Closing on Owner-Financed Land in Texas, Step by Step: From Reservation to Your First Payment (2026)
What actually happens between reserving a tract and owning it: the financing review, the title commitment, the survey, the documents you sign at a licensed Texas title company, recording at the county and your first payment.
Rodrigo Blanco, Founder & CEO of TerraFunded
Published: 2026-11-09
TL;DR
- Closing is where the land becomes yours. With owner financing done right, a licensed Texas title company handles the closing, the seller signs a Warranty Deed to you, and you sign a Promissory Note and a Deed of Trust that secures the balance.
- The main steps: reservation, financing approval, title search and title commitment, survey, signing, recording at the county, and then your first payment under the note.
- Read two documents before closing day: the title commitment (especially Schedules B and C) and the closing statement.
- Recording matters. Under the Texas Property Code, a recorded instrument is notice to everyone, and an unrecorded deed is void against later buyers and creditors who had no notice of it.
- At TerraFunded: a $1,000 non-refundable reservation that is applied to your down payment, approval without a bank, about three weeks to close, and a Warranty Deed recorded in your name. The land is legally yours from closing day.
I'm Rodrigo Blanco, Founder & CEO of TerraFunded. Most of the anxiety around buying land with owner financing comes from not knowing what happens between "I want this tract" and "it's mine." This guide walks through each step of a Texas closing, what you sign, what you receive, and what to check, with the facts of how it works at TerraFunded where they apply.
The closing at a glance
| Step |
What happens |
What you sign or receive |
| 1. Reservation |
You choose a tract and hold it with a deposit |
Reservation confirmation |
| 2. Financing approval |
TerraFunded approves the financing directly, no bank |
Your financing terms |
| 3. Title search and commitment |
The title company searches the records and commits to insure title on stated conditions |
Title commitment (Schedules A to D) |
| 4. Survey |
The boundaries and legal description are confirmed on the ground |
The survey |
| 5. Signing |
You and the seller sign the closing documents at a licensed Texas title company |
Promissory Note, Deed of Trust, closing statement; the seller signs the Warranty Deed |
| 6. Recording |
The deed and deed of trust are filed with the county clerk |
Recorded Warranty Deed in your name, owner's title policy |
| 7. First payment |
Payments begin under the Promissory Note |
Your payment records |
Step 1: Reserve the tract, after your own homework
Before you put money down anywhere, do three things: read the listing carefully (acreage, access, restrictions, mineral rights, water and power), visit or inspect the land (our visit and inspection guide covers what to check), and confirm you are dealing with the real seller (see how to verify a Texas land seller and verify TerraFunded).
At TerraFunded, you reserve a tract with a $1,000 reservation deposit. It is non-refundable, and it is applied to your down payment, so it is not an extra fee on top of the purchase.
Step 2: Financing approval
In owner financing, the seller is the lender, so the seller approves the financing directly. There is no bank, no loan committee and no appraisal.
At TerraFunded, there is no bank: TerraFunded approves the financing directly. The terms are fixed 10% APR for 10 or 15 years. The financed price is the cash price times 1.20, and you choose a down payment of 5%, 10% or 20% of the financed price. In plain math, a 10% down payment equals 12% of the cash price. The owner financing vs. bank mortgage guide explains how this compares with a bank loan.
Step 3: Title search and the title commitment
The title company searches the public records for the tract and issues a commitment for title insurance. TDI describes it as the title insurer's promise to issue a policy, and a legal document you should review carefully before closing. TDI's FAQ adds that the commitment comes before closing and the policy is issued after.
The Texas commitment form (T-7) is organized in four schedules:
| Schedule |
What it contains |
What to check |
| A |
The policy to be issued, the proposed insured and amount, the interest being insured, who holds record title now, and the legal description |
Your name spelled correctly; the legal description matches the survey |
| B |
Exceptions the policy will not cover, such as recorded restrictive covenants, the "area and boundary" exception, taxes for the current year and later, and any listed easements or mineral matters |
Every listed easement and restriction, and anything you do not understand |
| C |
Requirements that must be met before the policy issues, such as signed, notarized and recorded documents, proof that taxes are paid and evidence of legal access |
That these are resolved before you sign |
| D |
The estimated premium and related disclosures |
That it matches your closing statement |
Two details from the T-7 form are worth knowing. You may ask to amend the "area and boundary" exception, which requires an acceptable survey and other company requirements. And minerals may not be covered: if the policy excepts minerals, neither the policy nor optional endorsements ensure you hold mineral title. Our rural land checklist covers mineral rights along with the other items to verify. The form also suggests discussing Schedules B and C with an attorney, because they affect your title and your use of the land.
Step 4: The survey
A survey shows the boundaries, the acreage and anything that crosses or sits on the land, such as easements or fences. In Texas, land surveyors are licensed by the Texas Board of Professional Engineers and Land Surveyors. TDI recommends checking the policy's legal description against your survey and notes that title insurance does not protect against boundary disputes with a neighbor unless you buy additional coverage.
