Note against property

[Karen Margrave]

@Bill Gulley Someone was asking me a question on their home. The Seller is carrying back a note secured by a 2nd deed of trust. The agreement they have is that there are to be no payments on the note, and the buyer will pay off the off the note when they flip the house, but not to exceed 2 years. However; in looking at the note there is no provision for what happens if the house doesn't sell in the specified amount of time.

I explained that all those possibilities need to be accounted for, including if it doesn't sell what happens, and everything spelled out in writing (how long seller will carry, interest rate, payments, etc.), and agreed to by all parties.

Apparently someone at the title company gave them a copy of a blank note to use as a template, that didn't include any of that; and they are under the impression that by crossing out the interest provision and term provision, that means that there's no interest or payments that need to be addressed, and if it doesn't sell in the 2 years it will be addressed and negotiated then.

Can you please answer this to back me up?

1. Does the note have to be written by a mortgage broker?

2. What exactly needs to be included in the note? (interest rate, term, etc.)

3. If property doesn't sell by the end of the term, then the exact terms of how payment will be made need to be addressed isn't that correct?

Thanks!