Today I would like to talk to you about a document called a "note." From day one, notes have always been synonymous with the real estate business. Well, let’s start with, what is a note and what purpose does it serve in the real estate business? A note is an IOU, a written promise to pay, with all the terms and conditions of the obligation, signed and in proper legal format. It’s also referred to as "Promissory Note." A note can be secured or unsecured. A secured note is one that is attached to another document called a "Mortgage" which is a document that simply states that if the obligations of the note are not met, the property may be sold to pay for the note, thus the note is secured by real estate. With an unsecured note, there is no collateral for non payment of the terms. The note is only secured by the payer’s written promise to pay. Notes are bought and sold everyday by buyers who are looking for long term investments, along with the sellers of the note looking to meet a special financial need that must be met for a variety of different reasons, such, as credit card debt, downsizing their assets, maybe their putting a kid through college, or maybe they didn't even want the note in the first place and sold it as an only means of liquidating the property in a fast and timely manner.
I hope this info was helpful in your understanding of what a note is, its purpose, and its function in modern everyday real estate transactions.
