How to Sell a Land Contract in Texas: The Full Process

If you are the seller under a land contract in Texas and you have been collecting monthly payments for months or years, there is a good chance you have thought about what it would be like to just cash out. Receive a lump sum, move on, and let somebody else track the payments and worry about whether the buyer is keeping up with the property taxes and insurance. That option is very real — land contracts can be sold on the secondary market, and if yours is well-structured and backed by solid Texas real estate, there are buyers ready to make you an offer.

Land contracts — called contracts for deed in the Texas Property Code — are one of the oldest forms of seller financing in the state. They were the go-to structure for owner-financed land deals for generations before the promissory note and deed of trust combination became standard practice. Even today, land contracts remain common for rural property, small acreage tracts, and transactions where simplicity was prioritized at the time of sale. If you hold one and want to sell it, the process is well defined, but it does require understanding how land contracts are treated differently from standard notes in the Texas market.

This guide covers the full process of selling a land contract in Texas from start to finish. You will learn what makes land contracts unique, how to prepare yours for sale, what buyers look for during their evaluation, and exactly what happens at each stage of the transaction. By the end, you will have a clear roadmap for converting your land contract into cash.

Understanding Land Contracts in the Texas Context

The term "land contract" is used somewhat loosely in real estate, and it is important to establish what we are talking about specifically in the Texas context. In Texas, a land contract is legally a contract for deed — an agreement where the seller retains legal title to the property while the buyer makes installment payments. Title transfers to the buyer only after the full purchase price has been paid.

How Land Contracts Work

In a typical Texas land contract, you sold a piece of property to a buyer who agreed to pay the purchase price over time in installments. You retained the deed — legal ownership of the property — while the buyer took possession and began using the property. Each month or each year, the buyer makes a payment that includes principal and usually interest. When the last payment is made, you deliver a deed transferring title to the buyer.

During the payment period, you remain the legal owner on paper, but the buyer has what is called equitable title — a legal interest in the property that gives them the right to possession, use, and eventual ownership. This dual-title structure is the defining characteristic of a land contract and the source of both its advantages and its complications.

The Regulatory Landscape

Texas has progressively tightened the regulations around land contracts over the past two decades. Property Code Chapter 5, Subchapter D governs these transactions and imposes requirements on sellers that include recording the contract with the county clerk within 30 days of execution, providing the buyer with an annual accounting statement showing payments made, the amount applied to principal and interest, and the remaining balance, disclosing the property's condition and any known defects, providing specific notice of the buyer's rights under the contract, and following judicial foreclosure procedures if the buyer has paid 40 percent or more of the purchase price or made 48 or more monthly payments.

These requirements were enacted to protect buyers from abusive practices that were historically common in land contract transactions. For sellers looking to sell their contracts on the secondary market, compliance with these requirements is not optional — it is a fundamental factor that buyers will evaluate and that directly affects pricing.

Phase 1: Self-Assessment — Is Your Land Contract Ready to Sell?

Before you contact a single buyer, take an honest look at your land contract and assess its readiness for sale. This self-assessment saves time, prevents surprises, and puts you in a stronger position when you begin discussions.

Check Your Compliance Status

Go through the Texas Property Code requirements and verify that your contract meets each one. Is the contract recorded with the county? Have you provided annual accounting statements every year? Did you make all required disclosures at the time of sale? Are the contract terms in conformity with current statutory requirements?

If you find compliance gaps, you have two choices: remediate them before approaching buyers, or disclose them and let the buyer price them in. Remediation is almost always the better choice because it broadens your buyer pool and improves your pricing. An attorney who handles Texas real estate can help you identify and address compliance issues efficiently.

Assess Your Payment History Records

A complete, accurate payment history is the backbone of any note or contract sale. Pull your records and verify that you can document every payment received — the date, the amount, and ideally the method. If your record-keeping has been informal, now is the time to reconstruct a proper ledger.

Gaps or inconsistencies in your payment records create uncertainty for buyers, and uncertainty always costs you money. If you have bank statements showing deposits that correspond to contract payments, those can serve as supporting documentation for your payment history. The goal is to present a clear, verifiable record that gives the buyer confidence in the contract's performance.

