Agreements for Note buying/selling

[Ron King]

Ok. I understand the concept and believe notes are for me. Can you tell me What agreements/contracts are needed to buy a note and sell a note?

[Dion DePaoli]

A lesson in and of itself really. As with learning the in's and out's with any contract.

Purchase and Sale Agreements for notes is not a uniform contract although there are some forms which are more commonly used in transactions. Much of the difference will be the representations and warranties that are made by both parties to the transaction inside the contract.

The transaction cycle can be a little different and defined by the what the seller and buyer agree to, essentially providing where due diligence takes place and whether pricing is subject to the due diligence or pricing is final, amongst other concepts. That will also vary depending the number of loans you purchase and the type of seller, institutional or private.

There can be many moving pieces in the contract and some are governed by law, such as timing for Servicing Transfer. Other concepts work to protect the interests of the parties such as how and when money is delivered and the files to each party. There is typically no escrow like you find in real property so again it can be a little different.

As with all of this, if you are the point where you need contract information that is synonymous with getting a qualified and experienced attorney dealing with notes in your rolodex. You can likely Google some stuff for some examples but I would caution using those at face value as they may be incomplete in terms of concept coverage and details to protect your interests. None the less reading a couple might start to help you understand some of the topics the contract deals with.

In many cases, if the seller is institutional in nature, they will provide a contract to you which they desire to use and some times that is open for red line. If the seller is private, this may be the first loan they ever sold and would need the same help you need. So either way, like I said, it's probably time to seek legal counsel for those matters.