Buy The Note - Get The House - Posted by Bob-Tx

Posted by SCook85 on March 10, 1999 at 11:11:02:

Looks to me like you have a sweet deal there. I would buy that note even for the full face value but definitely would not offer that. A good deal is a good deal.
My concerns would be whether or not the note you are interested in is a second or a third or… Make sure the note is the first lien and then go to a title company and get the deal done. You just bought a property for $5000 or less at that point. You will have to beging foreclosure but it may be worth trying to restructure the note, get the payor making payments and then resell the note. Good luck with it.


Buy The Note - Get The House - Posted by Bob-Tx

Posted by Bob-Tx on March 10, 1999 at 08:56:19:

I have an opportunity to pick up a non-performing note and thereby perhaps get the house down the road…need advice.
The deal:
fmv = 40k
my seller sold the house and carried the note which now has a balance of approximately $5k. Her buyer has not made a payment since Jan. '98 and she is just fed up with the guy and wants to convert her note to cash.
She “believes” there is a second lien on the property - placed since she sold the house.
The house is currently rented.


  1. do I need to be concerned about the 2nd or do I go forward knowing that anybody else out there has to deal with me first?

  2. do I offer her the balance of the note or push for a deeper deal?

  3. what are the mechanics of buying the note…do I make some form of written offer, do I close at the title co., etc.

I’ve just never done this so any help would be appreciated.

Re: Buy The Note - Get The House - Posted by Kevin OK

Posted by Kevin OK on March 11, 1999 at 21:54:33:

Have you yet searched to see if there really are other liens behind hers/yours…including an IRS lien, etc.?

Re: Buy The Note - Get The House - Posted by Bud Branstetter

Posted by Bud Branstetter on March 10, 1999 at 21:05:32:


In Texas you do not have to notify junior lien holders of a default action. The problem when buying the note is that if you do not buy at a discount they the owner or the junior lien holder just pays off and you have nothing for your trouble or expenses. Yes, you want title insurance. As the lien holder you can also notify the renter, after you accelerate and call the note due, that the renter should pay the rent to the foreclosure trustee. Gets the owner off sucking eggs. The other thing you should do is get estoppell affidavits from both the holder and the maker of the note. The difficulty may be the maker. They can claim they have paid off the note. So you end up in court. I use an option contract designed to buy notes.
Track me down at AIREO tomorrow night if you want to discuss more.


Re: Buy The Note - Get The House - Posted by Ben

Posted by Ben on March 10, 1999 at 14:33:27:

If you really want the property, why not buy the second
as well? Chances are he is not getting paid either and would take a big discount. As holder of the first you can wipe him out at foreclosure but as was said before, he will probably just pay you off. This would increase your chances of ownership. Ben

Re: Buy The Note - Get The House - Posted by Tom Brown

Posted by Tom Brown on March 10, 1999 at 14:03:05:

You had better structure the deal to make money on the note, because you will never get the house IF there is a second. The instant your start a foreclosure, the owner of the second will pay you off to protect their position, especially if the owner of the note is a commercial lender.

I will guarantee it since the first is so small.