General Information about Real Estate Notes

What are real estate notes? Well, first of all, a person holding the mortgage (the payee) is the property owner. Whereas, the buyer/renter of the property (the payor), usually makes monthly payments to the payee. The seller is holding the mortgage on the property in the same way a bank or mortgage company would. This is usually called seller financing or owner financing of the property. There are different legal documents associated with this transaction. Real Estate Receivable is the genetic term for these transactions. Real estate receivables are called "notes."

Being the payee, he or she has different degrees of responsibilities. What are these responsibilities? Well, as the payee, you have the risk of the payor not making his or her payments on time. Thus, you have to get a hold of the payee in order to collect money for the month. If the payee does not pay, you the payor, have the right to evict the payee for non-payment. This is very time consuming and could be expensive with hiring an attorney to handle your end of the deal.

The payor has other options to deal with the note, in that, they can sell the note, partially or all of it. The reasons vary as to why the payor would sell their notes. One of them would be to get out from under the responsible of it. As a payee and payor, each has his or her own responsibilities to preform and execute to satisfy the note.