Legal Question in Real Estate Law in Texas

Re: Texas promissory note and security agreement

There may be a homestead problem. First, the proper documents are a Note and Deed of Trust. However, if your wife lives there, it would be subject to the Home Equity laws and the forms are specific and numerous. Plus, it takes a couple of years to be approved by the State to be a Home Equity lender. If you do it on your own, chances are the lien would be void and if things go wrong would be uncollectable. If it is not a homestead, no problem. On the price, you called the wrong attorney. I typically charge $250 for a note & deed of trust. Try someone else.

Re: Texas promissory note and security agreement

Your general scheme looks good. The proper documents to use would probably be a promissory note and a deed of trust. The most important thing, at least from the sister's perspective, is to make sure that the deed of trust (not security agreement) will be effective so that she can foreclose on the condo if your wife cannot pay the note. As you say, the deed of trust should be filed at the courthouse.

Neither I nor any other attorney can tell you whether the forms on uslegalforms.com would be effective, unless we look at them. If the condo is used as your wife's homestead, then special home equity loan requirements would apply.

On the other hand, if your sister in law would accept a simple unsecured promissory note, knowing that she could recover from your wife through a lawsuit if she needed to, then the extra deed of trust would not be necessary. If the deed of trust you download turns out not to be effective in Texas, then this is the position in which the sister in law will be - an unsecured creditor.