Texas Seller Financing for Land: What Sellers Need to Know in 2026

Texas land sellers ask me the same things: Is it legal? Can I use a contract for deed? What rate can I charge? Do I need a license? Here are the answers, with each Texas statute linked.

I am not a lawyer, and this is not legal advice. Many of these rules turn on your facts. Have a Texas real estate attorney or Texas title company draft your documents.

Is Seller Financing Land Legal in Texas?

Yes. Texas allows seller financing on land, but it regulates how you document it, what you charge, and how often you do it.

You can sell Texas land and carry the note yourself. The rules that matter are the contract for deed rules, the foreclosure notice rules, the interest rate limits, and the mortgage licensing rules. Which ones apply depends on who your buyer is and how the land will be used.

Should You Use a Deed of Trust or a Contract for Deed in Texas?

Use a promissory note and a deed of trust. Texas puts heavy rules on contracts for deed, and many note buyers will not touch them.

Texas calls a contract for deed an "executory contract for conveyance." On residential property, the seller keeps title and must follow a long list of duties in Property Code Chapter 5, Subchapter D, with daily penalties for some misses. A deed of trust avoids that list and gives you a clear foreclosure process.

	Note and deed of trust	Contract for deed (executory contract)
Who holds title	Buyer, from closing	Seller, until paid off
Recording	Deed and deed of trust recorded with the county clerk	Seller must record within 30 days of signing, if the subchapter applies
Yearly duty	None set by Subchapter D	Annual accounting statement to the buyer each January
If the buyer defaults	Trustee sale under Property Code 51.002	30 day cure; after 40% paid, 48 payments, or recording, a trustee sale with a 60 day cure
Buyer's right to switch	Not needed	Buyer can convert to a note and deed of trust at any time
Can you sell it to us?	Yes	No, we do not buy land contracts

Sources: Texas Property Code 5.065, 5.066, 5.076, 5.077, 5.081, and 51.002.

The seller must also give written disclosures and transfer title within 30 days of the final payment, or owe the buyer $250 a day from day 31 to day 90, then $500 a day (Property Code 5.079). More on this in why to avoid land contracts for seller financing land.

Do the Texas Contract for Deed Rules Apply to Vacant Land?

They apply when the land is used, or will be used, as the buyer's home or a close relative's home, and a lot of one acre or less is presumed residential.

Subchapter D is written for residential property. Under Property Code 5.062, it covers an executory contract on property used or to be used as the buyer's residence, or a residence for a relative within the second degree. For this subchapter, a lot of one acre or less is presumed to be residential.

A buyer planning a home on a half acre lot is inside the rules. A 40 acre hunting tract bought by an LLC as an investment may be outside them. In between, it depends on the facts. The statute also does not apply when the contract requires the seller to deliver the deed within 180 days. Under Property Code 5.0622, some counties can extend the rules by order, but not to farm, ranch, wildlife, or timber land.

In my experience, the simple answer is to skip the contract for deed. A note and deed of trust works either way.

How Does Foreclosure Work on a Texas Land Note?

A Texas deed of trust with a power of sale lets the trustee sell the land at a public auction on the first Tuesday of the month, without going to court.

Texas nonjudicial foreclosure follows Property Code 51.002. The sale is a public auction held between 10 a.m. and 4 p.m. on the first Tuesday of a month. Notice of the sale must go out at least 21 days before the sale date.

That notice is posted at the courthouse, filed with the county clerk, and sent by certified mail to each debtor. On property used as the debtor's residence, the servicer must first send a certified mail notice giving at least 20 days to cure.

The statute ties that 20 day cure notice to a residence. On vacant land, your deed of trust may set its own notice terms, so read it, and have a Texas attorney run any foreclosure. Compare other states in our state foreclosure timelines for land notes.

What Interest Rate Can You Charge on Texas Seller Financing?

Texas sets a 10% maximum unless another law allows more, and one law that allows more is the Chapter 303 rate ceiling, which was 18% a year in October 2026.

