Addendum

TXR 1919 — Loan Assumption Addendum

This addendum governs the assumption of the seller's existing mortgage loan(s) by the buyer. It establishes the buyer's credit documentation requirements, the seller's right to approve or reject the buyer's credit, the details of the loans being assumed (principal balance, monthly payments), varianc

Source: TXR
Form Number: 1919
Category: Addendum
Revised: November 7, 2022

Used For

Residential Sales, Farm & Ranch, Vacant Land

Form Outline

The TXR 1919 form is organized into the following sections:

  1. Header and Property Identification
    Identifies the form as a Loan Assumption Addendum and specifies the property address.
  2. Credit Documentation
    Specifies what credit documentation the buyer must deliver to the seller within a set number of days to establish creditworthiness. The buyer authorizes credit reporting agencies to furnish reports to the seller and the noteholder(s) at the buyer's expense.
  3. Buyer's Credit Approval
    Establishes the seller's right to review the buyer's credit and terminate if the credit is unacceptable. If the buyer fails to deliver documentation on time, the seller can terminate and keep the earnest money. If documentation is delivered but credit is unacceptable, the seller can terminate within 7 days and earnest money is refunded. If the seller doesn't terminate in time, the buyer's credit is deemed approved.
  4. Assumption
    Details the existing loans the buyer will assume at closing, including the first and second lien notes. Specifies the payee, unpaid balance, current monthly payment, and provides for balance variance adjustments. Seller must deliver loan documents within 7 days of the Effective Date.
  5. Loan Assumption Terms
    Establishes caps on assumption fees and interest rate increases that the buyer will accept. If the noteholder requires terms beyond these caps, the buyer may terminate.
  6. Consent by Noteholder
    If the noteholder fails to consent to the assumption, either party may terminate and earnest money is refunded to the buyer.
  7. Seller's Liens
    Unless the seller is released from liability on the assumed note, a vendor's lien and deed of trust to secure assumption will be required. The vendor's lien is automatically released when the noteholder provides an executed release.
  8. Tax and Insurance Escrow
    If the noteholder maintains an escrow account for taxes, insurance, or mortgage insurance, the seller transfers it to the buyer without deficiency. The buyer reimburses the seller for the amount in the transferred accounts.
  9. Authorization to Release Information
    Authorizes the lender(s) to furnish assumption status information to buyer and seller, and authorizes disclosure of closing documents to the parties' brokers and agents.
  10. Notices to Buyer and Seller
    Three important notices: (1) Buyer should examine notes and deeds of trust before signing if concerned about future adjustments, (2) Seller's liability continues unless released by noteholder, (3) Due on sale clauses may allow the noteholder to accelerate the loan upon transfer.
  11. Signatures
    Signature lines for both buyers and both sellers.

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