Long back story but short of it is we have a family member in prison and at his request used a power of attorney to sell his paid-for house. It's not a good house and is in an arm pit of Texas and sold for a whopping $18k. We had to owner finance which is apparently the norm for this neck of the woods. It was done through a realtor with a mortgage and we insisted on title insurance for the sake of the buyer because this relative is a moron and we didn't want anyone to get hosed.

Now the buyer wants to pay it off after a year which is great but we can't reach the realtor to find out the procedure. The title company told the buyer they don't have anything to do with it now. Our main question is - where's the title?

I've read online and it appears that since it was a mortgage the house is deeded to them already so there's really nothing left to do except maybe send a letter stating they've paid in full? Is that right? Any other things we are missing?

I dont know about Texas, but here a realtor cannot draw up the contracts for owner financed transactions (Contract for Deed). Do you know who is holding the documents in escrow? They would likely have all documents that would need to be filed/recorded for a payoff (warranty deed, etc.).

At least here, when we do a contract for deed, the only thing recorded is the memorandum of contract for deed. No deed is actually recorded until the transaction is complete (either the buyer defaults - special warranty deed, or the buyer pays off the loan- warranty deed). We are also required to file a RTC with each deed that is recorded that goes to the Department of Revenue (but again, I dont know if ya'll require that.)

Okay, thank you! I just think my husband needs to call the Title company that wrote up the mortgage for us because surely they can tell him how to proceed. I didn't think the realtor had the documents but since she is the one who told us that's how everyone down there sells a house I thought she would know. I suspect the buyer did not ask the right question.

You do need to clarify if it is a contract for deed (You still have title) or seller financing (They have title and you have a lien). Since a title company was involved and you mentioned a mortgage I'm assuming it is seller financing.

The title company should have recorded the mortgage/deed of trust. Once the loan is paid you need to file a release of lien in the property records. Then I would send the recorded release to the buyer by certified mail so they cannot claim in the future that you failed to release the lien in a timely manner. You should also review the deed of trust to make sure you are complying with all of its requirements.

I can look it over for you if you need some help.

You need a release of lien. Title company can't prepare that for you as it would be practicing law and title companies are not licensed to practice law. Title company probably DOES have an attorney on staff or a relationship with an attorney, and could either put you in touch with that attoeney or request the attorney to prepare the release.

Note: there will most likely be a fee for preparing the document and definitely will be a fee for recording it (release needs to be recorded in county where Deed of Trust lien was filed .i.e where property is located).

ah, thanks for the clarification. We dont deal with Seller Financing, only Contracts for Deed here (at my work), so I dont know how those go. I just assumed OP meant Contract for Deed. My apologies.


Also, the documents signed should have provisions for early payoff, at least in terms of if there is a penalty.

Deed of Trust should be recorded with the county. Deed of trust should have a Trustee of record. This trustee likely drafted the docs. This person could also draft and record a release of lien. Title companies often times have attorneys that draft loan docs, affidavits, releases, etc for transactions. This is all very common and should not be hard to accomplish

All title companies have access to attorneys.

Sasappis said:

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histag10 said:

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ah, thanks for the clarification. We dont deal with Seller Financing, only Contracts for Deed here (at my work), so I dont know how those go. I just assumed OP meant Contract for Deed. My apologies.


Also, the documents signed should have provisions for early payoff, at least in terms of if there is a penalty.

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Contracts for deed are essentially illegal in Texas. There are ways to do them but the process is very onerous and rare.

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Ah. They are very popular here, we usually facilitate at least one a month. Though here, bankruptcy and foreclosure laws apply to contracts, so it provides both seller and buyer with a little more protection. I haven't dealt with a different type of seller financed property.

Thank y'all. I have a call into the title company and we'll pay them to draw up the documents but you've helped me know the right things to ask for.