Legal Question in Real Estate Law in Texas

Verbal Contract for Real Estate Loan

My parents own a construction company and offered to loan us the money to add onto our house. They told us they could float the loan, interest free for a year, giving us time to finish the house and then refinance. We started the house in July 2008, the job was run through their company, and finished it February 1, 2009. We are now working on refinancing but according to our mortgage broker we are looking at 60 days to closing. My parent's company is now looking at bankruptcy and wants us to start paying them $980 a month in interest on a $107,000 loan. Back charging us to January and they said they may have to foreclose. All we have is a verbal agreement that we would have a year from July 2008 and no interest. There is nothing on the lien and we cannot afford to pay $980 a month in interest payments on top of our $700 month existing mortgage loan. What are our options and can they foreclose with only a verbal agreement, whose terms we have not violated yet?


Asked on 3/12/09, 10:47 am

1 Answer from Attorneys
Joseph A. McDermott, III Attorney at Law

Re: Verbal Contract for Real Estate Loan

An interest in real estate, including a lien, cannot be conveyed orally in Texas, so they have no lien to foreclose on. This does NOT mean you don't still owe the money; oral loans can be enforceable.

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Answered on 3/12/09, 2:21 pm


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