements. Common compliance gaps include failure to record the contract, missing annual accounting statements, incomplete or missing property condition disclosures, and contract terms that do not conform to current statutory requirements.

If compliance gaps exist, consider whether they can be remediated. Recording an unrecorded contract, providing retroactive accounting statements, or executing supplemental disclosures may be possible depending on the circumstances. An attorney familiar with Texas contract-for-deed law can advise you on remediation options.

Consider Conversion to a Note and Deed of Trust

If your contract has significant compliance issues or if you want access to the broadest possible buyer market and the best possible pricing, seriously consider converting the contract to a standard note and deed of trust before selling. The conversion costs — typically a few hundred to a couple thousand dollars in legal and recording fees — are often recovered and then some through better pricing on the resulting note.

Conversion requires the buyer's cooperation, so approach the conversation thoughtfully. Most buyers under contracts for deed are happy to cooperate with a conversion because it gives them legal title to the property, which improves their position as well. Frame it as a benefit to both parties rather than a demand.

The Selling Process for Contracts for Deed

The process follows the standard note selling framework with additional steps related to the contract structure.

Submit Your Contract Details

Contact a buyer experienced with contracts for deed and share the core information: remaining balance, interest rate, payment amount, remaining term, payment history, property details, and the compliance status of the contract. A knowledgeable buyer can typically provide a preliminary offer within 24 to 48 hours.

Due Diligence

Due diligence on a contract for deed includes all the standard elements — title search, property valuation, payment verification — plus a thorough review of the contract's compliance with Texas Property Code Chapter 5. The buyer will verify that the contract is properly recorded, that all required disclosures and accountings have been provided, and that the contract terms conform to current law. This process typically takes two to four weeks, and may take longer if compliance issues need to be addressed.

Closing and Assignment

At closing, you assign your rights under the contract for deed to the buyer. The assignment is recorded with the county clerk. The property buyer is notified of the change and receives new payment instructions. Their terms remain the same — same payment, same rate, same remaining balance. You receive the purchase price via wire transfer or cashier's check.

If the contract was converted to a note and deed of trust prior to sale, the closing follows the standard note sale process instead — endorsement of the note, assignment of the deed of trust, and recording.

Contracts for Deed on Different Property Types

Contracts for deed in Texas are found across a range of property types, and each presents its own considerations.

Raw Land

Contracts for deed on raw land are extremely common in Texas, particularly for smaller parcels sold by land companies or individual sellers in rural areas. These contracts combine the challenges of the contract-for-deed structure with the valuation complexities of unimproved land. The key to maximizing value is demonstrating a strong payment history, a solid equity position, and clear compliance with Texas law. Location matters enormously — a contract on 10 acres near a growing Texas metro is far more valuable than one on 10 acres in a remote area with limited market demand.

Manufactured Homes on Land

Contracts for deed on properties that include manufactured or mobile homes on owned land are another common category in Texas. The valuation of these properties can be complex because the home and the land may be valued differently, and the depreciation characteristics of manufactured homes differ from site-built structures. Buyers of these contracts will carefully assess the home's age, condition, and whether it is permanently affixed to the land. Newer manufactured homes on owned land in desirable areas can support strong note values, while older homes in declining condition will face steeper discounts.

Residential Properties

Contracts for deed on residential properties are subject to the strictest regulatory requirements under Texas law. If your contract is on a residential property, compliance is paramount. Buyers will scrutinize every aspect of the contract's conformity with Property Code Chapter 5, and any gaps will need to be addressed. On the positive side, residential properties in solid markets provide the most liquid collateral, which supports better pricing once compliance is confirmed.

Why Longhorn Note Buyers for Your Contract for Deed

Selling a contract for deed requires a buyer who understands the unique legal structure, the Texas regulatory environment, and the specific valuation challenges these instruments present. Longhorn Note Buyers has been purchasing real estate paper across Texas since 2007, and founder Nick McFadin's four decades of experience include extensive work with contracts for deed on properties of every type.

With over $47 million in notes purchased, an A+ BBB rating, and a 100 percent close rate, Longhorn provides the expertise, transparency, and reliability that contract-for-deed sellers need. They can evaluate your contract quickly, explain the factors driving their offer clearly, and close the deal without the surprises or re-trading that plague less experienced buyers.

Ready to Sell Your Note?

If you hold a contract for deed in Texas and you are ready to explore your options, the first step costs you nothing. Contact Longhorn Note Buyers today at (210) 828-3573 or visit longhornnotebuyers.com to get your free, no-obligation cash offer within 24 hours. Whether your contract is on land, a home, or a manufactured property, Longhorn has the experience and capital to give you a fair price and close the deal on your timeline.

Frequently Asked Questions

Is it harder to sell a contract for deed than a standard promissory note?

It can be, primarily because the pool of buyers is more specialized and the due diligence process is more involved due to regulatory compliance requirements. However, contracts for deed on solid properties with good payment histories and proper documentation sell regularly on the secondary market. The key is working with a buyer who has specific experience with these instruments in Texas.

What if my contract for deed was never recorded with the county?

Texas law requires contracts for deed to be recorded, so an unrecorded contract represents a compliance gap that will need to be addressed. In most cases, the contract can be recorded retroactively, though there may be implications depending on when the contract was executed and whether any intervening liens or interests have been filed against the property. Consult with an attorney to determine the best path forward before approaching buyers.

Can I sell a contract for deed if the buyer has paid more than 40 percent of the purchase price?

Yes. The 40 percent threshold in Texas law affects the termination and foreclosure process if the buyer defaults — once they have paid 40 percent or made 48 monthly payments, judicial foreclosure is required rather than contract forfeiture. This does not prevent you from selling your interest in the contract. However, buyers will factor the foreclosure requirements into their pricing because judicial foreclosure is more expensive and time-consuming than contract termination.

Would I get more money by converting to a note and deed of trust before selling?

In many cases, yes. A standard promissory note and deed of trust is a more familiar and marketable instrument than a contract for deed, which typically translates to access to more buyers and better pricing. The conversion costs are usually modest — a few hundred to a couple thousand dollars — and the improved marketability often more than offsets those costs. The conversion does require the property buyer's cooperation, which is generally forthcoming since they benefit from receiving legal title.

Does the property buyer need to agree to the sale of the contract?

No. As the seller under the contract for deed, you have the right to assign your interest to another party without the buyer's consent, unless the contract itself specifically prohibits assignment. The buyer will be notified of the change and given new payment instructions, but their permission is not required. Their payment terms, interest rate, and remaining balance remain unchanged.