Where can I find a contract that protects me in assuming the loan on a home?

Full question:

I am going to assume ownership of the home. I am looking for a contract to protect myself from them coming back and want their home back. I am not in a position to get financing through a bank so they are okay with this situation. Looking for a contract to take full assumption and responsibility of the home. They will not make any money off of the assumption to me. I will start paying the mortgage as soon as I move in the house.

• Category: Contract for Deed
• Date: 04/07/2025
• State: Texas

Answer:

It is unclear from your question whether the lender has agreed to have you assume the mortgage. A contract for deed, or land contract, is often used as an alternative means of financing the purchase price of property. The buyer does not receive an actual deed until payments are made under the terms of the contract for deed agreement. Until the buyer receives a deed, ownership isn't transferred and the property is subject to being foreclosed on if the mortgagee/owner defaults on the mortgage. The responsibility for payment for the property is a separate issue from the ownership of the property.

If there is a mortgage on the property, the contract may violate a due-on-sale clause in the mortgage which the lender may or may not seek to enforce. Most lenders require that the mortgage or deed of trust contain a due on sale clause. This is an acceleration clause in a loan, calling for payment of the entire principal balance in full, triggered by the transfer or sale of a property. Such a clause permits a secured mortgage lender (federal, state or private) to call the entire unpaid loan balance due and payable immediately if the property securing the loan is sold, transferred, traded, gifted or otherwise disposed of without the lender’s prior written consent.

If the home is foreclosed on, the buyer may lose investment payments that are made and then the buyer loses the home.