Evaluate the Property's Current Value

The property securing your land contract is the buyer's collateral, and its current market value relative to the remaining contract balance determines the LTV ratio — one of the most influential factors in pricing. Research current land values in your area using comparable sales, county tax assessments, conversations with local land brokers, or online resources.

If the property has appreciated since you sold it, that appreciation directly benefits you as a contract seller because it improves the LTV ratio and gives the buyer more collateral protection. Texas land values have generally trended upward over the past decade, particularly for properties within reasonable distance of major metros, so there is a good chance your equity position is stronger today than when you created the contract.

Consider the Conversion Option

Before committing to selling the land contract in its current form, consider whether converting it to a standard promissory note and deed of trust would be advantageous. Conversion 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 against the property to secure the note.

The resulting note and deed of trust is a more standard instrument that appeals to a broader pool of buyers and typically commands better pricing. The conversion costs are modest — usually $500 to $2,000 depending on the complexity — and the improved marketability often more than compensates. Conversion does require the buyer's cooperation, but most buyers are willing because they receive legal title to the property, which is a significant benefit for them.

Phase 2: Documentation — Building Your Sale Package

Once you have assessed your contract and addressed any issues, the next step is assembling a comprehensive documentation package. This package is what you present to prospective buyers, and its quality directly influences both the speed of the evaluation and the pricing you receive.

Essential Documents

Your sale package should include the original executed land contract or contract for deed, proof of recording with the county clerk and a copy of the recorded instrument, a complete payment history with dates and amounts for every payment received, copies of all annual accounting statements provided to the buyer, copies of all property condition disclosures and other required notices, current property tax records showing the tax status and any exemptions, proof of hazard insurance on the property, a recent survey or legal description of the property, and any amendments, modifications, or supplemental agreements executed since the original contract.

For guidance on organizing your documentation, this comprehensive resource on documents needed to sell a note in Texas covers the essentials applicable to both standard notes and land contracts.

Property Supporting Information

Beyond the core documents, provide any information that helps the buyer understand and value the property. This might include aerial photos or satellite imagery, soil surveys or topographic maps for agricultural land, documentation of road access and utility availability, information about water wells, stock tanks, or other water features, records of any improvements made by the buyer since the sale, comparable sales data from the local area, and information about any income the property generates such as hunting leases, agricultural leases, or mineral royalties.

The more information you provide, the less the buyer has to assume or investigate independently. Reducing uncertainty in the buyer's evaluation process translates directly into better pricing for you.

Phase 3: Getting Offers — Finding the Right Buyer

With your package assembled, it is time to approach buyers. The market for land contracts is more specialized than the market for standard notes, so finding the right buyer requires some selectivity.

Identifying Qualified Buyers

Not every note buyer has experience with land contracts. You need a buyer who understands the contract-for-deed structure, is familiar with Texas Property Code Chapter 5, and has the expertise to evaluate the specific compliance and title considerations that land contracts involve. Ask prospective buyers directly about their experience with contracts for deed in Texas. A vague answer is a red flag — you want someone who can speak specifically about the process and the issues they have encountered.

Longhorn Note Buyers, with over four decades of note buying experience in Texas and more than $47 million in notes purchased, has the depth of expertise required to evaluate land contracts across all property types and regions of the state. Their familiarity with the Texas regulatory framework means they can identify and address compliance issues efficiently rather than walking away from a deal or drastically reducing the price at the first sign of complexity.

Requesting and Comparing Offers

Submit your documentation package to two or three qualified buyers and request cash offers. For land contracts, the evaluation may take slightly longer than for standard notes because of the additional compliance review. Expect preliminary offers within 24 to 48 hours from experienced buyers.

When comparing offers, consider the price, the buyer's familiarity with land contracts, their close rate, the expected timeline, and whether the offer is firm or subject to significant adjustment during due diligence. A buyer who is experienced with land contracts is less likely to re-trade the price during due diligence because they have already accounted for the structural complexities in their initial evaluation.

Phase 4: Due Diligence — What the Buyer Investigates

Due diligence on a land contract is the most involved phase of the selling process and includes several steps beyond what a standard note purchase requires.

