Texas LO Section 5.085

[has 0]

There are LOs and then there are Texas LOs :-)

 

I had a question regarding section 5.085 which I think says that the property must be owned fee simple by the seller with NO LEINS OR ENCUMBRANCES except a few scenarios. The scenario of concern to me is :

 

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§ 5.085. FEE SIMPLE TITLE REQUIRED; MAINTENANCE OF FEE

SIMPLE TITLE.

(a) A potential seller may not execute an executory

contract with a potential purchaser if the seller does not own the

property in fee simple free from any liens or other encumbrances.

 

(b)Except as provided by this subsection, a seller, or the

seller's heirs or assigns, must maintain fee simple title free from

any liens or other encumbrances to property covered by an executory

contract for the entire duration of the contract. This subsection

does not apply to a lien or encumbrance placed on the property that

is:

 

(3) placed on the property by the seller prior to the

execution of the contract in exchange for a loan used only to

purchase the property.

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Do I interpret that as a refinance being a no-no?

What if I purchase a property for cash (hard money), fix up etc, then do a refi - is a < 3yrs LO a no-no for

such a property?

 

John where are you ? :-)

[ErikOk 10]

(3) placed on the property by the seller prior to the

execution of the contract in exchange for a loan used only to

purchase the property.

*********

 

Do I interpret that as a refinance being a no-no?

What if I purchase a property for cash (hard money), fix up etc, then do a refi - is a < 3yrs LO a no-no for

such a property?

 

 

If the property was purchased with a hard money loan to begin with, I am assuming that the property was mortgaged to that hard money lender. If a refi is done before performing a LO on the property, I don't see how that would change anything. I would think the refi would just be used to pay off the hard money lender and the refi would then be considered the loan being used to purchase the property.

 

Probably a question for an attorney I would think, but that is how I read it.

 

Seriously though, it is just comical reading through those laws. You can tell that they were just slapped together without much thought.

[pilot76180 51]

I've mentioned before, that my thought is that laws are written with ambiguity for a reason. They are drafted by attorneys, and as long as there is ambiguity, it keeps other attorneys in business.

People can ask "how would a judge interpret this, or that"...I don't know...and an attorney couldn't tell you either, when it comes to ambiguity...so..I personally look at what the law states exactly, and what the purpose was.

If you bought on a HML and refid, fine...if you bought...then got a loan to start a business and used the house as collateral...not good.