UT Professors Relase Study on Contracts for Deed in Texas

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

On October 19, Professors Peter Ward, Heather Way, and Lucy Wood from the University of Texas at Austin (my alma matter) presented their key findings of the Contract for Deed Prevalence Project, a year-long study examining emerging titling practices in low-income informal settlements in Texas. The study was commissioned by the Texas Department of Housing and Community Affairs, and focused on estimating the current number of recorded and unrecorded Contracts for Deed in Texas colonias in Cameron, El Paso, Hidalgo, Maverick, Starr, Webb and  Val Verde counties.

 

Here are some of the study's key findings with regard to RECORDED Contracts for Deed:

• RCFDs continue to be in use and recorded at significant rates in the border region and also interior counties far from the border.
• An estimated 16,261 total CFDs were recorded between 1989 and 2010 in the 10 counties, and that 5,451 of these CFDs are still active
• Most of the State's active RCFDs are in five counties: Bastrop, Travis, Webb, Maverick, and El Paso counties. The fewest outstanding contracts are in Starr, Guadalupe, and Val Verde counties.
• As one might expect, border counties with larger colonia populations had the largest absolute numbers of recorded CFDs.

Even more problematic, the study showed, is the widespread use of UNRECORDED Contracts for Deed. According to the study:

• approximately one of out of five recent purchasers in the surveyed counties purchased with a UCFD.
• UCFDs are most often used with consumer-to-consumer transactions, but can still be found in developer/land company sales.
• Consumers enteringinto UCFDs lack access to information about the land acquisition process and how to protect their interests.

The study also identified the following trends: 

• A “dramatic increase in clouded property titles” is anticipated in coming years as contract for deed properties are passed down to heirs, often without formal wills.


• Consumer-to-consumer transactions in older colonias, financed by sellers, are replacing sales by developers, with an accompanying lack of buyer safeguards such as title insurance and recorded deeds.


• Nearly half the homeowners in colonias and informal homestead subdivisions do not claim the homestead tax exemption to which they are entitled.

All persons interested in Texas Contracts for Deed would be fascinated by this terifficly informative study. The full report can be found HERE.