Selling a home in the state of Texas is not always a simple sales transaction. Nevertheless, some people in the market, either as buyers or sellers, wonder whether it is legal to arrange rent for a residential property in that state. The answer is brief, yes, but only if you look closely at the situation and how the texas statute might work. A rental option may be one or two contracts, but it is necessarily an agreement to lease a property (for rent), with the right (but not the obligation) to buy the property at a certain price and within a specified time frame. Options that are not combined with a residential lease as well as options on commercial real estate are not covered by property Code Section 5.061. One of the essential features of a leasing option is that it sets a set selling price. Brooks v. Acosta, 581 S.W.3d 485 (Tex.App.-Austin 2019, no pets)). To be clear at the beginning of this review, a rental option related to the purchase of real estate under the layman`s thinking conditions is a rent for his own contract. Keep in mind that even though this scenario is sometimes called leasing, technically, a lease purchase would be a little different.
The Property Code expressly requires that a contract of execution be signed in writing and by the person to be hired (or that person`s representative) to be enforceable. Any oral agreement that does not meet this requirement is unenforceable. The property code requires the seller to include a notification in the contract. The seller`s failure to provide this notification is a “false, misleading or deceptive act or practice” under the Texas Deceptive Trade Practices Act (DTPA) and allows the purchaser to terminate and terminate the contract. Many lease-to-purchase contracts contain vague lease-to-purchase provisions that look like purchase options but do not meet the legal definition developed by Texas court decisions. For example, some lease-to-purchase agreements do not contain a fixed price. Instead, they stipulate that tenants can acquire the property at “market value” without indicating how “market value” could be determined. Sometimes a call option is tied to a lease agreement.
In other situations, the option to purchase is part of a traditional real estate purchase agreement and is used to give a buyer time to assess the feasibility of closing the purchase. In addition, for whatever reason, Property Code Section 5.074 (a) authorizes the purchaser to terminate any performance contract, including a leasing option, within 14 days of signing, even if all legal requirements are met. As of the 30th day after the contract is signed, the seller must mention the execution contract and the statement of disclosure attached in accordance with Section 5.069 in the real estate records of the county where the property is located. If the execution contract is terminated for any reason, the ownership code also requires the seller to register the instrument that terminates the contract. However, the statutes do not apply to all rental options and some are expressly excluded. There are no legal restrictions for any of the following leasing options: Another related pre-closing requirement is contained in property Code Section 5.016: “A person cannot disclose interest in residential real estate or enter into a contract to attract interest in registered residential real estate,” without making a seven-day termination to both lenders and buyers. The law defines the necessary content of this communication, which is quite technical, although there are no actual sanctions, with the exception of granting a right of pre-retraction to the purchaser.