When is this document used?

When a property is sold, and a Contract has been executed by both parties this Memorandum document is often recorded in the county where the subject property is located instead of the actual Contract. Stating - Seller has agreed to sell, and Buyer has agreed to buy, the Property upon the terms and conditions set forth in the Contract.

Why a Memorandum of Contract?

Privacy - When parties want to keep financial details of a Contract for Deed, Land Contract or Buy-Sell Agreement private, a Memorandum is recorded.

Notice - puts the world on notice that a Contract between buyer and seller exists on a specific property.

Legal - legal binding agreement between buyer and seller concerning the property in question.

Protection - Often filed by buyers alone, after a contract has been executed, preventing loans or encumbrances being placed on the property by existing Deed holder. Encumbrances have been placed on properties even though the Contract states they can't. This can be devastating for a buyer who has made payments. A Memorandum is an effective instrument to prevent this. In short, either the Contract or Memorandum should be recorded for your protection.

Seller Financing - When the buyer chooses or is obligated to obtain bank financing a Memorandum legitimizes the purchase agreement, providing proof to the bank that a deal was in place. Most banks will require that the Contract or Memorandum be recorded before they will finance the property in question.

(Texas Memorandum of Contract Package includes form, guidelines, and completed example)

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