Re: Seeking suggestions - Posted by JPiper
Posted by JPiper on October 31, 2000 at 24:02:34:
The way I have used this in the past is to create the note at a mutually agreed upon amount at a stated interest rate. The note together with the interest would balloon at the maturity of the first mortgage.
Assuming all payments on the first mortgage are paid on time, then the note contains a clause providing for the note to be reconveyed for $10 at either the maturity date or the payoff date, whichever is earlier.
YOu’re correct that the note could simply be paid off. And if you’re concerned about the seller then I suppose you should advise them of this possibility and set an amount for the note that you couldn’t pay.lol.
Personally, I have normally written these notes for very small amounts, such that they could easily be paid off if I chose. I’ve never had a seller question it. They were typically focusing on the purpose of the note rather than some of the other legal intricacies.