What should I do if the buyer defaults on a Contract for Deed?

Full question:

I signed a Contract for Deed with a man December 7th, 1995. He is 3 months behind in notes, insurance cancelled, and 2 years taxes owed on the house and property (3 lots). I sent him a certified letter and a letter by mail telling him the amount of taxes he owed (2007-2008 $1,581.78), He had to have insurance at all times, and the house notes for (August, September, October were due now. He reinstated the insurance and I think paid the taxes but 3 months later he still has not made a payment on the house. His notes are only $162.28 a month. He now owes 6 months ($973.68) and on the 29th he will owe 7 notes. He never filed the original Contract for Deed. I had him sign a Quit Claim Deed at the beginning of the Contract that he had notarized because he owes taxes of some kind and was afraid he would lose his house. I had an attorney to tell me to have him sign the Quit Claim Deed so that in the future like now all I had to do was file the Quit Claimed Deed. I need to know if I file the Quit Claimed Deed what else would I need to do if any thing? He has been in the rears almost all the time. His insurance has cancelled 3 times. He only owes $3,352.09 + late payments he has never paid ($1,975.00 late notes owed) = $5,327.09 and the house will be paid for but I am paying a finance company the notes and I need to get the money or he needs to go. I would appreciate your help. Thank You.

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

Answer:

In a Contract for Deed, the buyer typically does not receive the deed until all payments are made. By filing the Quit Claim Deed, you would be transferring ownership of the property to the grantee named on the deed. If the buyer is behind on payments, you may have grounds to sue for the money owed due to breach of contract and potentially evict them for non-payment.

A Contract for Deed is an alternative financing method where the buyer does not receive the deed until they fulfill the payment terms. Until the buyer gets the deed, ownership remains with you, and the property can be foreclosed if the buyer defaults.

If there is a mortgage on the property, the contract may violate a due-on-sale clause, which could allow the lender to call the entire loan balance due immediately if the property is transferred without their consent.

Failure to perform contractual duties constitutes a breach of contract. If one party does not meet their obligations, the other party may suffer financial harm. Legal actions for breach of contract aim to compensate the injured party, not to punish the breaching party. Remedies may include money damages, restitution, rescission, reformation, or specific performance.

For your situation, consider your options carefully and consult with a legal professional to determine the best course of action regarding the Quit Claim Deed and any potential legal remedies.