Sub2 demise in Texas, now what?

We are seeing a halt on Sub2s in Texas come January '08. First it was no more contract for deed, then no more lease options and now the Sub2 is on the chopping block come January. At this point it looks as though there is no way to make use of OPM short of short term financing or getting a new mortgage on the property. I’d like to hear if Texas investors have a game plan.


If you would be kind enough to point me to the Texas State Statute that you are referring to about Subject To investing that takes effect in January it would be appreciated.

John $Cash$ Locke

Melissa, the bill excludes those who get title insurance or title commitment. So it is still doable, but raises the aquisition costs.

Cash, here is the bill,26765.msg124795.html


I knew you were on top of this, I thought they had a different bill that would stop Subject To investing that I had not seen.

Thanks for the insight, but nothing new here, keep on piling up those Subject To deals you are getting y’all.


Lease options and sub 2’s are easily accomplished in Texas.

  1. Owner places property in asset protection trust.

  2. Property is leased to a co-beneficiary of the trust under a triple-net lease.

That’s it!!! Done deal.


There is no trust law in Texas, so trusts fall under the Texas Usury Law. There are no case laws that I am aware of to support or deny this method, so it is difficult to say how the court will rule.

I personally think that if this ever goes to court, it will be very expensive to prove even if you win the case. So is it really better than just doing a wrap sale?

Land trusts are used by Texas investors all the time and are legal. A wrap has several drawbacks. It violates the lender’s Due on Sale Clause; there is no means for eviction in the event of default’ the tenant/buyer holds an “equitable interest”, necessitating foreclosure, ejectment and quiet title actions in lieu of eviction; any party’s creditor liens, lawsuits, judgments and tax liens can attach tot he property; and the death of any party throws the entire property into probate.

Use a land trust and no party can jeopardize title, the property is shielded from public view, and is well insulated from lawsuits, creditor judgments, tax liens, bankruptcy, marital disputes and probate on behalf of either party. Simple eviction rights are preserved, and the DOSC is exempted.

Hope this helps.

When someone Violates the DOSC, they should realize they could be issued a Parking Ticket, although I have never heard of anyone being tracked down by bounty hunters hired by the lenders to seek out the perpetrator of this minor infraction, if it was ever classified as one. But it sounds good when you are trying to convince someone it may be a hanging offense.

An Infraction in legal sense (minor offense, minor violation, petty offense, or frequently citation, sometimes used as synonymous with Violation is a “petty” violation of the law less serious than a misdemeanor.

In the state of Oregon possession of less than one ounce of cannabis (marijuana) is a Violation rather than a crime.

Oregon sounds great, do creative deals and smoke a little pot at the same time, which one do you think will cause you the most trouble?

John $Cash$ Locke

KIDS, DON’T DO DRUGS! (Sorry, had to throw that one in there)

When interest rates were in the teens and people were taking homes sub2 with single digit interest rates I could see banks relentlessly chasing DOSC violators, now I wouldn’t doubt that most banks are happy that ANYONE is paying the note. Defaults are through the roof, if a note is performing I don’t see why in their right mind a bank would call it due on sale.