Which of the following is TRUE about seller financing in Texas?
Question & Answer
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Sellers cannot finance property sales
Texas law explicitly allows seller financing in property transactions. Sellers are permitted to finance the sale of their property by acting as a lender, creating a note and deed of trust. This is a common practice in Texas real estate transactions and is not prohibited by state law.
Seller financing requires TREC approval
TREC approval is not required for seller financing transactions. While real estate agents must be licensed, the financing arrangement itself doesn't require special regulatory approval from the Texas Real Estate Commission.
Seller financing with a wrap-around mortgage is allowed
Seller financing is limited to commercial property
Seller financing is not limited to commercial property in Texas. It's commonly used for residential properties as well, particularly when traditional financing options are unavailable or undesirable for either party.
Why is this correct?
Texas law explicitly allows seller financing with wrap-around mortgages, where the seller keeps their existing mortgage in place while creating a new mortgage that encompasses it. This is a common financing method when buyers may not qualify for traditional loans or when sellers want to offer more flexible terms.
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