A Texas seller is paid when the sale funds, not just when the papers are signed. State rules bar a title company from paying anyone until good funds for the whole deal are received and deposited. Once they are, your loans are paid off and your net comes to you by the method you set up with the title company.
Signing the closing papers and getting paid are two separate events in Texas. You are paid when the sale funds: when the money for the whole deal is in the title company's trust account and the title company is allowed to send it out. In a sale where the buyer's money is already there, that can follow quickly. When a lender is involved, you wait for the lender's money to arrive.
This guide covers the statewide rules that control that timing. For Dallas, Fort Worth and the surrounding counties, the DFW version of this guide covers what to check after closing, from the county deed record to your final water bill.
Closing and funding are not the same
The TREC resale contract (TREC No. 20-19) uses both words. Paragraph 9B lists what happens at closing: the seller signs and delivers the deed, and the buyer pays the sales price "in good funds acceptable to the Escrow Agent." Paragraph 10A then ties the buyer's possession to "closing and funding," unless a written lease says otherwise. Paragraph 18A adds that the escrow agent may require any disbursement to wait until it has collected good funds.
So a signed set of documents is only half of it. The money has to arrive and qualify before anyone, including you, is paid.
The Texas good funds rule
Insurance Code Section 2651.202: a title insurance company or title agent may not disburse funds from a trust account until good funds for the transaction have been received and deposited in amounts enough to cover the disbursements. The Texas Department of Insurance implements this in Procedural Rule P-27 of its title manual.
Rule P-27 fills in the details:
- What counts as good funds: cash or wire transfers; cashier's, certified and teller's checks; and uncertified checks or money orders under $1,500. Uncertified items of $1,500 or more count only once the bank has collected them.
- All or nothing: good funds equal to all disbursements must be received and deposited before any disbursement. Partial disbursements before then are not permitted.
- Wires: a wire is treated as received and deposited when the bank notifies the title company that it arrived.
- Judgment call: even when funds technically qualify, a title company is not required to disburse if reasonable business judgment suggests they may not be collected.
The practical result: you cannot be paid from part of the money. If the buyer's lender has not wired its share, nobody gets paid yet.
What a financed buyer adds
When the buyer uses a mortgage, more steps sit between contract and funding. The Consumer Financial Protection Bureau says the lender must give the buyer a Closing Disclosure at least three business days before closing on the loan. Even after everyone signs, the title company cannot pay you until the lender's money has arrived and counts as good funds.
A buyer paying cash has no Closing Disclosure clock and no lender to wait for. If the buyer's money is already in the trust account as good funds when everyone signs, disbursement can follow without that wait.
What comes out before you see a dollar
The title company pays the sale's obligations from the price before it pays you. Paragraph 9B(4) of the contract says there will be no liens left on the property that are not satisfied out of the sale proceeds, unless the buyer assumes a loan. That means the closing statement subtracts, in some order:
- the payoff of your mortgage, any home equity loan and any other lien, plus release fees;
- your share of closing costs under paragraph 12A(1), such as the tax certificates, deed preparation and half the escrow fee;
- any brokerage fee you agreed to pay;
- your prorated share of this year's property taxes and dues under paragraph 13; and
- anything else the contract makes yours, such as agreed repairs or a contribution to the buyer's costs.
Our guide to who pays closing costs in Texas walks through each line. Ask the title company for a seller's estimate as soon as you are under contract.
Wire or check: decide before closing day
Tell the title company in advance how you want your proceeds. A wire to your bank is one option; a check is another. Each has its own timing and steps, so ask the title company what it offers and when each would reach you. Give your bank details in a way you and the title company have agreed on, not by replying to an email.
Guard your proceeds against wire fraud
TDI warns that real estate transactions can be a target for wire transfer fraud. Its tips:
- Get a contact name, email address and phone number for everyone in the transaction.
- Verify electronic payment instructions with your title agent.
- Be wary of any email that asks you to act immediately or says payment details have changed.
- After a payment is made, confirm right away that it was received.
TREC adds that consumers should not rely on instructions sent by email, because email accounts can be hijacked. For a seller, the same logic runs in reverse: confirm your own wiring details with the title company by phone at a number you already know.
Withholding if the seller is a foreign person
Paragraph 20A of the contract says that if the seller is a "foreign person" under the Internal Revenue Code, or does not deliver an affidavit or certificate of non-foreign status, the buyer must withhold an amount from the proceeds and send it to the IRS. The IRS FIRPTA page puts the general rate at 15% of the amount realized and says the buyer is usually the withholding agent. Exceptions and reduced rates exist. A seller who may be a foreign person should talk to a CPA well before closing, because the withholding reduces what you receive that day.
Reporting after you are paid
The IRS instructions for Form 1099-S say the person listed as settlement agent on the closing statement generally files the form. A main-home sale of $250,000 or less ($500,000 if married) is not reportable when the seller gives an acceptable written certification that the full gain is excludable. Keep your closing statement with your tax records.
Moving out and handing over the keys
Paragraph 10A gives two choices: possession upon closing and funding, or under a temporary residential lease. If you need a few days after closing, put it in writing with TREC's Seller's Temporary Residential Lease. Paragraph 10A of the contract warns that possession without a written lease creates a tenancy at sufferance, and it tells both parties to consult their insurance agents before ownership and possession change. Paragraph 10B also requires you to hand over the codes and apps for any smart devices and remove your own access.
Getting paid by Cash Home Advisors
When Cash Home Advisors buys your house, there is no buyer's bank loan to wait on. We pay all closing costs, and we can close in 7–14 days at a title company. You see the full closing statement, including your payoff and net, before you sign.
You can ask for a cash offer, read how our process works, or see the kinds of houses we buy. If a deadline is pushing your sale, our page on selling before a Texas foreclosure explains the timing.
Want a cash offer instead?
We buy Texas houses as-is, pay all closing costs, and can close in 7–14 days.
Get my cash offer or call (817) 635-0743
Frequently asked questions
Why can't the title company pay me as soon as I sign?
Texas Insurance Code Section 2651.202 bars a title company from disbursing from its trust account until good funds for the transaction are received and deposited. The Texas Department of Insurance's rule P-27 adds that partial disbursements before that point are not permitted.
What counts as good funds in a Texas closing?
Under TDI rule P-27, good funds include cash and wire transfers, cashier's checks, certified checks, teller's checks, and uncertified items under $1,500. Larger uncertified checks count only after the bank collects them. A wire counts as received when the bank notifies the title company.
Does the buyer move in before I am paid?
Under paragraph 10A of the TREC resale contract, the seller delivers possession either upon closing and funding or under a written temporary lease. Possession without a written lease creates a tenancy at sufferance, which the form warns can expose both sides to loss.
How do I avoid wire fraud on my sale proceeds?
TDI suggests getting contact details for everyone in the deal, verifying payment instructions with your title agent, and being wary of any email that urges speed or says payment details changed. TREC warns consumers not to rely on wiring instructions sent by email.
Sources
- Texas Insurance Code, Chapter 2651 (Sec. 2651.202 trust fund disbursements)
- Texas Department of Insurance, Basic Manual of Title Insurance, Procedural Rule P-27
- Texas Real Estate Commission, One to Four Family Residential Contract (Resale), TREC No. 20-19
- Consumer Financial Protection Bureau, What is a Closing Disclosure?
- Texas Department of Insurance, Title insurance tips (fraud alert)
- Texas Real Estate Commission, Beware of possible scams before sending money via wire transfer
- IRS, FIRPTA withholding
- IRS, Instructions for Form 1099-S
General information, not legal or tax advice. Talk to a Texas attorney or CPA about your situation.