Legal Question in Real Estate Law in Texas

owner financed mortgage: buyer has not paid taxes

We owner-financed a commercial property to our long term (10+yrs) tenant. The current agreement is for five years with a substantial balloon note. Buyer is responsible for taxes and insurance. Two years into the contract, he has suffered losses to his business and is behind on payments and unable to pay the taxes on the property. We do not want to foreclose on him - we have a longstanding relationship and we know he WILL honor his obligations when he is able. I know we need to pay the back taxes to avoid a tax foreclosure.

What do we need to do to legalize his obligation to repay us for this act? Will a simple promissory note do? Am I correct in assuming that the missed payments are not a problem at this time? Our contract states the selling price, interest rate, and monthly payment according to an amortization schedule. Doesn't that imply that if payments are missed and not made up, they roll into the balloon note due at the end of the contract?

Thank you in advance for your expertise.


Asked on 8/24/09, 8:18 pm

1 Answer from Attorneys
David Leon David L. Leon, P.C.

You can do all of these things, if you all agree. My suggestion is that you contact the taxing authority, purchase the lien (with the buyer's written consent.) This will further protect your interest. The tax lien note is a separate note, which you can foreclose, or sell to another buyer.

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Answered on 8/25/09, 12:10 pm


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