Releasing property when seller holds the note

Q: I sold property in Houston to an individual several years ago. It was owner-financed, and I carried the note. It appears the buyer will pay it off later this year. What do I have to do once the note is paid in full? I think I have to complete a release of lien and someone has to file it at the courthouse or annex. The person buying the property has never missed a payment, and I supply her with an annual statement showing what she paid in principal and interest, and what is owed.

A: You are correct that you need to sign a release of lien, have it notarized and then record it in the Harris County real property records. The original recorded document should be given to the buyer.

The release of lien is a document that should be prepared by an attorney. (I am not aware of any free and legitimate online resources.) It is typically only one or two pages long and therefore should not cost you much in legal fees.

Q: If a house and cars are in both spouses’ names, brokerage accounts are held as joint tenants with rights of survivorship, and each spouse has named the other as beneficiary on the retirement accounts, do they still have to go through probate when one of them dies?

A: The cars can be transferred easily without probate, and all the financial assets will pass directly to the surviving spouse without the need for probate.

It is the house that can cause a problem.

Even though the house is owned by the spouses jointly, it is probably not held with rights of survivorship. Such an ownership arrangement is very rare and highly discouraged in Texas. A solution would be for the spouses to sign a transfer on death deed, which would provide that the house will pass automatically, without the need for probate, to the surviving spouse.

Q: My daughter wants to buy the house I inherited from my mother. The house is worth about $60,000. I want to sell it to her for $50,000. Can we do this without a lawyer? There are four siblings (one of whom is deceased) to divide the selling costs, and there are no adverse issues among the siblings. What is the best way to handle this?

A: You could possibly do this without a lawyer, but there are many issues to be addressed, including whether your daughter is paying cash or just making a down payment with a note for the balance, whether the deceased sibling’s estate has been probated, whether a minor owns an interest in the house, and whether your daughter wants title insurance.

You say the siblings all agree, but what about the people who inherited the quarter interest from the deceased sibling?

It would be a good idea to hire an attorney.

The information in this column is intended to provide a general understanding of the law, not legal advice. Readers with legal problems, including those whose questions are addressed here, should consult attorneys for advice on their particular circumstances. Ronald Lipman of the Houston law firm Lipman & Associates is board-certified in estate planning and probate law by the Texas Board of Legal Specialization. Email questions to stateyourcase@lipmanpc.com.