Finance Code 302.001 sets the maximum rate at 10% a year "except as otherwise provided by law," and a usurious contract is subject to penalties under Chapter 305. Chapter 303 provides optional rate ceilings, and Finance Code 303.009 keeps the weekly ceiling between 18% and 24% a year, with a 28% cap for business, commercial, or investment credit.

The Office of Consumer Credit Commissioner posts the weekly ceiling: 18% for the week of October 12, 2026 (OCCC interest rates). Texas adds up all interest contracted for over the stated term when it tests the rate (302.001(c)), so have your attorney or title company check the rate, the fees, and the note language together before you close.

Do You Need a Mortgage License to Seller Finance Land in Texas?

Usually not for a few deals a year, and generally not when the buyer is buying for business purposes, but the counts and the buyer's purpose matter.

Texas licenses residential mortgage loan companies under Finance Code Chapter 156 and originators under Chapter 157. Both exempt an owner who makes only a few residential mortgage loans to buyers in any 12 months. Whether your sale counts as a residential mortgage loan depends on the buyer's purpose and the land's use.

• Finance Code 156.202: no more than three residential mortgage loans in 12 consecutive months. Affiliated owners that include an entity, like an LLC, count as one.
• Finance Code 157.0121: no more than five residential mortgage loans in 12 consecutive months for an individual owner, and no more than three for an owner whose employees do the work, with affiliates counted together.

The key word is "residential." Under Finance Code 180.002, a residential mortgage loan is a loan primarily for personal, family, or household use, and residential real estate includes land where a home is built or intended to be built. The federal SAFE Act uses the same idea (12 U.S.C. 5102).

So land sold to a business buyer for investment is generally outside these definitions, while a lot sold to a family who plans to build can be inside them. If you sell many lots on terms to people who will live on them, talk to a Texas real estate attorney.

Does Dodd Frank Apply to Texas Land Seller Financing?

The biggest Dodd Frank rules are written for loans secured by a dwelling, and business purpose credit is outside Truth in Lending.

Truth in Lending covers consumer credit, not credit made mainly for business purposes (12 CFR 1026.3). If your buyer is buying for personal use, some rules can apply depending on how many deals you do.

I cover the federal side in Dodd Frank and seller financing land.

How Do You Close a Seller Financed Land Sale in Texas?

Close through a Texas title company, sign a note and deed of trust, record both the deed and the deed of trust, and keep the property taxes paid.

A Texas title company runs title, closes, and issues the title policies. Premium rates in Texas are set by the Commissioner of Insurance (Insurance Code 2703.151; current rate chart at the Texas Department of Insurance). The steps:

1. Set the price and terms. Get a real down payment.
2. Ask how the buyer will use the land. Home site or investment, person or company. That decides which rules apply.
3. Open title with a Texas title company. Ask for a title commitment and a lender's policy on your lien.
4. Have the documents drafted. A Texas real estate attorney or the title company prepares the note, deed of trust, and deed.
5. Check the rate and your loan count. Confirm the usury rules and any licensing exemption.
6. Close and record. The buyer signs the note and deed of trust, you sign the deed, and the title company records the deed and deed of trust with the county clerk. An unrecorded deed of trust is void against a creditor, or a later buyer who pays value, without notice of it (Property Code 13.001).
7. Set up servicing and tax tracking. Texas property taxes are delinquent if not paid before February 1 of the next year (Tax Code 31.02), and a tax lien generally ranks ahead of your deed of trust (Tax Code 32.05). Confirm the buyer pays.

More in closing a seller financed land deal and the full seller financing guide.

Can You Sell a Texas Land Note for Cash?

Yes. We buy Texas land notes secured by a deed of trust or mortgage for 80 to 90% of the balance.

If you want cash instead of payments, sell the note at closing or later. Our criteria are a $25,000 minimum balance, a property worth at least $50,000, a buyer down payment of at least $10,000. What we pay for the note stays at or under 65% of the land value. We buy promissory notes only, not land contracts.

See our note buying criteria, try the note value calculator, read about Texas note buying, or sell your note.