Compliance Review

The buyer's first priority is verifying compliance with Texas Property Code Chapter 5. They will confirm that the contract is recorded, that annual accountings have been provided, that all required disclosures were made, and that the contract terms conform to statutory requirements. Any gaps will need to be addressed — either through remediation before closing or through price adjustments that account for the risk.

Title Examination

Because the seller retains title in a land contract, the buyer needs to verify your clear ownership of the property. The title search will look for any liens, judgments, tax delinquencies, or other encumbrances that could affect the title. The buyer also needs to confirm that no intervening interests have been recorded against the property since the contract was executed.

Property Valuation

The buyer will obtain a current valuation of the property through a broker's price opinion, a comparable sales analysis, or a formal appraisal depending on the property type and value. For land properties, this may involve a land-specialized broker or appraiser who understands the local market. The valuation determines the LTV ratio, which is a primary pricing factor. For an in-depth look at what drives valuation, see this guide on what determines note value in Texas.

Payment Verification

The buyer will verify the payment history you provided by cross-referencing your records with any available third-party documentation — bank statements, cancelled checks, money order records, or electronic payment records. A clean, verifiable payment history strengthens the buyer's confidence and supports the pricing.

Insurance and Tax Verification

The buyer will confirm that hazard insurance is in place on the property and that property taxes are current. Delinquent taxes create a priority lien that supersedes all other interests, so tax status is a critical due diligence item. If taxes are delinquent, they will need to be brought current before closing.

Phase 5: Closing — Transferring Your Interest and Getting Paid

Once due diligence is complete and all issues have been resolved, the transaction moves to closing. The closing process for a land contract sale is straightforward but slightly different from a standard note closing.

Assignment of the Contract

The primary closing document is an assignment of the contract for deed, which transfers your rights and obligations as the seller under the contract to the buyer of the contract. This assignment is recorded with the county clerk, creating a public record of the transfer. The assignment should clearly identify the original contract by its recording information, specify the terms of the transfer, and address any ongoing obligations related to the contract.

Funds Transfer

After the assignment is executed and recorded, the purchase price is wired to your bank account. Most closings are funded the same day or the next business day after recording. You receive the agreed-upon price with no deductions, fees, or hidden charges — at least with reputable direct buyers like Longhorn Note Buyers who do not charge seller fees.

Buyer Notification

The property buyer is notified of the change in contract ownership and provided with new payment instructions. Their terms remain unchanged. They continue making the same payments under the same schedule at the same interest rate. The only difference is where they send the check or the account information for electronic payments.

Pricing Factors Specific to Land Contracts

Several factors specific to land contracts influence the pricing beyond the standard note valuation criteria.

Compliance Premium and Penalty

A fully compliant land contract — properly recorded, with all required disclosures and accountings provided — commands a measurable premium over a non-compliant contract. Compliance gives the buyer certainty about their legal position, reduces the risk of buyer claims or contract challenges, and simplifies the foreclosure process if the buyer ever defaults. Non-compliant contracts carry a pricing penalty because the buyer must account for the cost and risk of potential legal complications.

Conversion Potential

If the land contract can be converted to a standard note and deed of trust — with the property buyer's cooperation — some contract buyers will factor that potential into their pricing. The ability to convert after purchase gives the buyer flexibility to reposition the asset in the broader secondary market. If the property buyer is cooperative and conversion is feasible, mention this to prospective buyers as it can positively influence their offer.

Foreclosure Complexity

If the property buyer has paid 40 percent or more of the purchase price or made 48 or more payments, Texas law requires judicial foreclosure rather than contract termination in the event of default. Judicial foreclosure is more expensive and time-consuming than contract forfeiture, and buyers will factor this into their pricing. Contracts where the buyer has not yet reached this threshold may command slightly better pricing because the termination process in a default scenario is simpler.

Property Type Considerations

Land contracts on different property types command different pricing. Contracts on residential property in populated areas tend to receive the best offers because the collateral is the most liquid. Contracts on raw land in rural areas face steeper discounts due to the limited buyer pool and longer marketing times in a foreclosure scenario. Contracts on properties with manufactured homes fall somewhere in between, depending on the home's age, condition, and whether it is permanently affixed to the land. For more on how property characteristics affect pricing, review this resource on how much your land note is worth in Texas.