At TerraFunded, the survey is one of the documents you receive at closing.
Step 5: Closing day at a licensed Texas title company
The title company acts as the neutral party that collects signatures and funds, follows the commitment's requirements and records the documents. Before you sign, TDI says you may ask to see your closing papers in advance. Make sure the title agent is licensed by TDI; you can call TDI's Help Line at 800-252-3439 or check TDI's licensing reports.
Protect your money. TDI warns that real estate transactions are a target for wire fraud. Get a contact name and phone number for everyone involved, verify payment instructions directly with your title agent, be wary of any email that pushes you to act immediately, and confirm receipt right after you send funds.
Can you sign remotely? Texas law allows online notarization by a commissioned online notary using two-way audio and video, regardless of whether the signer is physically in Texas (Government Code Section 406.110). Whether a remote or mail-away signing is available for your closing depends on the title company, so ask early.
What gets signed:
| Document |
What it does |
Who signs |
| Warranty Deed |
Transfers ownership to you. Texas's statutory form of general warranty deed has the seller "warrant and forever defend" the title against everyone lawfully claiming it |
Seller |
| Promissory Note |
Your promise to repay the financed balance: amount, interest rate, payment schedule and where to pay |
Buyer |
| Deed of Trust |
Secures the note with a lien on the land, with a power of sale if the loan goes into default |
Buyer |
| Closing statement |
Itemizes every dollar in the transaction |
Both parties |
The difference between this structure and a contract for deed, where the seller keeps legal title until the last payment, is the most important protection a land buyer has. Our Warranty Deed vs. contract for deed guide explains it in depth.
At TerraFunded, you receive a Warranty Deed recorded in your name, an owner's title insurance policy, the survey, the closing statement, and signed copies of the Promissory Note and Deed of Trust.
Step 6: Recording at the county
After signing, the Warranty Deed and the Deed of Trust are filed for record with the county clerk; Schedule C of the commitment requires the documents creating your interest to be signed, notarized and filed for record. Recording is what protects you against the rest of the world. Property Code Section 13.002 says a properly recorded instrument is notice to all persons, and Section 13.001 says an unrecorded conveyance is void as to a creditor or a later purchaser for value without notice.
The recorded deed comes back to you after the county processes it. TDI notes that the paper copy of an owner's title policy can arrive about 30 days after closing. Keep the deed, the policy, the survey and the closing statement together.
Step 7: Your first payment, and the habits that protect you
Your Promissory Note states the payment amount, the due date of the first payment and where to pay. From closing day, the land is yours, which also makes you the owner of record for property taxes and for the homestead and agricultural applications with the county appraisal district.
Three habits that keep things simple:
- Pay on time and keep proof of every payment.
- Read the default terms in your Deed of Trust. Texas Property Code Section 51.002 sets the foreclosure procedure under a power of sale, including at least 20 days' notice to cure before a notice of sale when the property is used as the debtor's residence. Our guide on what happens if you stop paying covers the details.
- Keep the tax account current. A property tax lien attaches every January 1 and takes priority over other liens.
How it works at TerraFunded
Every TerraFunded sale closes at a licensed Texas title company, and closing takes about three weeks. You reserve with a $1,000 non-refundable deposit applied to your down payment. TerraFunded approves the financing directly, with no bank, at a fixed 10% APR for 10 or 15 years, with down payment options of 5%, 10% or 20% of the financed price. At closing you receive a Warranty Deed recorded in your name, an owner's title insurance policy, the survey, the closing statement and signed copies of the Promissory Note and Deed of Trust. The land is legally yours from closing day, not when you finish paying. Start on the marketplace, read how it works, or see the FAQ.
Frequently asked questions
How long does it take to close on owner-financed land in Texas?
It depends on the seller, the title work and any issues in the commitment. At TerraFunded, closing takes about three weeks.
What documents do I receive at closing?
In a Warranty Deed closing you should receive the deed (recorded in your name once the county processes it), the owner's title insurance policy, the closing statement and copies of the Promissory Note and Deed of Trust you signed. At TerraFunded you also receive the survey.
Is the reservation deposit refundable?
At TerraFunded, no. The $1,000 reservation deposit is non-refundable, and it is applied to your down payment.
Do I own the land at closing or when I finish paying?
With a Warranty Deed and Deed of Trust, you own the land from closing day. The seller holds a lien that secures the balance, not the title. Under a contract for deed, by contrast, the seller typically keeps legal title until you pay in full.
Do I have to be in Texas to close?
Not necessarily. Texas allows online notarization by commissioned online notaries for signers who are not physically in Texas, but whether a remote signing is offered depends on the title company handling your closing.
What is a title commitment and what should I check?
It is the title insurer's promise to issue a policy on stated conditions. Check that Schedule A has your correct name and a legal description that matches the survey, read every exception in Schedule B, and make sure the requirements in Schedule C are met before you sign.
Sources
This article is for general information only and is not legal or financial advice. Before you sign closing documents, consult a licensed Texas real estate attorney.
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For the interactive version with related properties and contact info, please visit the original article.