Texas Gives Investors New Tools to Kill Bogus MOCs

Starting September 1, 2025, Texas investors are likely to get two new weapons for clearing stale or fraudulent memoranda of contract (MOCs) without paying “greenmail” or engaging in litigation:

• Automatic invalidation for MOCs that don’t comply with a new law, and

• A structured 45-day process that forces MOC filers to either defend their position or walk away entirely.

House Bill 4063, which passed the Texas House unanimously (147-0) and the Senate (28-3), has been sent to the Governor for signature and would create the state's first comprehensive statutory framework for unilateral MOCs on residential property by adding Section 12.020 to the Texas Property Code.

This will mark the end of the wild west era where MOCs existed in legal gray areas with no standardized requirements or clear enforcement mechanisms.

Here's what you need to know.

Why Does This New Law Matter?

Memos will become formally recognized instruments with standardized requirements that create predictability and enforceability that simply doesn't exist today. 

Want protection for one of your own deals? Follow the statutory procedures correctly and get real protection backed by clear legal consequences for non-compliance by others.

Looking at a distressed property encumbered by a stale, fraudulent, or otherwise problematic MOC? Until now, your options were paying "greenmail" for a release or bringing litigation—both unpredictable and costly. Both are good reasons to pass.

But the proposed law will create two better options. The first addresses non-compliant MOCs through automatic invalidity. You read that right, automatic. The second provides a structured non-judicial 45-day process for eliminating facially compliant MOCs that should be invalidated for other reasons.

This regulatory shift will reward investors who understand the new framework while creating real challenges for those who don't. So, read on.

What Are MOCs?

Memoranda of contract are one-page documents that investors record to protect their deals. When you have a purchase agreement, option, right of first refusal, or right to match, recording an MOC puts the world on notice of your interest in the property.

This creates two practical protections: title companies will halt transactions with competing buyers, and you may have grounds to sue any buyer who proceeds anyway.

Until now, MOCs existed in a regulatory vacuum. They needed basic elements like parties' names, property description, and contract details, but had no standardized filing requirements or statutory recognition. 

This uncertainty created a major problem. It allowed unscrupulous operators—especially wholesalers—to record MOCs and refuse to release them as a strategy to extort money from property owners or subsequent good faith buyers.

HB 4063 will end this by creating the first comprehensive statutory framework with official rules, clear procedures, and predictable consequences.

What Does the New Law Require?

HB 4063 addresses this problem head-on by shifting the burden entirely onto the investors who record MOCs to actively defend their interest in the property or forfeit it entirely.

What’s the scope of the new law?

As we get into the weeds, the first thing you should know is that HB 4063 applies only to specific types of MOCs and properties:

1. Unilateral MOCs only: The law covers only MOCs signed by the non-owner. If both the buyer and seller sign the memorandum, the new requirements don't apply and existing practices continue unchanged.

2. Residential property only: The framework applies to single-family homes, multifamily, and all other real estate zoned for residential use. There will be no change with respect to commercial, industrial, and other types of non-residential real estate.

3. September 1, 2025 effective date: Only MOCs filed on or after the effective date fall under the new rules. No MOCs recorded before September 2025 will be subject to the new law.

Be aware, however, that the new law may have indirect effects beyond its explicit scope. 

Judges could view the new law as legislative recognition that MOC abuse is a serious problem, potentially making them more receptive to challenges against all problematic MOCs—even those filed before September 2025 or on non-residential properties. 

Anyone challenging MOCs outside the new law's scope should cite the new law as evidence of legislative intent to crack down on abusive practices.

What are the new filing requirements? 

The new law doesn't change what goes into an MOC—the content and form requirements remain governed by existing law and practice. 

Instead, the statute creates mandatory procedural requirements that must be followed exactly when recording any MOC.

To record a compliant MOC under the new law, the filer must: