A deed of trust in Texas transfers title of real property in trust and is often used as part of a real estate transaction that includes a Warranty Deed with a Vendor’s Lien and a Promissory Note. It functions in a way similar to mortgages used in other states. As the title indicates, in a deed of trust to secure assumption, another person assumes the note already in place, guaranteeing payment to the grantor in the deed. The agreement means that the buyer or grantee in the deed takes the property, assuming the debt currently on the property. Usually, the parties execute an assumption deed and a deed of trust to secure assumption as part of the transaction.
Primary Uses of Assumption Deed of Trust
Although it can be used any time a party assumes payments to convey a property, an assumption deed of trust commonly occurs in divorce cases. In a divorce settlement, the spouse being awarded the property may assume the unpaid debt on the home, for example. If that spouse does not timely pay the mortgage, the grantor spouse may take the house back.
Assumption transactions are also common outside of divorce situations. Owners of real estate may wish to transfer property with debt and allow the buyer to assume this debt as part of the transaction. The buyer expressly agrees to assume the debt in the deed and executes a deed of trust to secure assumption, thereby providing the seller security for the buyer’s promise to continue to make payments on the note already in place.
The following is a sample grant clause in an assumption deed of trust:
“For value received and to secure Grantor['s/s'] assumption, Grantor[s] convey[s] the Property to Trustee in trust. Grantor[s] warrant[s] and agree[s] to defend the title to the Property, subject to the Other Exceptions to Conveyance and Warranty. If Grantor[s] perform[s] all the covenants of the Note and Deed of Trust Assumed and if Beneficiar[y/ies] [has/have] not filed a notice of advancement, a release of the Deed of Trust Assumed will release this deed of trust to secure assumption and Beneficiar['s/ies'] vendor's lien.”
An assumption deed of trust offers advantages to buyers and sellers in certain situations, but there are risks as well. An experienced real estate attorney can personalize standard contracts and documents to reflect unique needs of the transaction. That service along with other helpful advice protects the interests of a client, ensuring the best possible outcome for everyone involved.
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