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Texas Real Estate Contracts, Warranty Deed, Promissory Note, and Deed of Trust

Generally, a contract for the sale of real property in Texas must be in writing. Texas Real Estate Commission (TREC), as well as the Texas Association of REALTORS®, created standardized forms for real estate contract, including the Texas residential resale contract, the condominium resale contract, and the Texas commercial improved contract. Regardless of where you have obtained a real estate form, you will need to consult the Houston Texas real Estate Transaction Attorneys; and, if it is a commercial property, our Houston Texas Commercial Property Lawyers will assist you in negotiating with the Buyer or the Seller. Our Real Estate Lawyers will review your contract, revise and amend necessary addendums such as the financing addendums, drafting promissory notes, warranty deeds, and other closing documents that often accompany the sale of real property. Our experienced Houston Real Estate Transaction Attorneys will assist you in navigating through this complicated process, ensuring that your interests are protected and that you have done your due diligence prior to closing.

A Texas residential contract and a Texas commercial improved property contract are similar in many aspects. Generally speaking, a real property contract identifies the parties, the property at issue, financing terms and documents, inspections which may include an accounting in a commercial property, especially if the sale includes the goodwill of a business, the title policy, inspections and studies, the property’s condition, disclosures, and closing date. In addition, the contract should state the obligations of the Seller and the Buyer, brokerage fees and who is liable for such fee, deadlines as to performance, and closing date.

There are a number of important exceptions, however, between a commercial improved property contract and a residential contract. In a commercial contract, the Buyer has a “feasibility period” in which the Buyer can study and perform inspections on the property as well as review an accounting and books of the business. The feasibility period is usually 30 days, but can be negotiated to be longer depending on each situation. In a situation in which the Buyer is a foreign national looking to invest in the U.S., such as through an E-2 Treaty Investor Visa, our Houston Commercial Transaction Attorneys will work with our Houston E-2 Treaty Investor Visa Lawyers to negotiate a feasibility period that could be as long as 90 to 120 days. In addition, our attorneys can draft the contract to be contingent upon the successful application of your E-2 Treaty Investment Visa, limiting any liability should any issue arise at the U.S. Consular office. In a residential contract, the period to study and research is much shorter, usually 7-10 days, and is called an “option period.”

Irrespective of a residential or commercial contract, there must be independent consideration for both the feasibility period and the option period. Usually, the Buyer allows the Seller to retain $100 from the earnest money deposit as independent consideration in the event that the Buyer chooses not to close on the property within the feasibility and the option period. In some instances, the failure to list independent consideration for the feasibility and option period may be construed as waiving one’s right to inspect the property, and the earnest money deposit may be retained by Seller if Buyer decides not to close on the property.

Some of the other important differences between a residential resale contract and a commercial contract are unique issues that would arise out of commercial transactions. In a commercial transaction, the contract often includes the assignment of a lease in which the Seller assigns all leases under the property to the Buyer. As such, all rents under such property must be assigned to the interest of the Buyer and the tenants must pay rent directly to the Buyer subsequent to the closing date (a Landlord Tenant Contact often also as an assignment of rents and estopple certificate sections). Within 7-10 days from the date of earnest money deposit, the Seller must obtain “estopple certificates” and deliver to the Buyer. An estopple certificate is a document in which each tenant must sign and agree to pay rent to the Buyer.

In addition to the above, a commercial contract usually has an extensive financing addendum in addition to the financing section of the contract. In a commercial transaction sales and purchase of real property it is common that a Buyer obtains financing from various sources, including from the Seller (Seller finance). Seller-financing exists when the Seller, either partially or wholly, finances the purchase price, often referred to as a purchase-money loan. Similar to a bank loan, the Seller holds a lien against the property through a couple of financing instruments, a promissory note and a deed of trust. The promissory note provides the Seller with a vendor’s lien, secured by a deed of trust and assignment of income from the property if the Buyer defaults on said loan. Our Houston Commercial Real Estate Transaction Attorneys will assist the Seller to draft and create a vendor’s lien; and therefore, if the Buyer defaults on the loan, the Seller has the right to take back the property (nonjudicial foreclosure), along with rents and income from that property.

There other issues unique to both residential improved real estate contracts and commercial contracts that are too numerous to be addressed in this article. Each contract provision is important and provides protection for both the Seller and the Buyer. You should consult our Houston Real Estate Closing Attorneys in all transactions, regardless whether the title company retains another attorney to draft the closing documents. An experienced Houston Real Estate Lawyer at the Law Offices of Steven Tuan Pham can assist you in reviewing various provisions and ensure that your rights are protected and no undue obligations are created. This is especially true in a commercial transaction in which the other party may have his own attorney reviewing and drafting the sales and purchase agreement, irrespective of whether you are informed of such. Please contact our Houston Residential Real Estate Attorneys and our Houston Commercial Real Estate Transaction Lawyers at 713-517-6645 for more information regarding our services.


The information above is NOT intended to replace a personal consultation with our Houston Real Estate Transaction Lawyers and our Spring Houston Real Estate Litigation Attorneys. Readers should not construe the information as a consultation. There may be other legal issues based on the specific fact of each case. Every case is unique and our Houston Real Estate Transaction Attorneys and our North Houston Real Estate Litigation Lawyers need to review the facts and circumstances of each individual case in order to provide a meaningful personal consultation. Please feel free to give us a call at 713-517-6645 or complete our Contact Form.