Strategies to Maximize Your Land Contract's Value

While you cannot change the fundamental terms of your contract, several practical strategies can help you achieve the best possible outcome.

Achieve Full Compliance Before Selling

If your contract has any compliance gaps with Texas Property Code Chapter 5, fix them before approaching buyers. Record an unrecorded contract, provide any missing annual accountings, and execute any supplemental disclosures that may be needed. The cost of achieving compliance is almost always less than the pricing penalty you would face for non-compliance.

Present Impeccable Payment Records

Reconstruct or organize your payment records into a professional, chronological ledger that a buyer can verify easily. If you have supporting documentation like bank statements or copies of money orders, include them. A clear payment record removes uncertainty and supports stronger pricing.

Explore Conversion Before Selling

If the property buyer is willing to cooperate with a conversion to a standard note and deed of trust, the investment in conversion — typically $500 to $2,000 — can yield a meaningfully better net price. The broader buyer pool and improved market perception of a standard note versus a land contract often more than compensate for the conversion costs.

Provide Thorough Property Documentation

Give buyers every piece of information you have about the property — surveys, aerial photos, comparable sales, access documentation, utility information, and income records if applicable. Reducing the buyer's uncertainty about the collateral translates directly into better pricing.

Why Longhorn Note Buyers for Your Land Contract

Selling a land contract requires a buyer who navigates the Texas regulatory landscape with confidence, who understands the title complexities of the contract-for-deed structure, and who can evaluate the unique pricing dynamics these instruments present. Longhorn Note Buyers, with over $47 million in notes purchased across Texas and founder Nick McFadin's experience dating back to 1983, brings the specific expertise that land contract sellers need.

Their A+ BBB rating, 100 percent close rate on quoted deals, and 24-hour turnaround on offers mean you get a reliable, transparent process from start to finish. When Longhorn quotes you a price on your land contract, that price holds through closing — no re-trading, no surprises, no games.

Ready to Sell Your Note?

If you hold a land contract in Texas and you are ready to convert it to cash, the first step is simple and free. 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 raw land, a residential property, or acreage with improvements, Longhorn has the experience and capital to evaluate it fairly and close the deal efficiently.

Frequently Asked Questions

What is the difference between a land contract and a contract for deed in Texas?

In Texas, there is no practical difference — the terms are used interchangeably. Both refer to an installment sale agreement where the seller retains legal title while the buyer makes payments over time. The Texas Property Code refers to these instruments as executory contracts, which is the formal legal term. Regardless of what you call it, the same regulations and market dynamics apply.

Can I sell a land contract if I have not been providing annual accounting statements?

Yes, but the missing accountings represent a compliance gap that will affect your pricing. Buyers will either require you to provide retroactive accountings before closing or will discount the price to account for the risk of potential buyer claims related to the missing statements. The better approach is to prepare and deliver the missing accountings before approaching buyers, which removes the issue and improves your negotiating position.

What if the property buyer has made improvements to the land since the contract was signed?

Buyer improvements can actually work in your favor when selling the contract because they increase the property's value and improve the LTV ratio. A buyer who has built a home, drilled a well, installed fencing, or made other improvements has both increased the collateral value and demonstrated a deep personal investment in the property — making them less likely to default. Document any known improvements and present them to prospective buyers as positive factors.

How long does it take to sell a land contract in Texas?

From first contact to cash in hand, most land contract sales close within three to five weeks. The process can be shorter if your documentation is complete and there are no compliance issues to address, or longer if remediation or conversion is required. The biggest variable in the timeline is usually the seller's responsiveness to document requests and the time needed to address any compliance gaps.

Will I owe taxes when I sell my land contract?

The sale of a land contract can create a taxable event, and the tax treatment depends on how you structured the original sale, your cost basis in the property, and whether you have been reporting the installment payments on your taxes under the installment sale method. Consulting with a tax professional before finalizing the sale is strongly recommended. For a general overview of the tax considerations, see this guide on tax implications of selling a note in Texas.