You do need to look at the circumstances and your relationship with the borrower, what amounts of equity and debt forgiveness there may be, the character of the debtor and the chance they may squak later on if the give a DILOF.

Some may disagree with this and say that they can manage the risk in such a way that more debt equals less risk, but history is full of examples of those that thought they could outsmart the risk and went belly up when a downturn proved otherwise, so I respectfully disagree and state instead that one should assume that there is no free lunch when it comes to debt or anything else.Some practical examples of using debt to manage risk level ... when I was young, single, and without kids, I was more focused on growing my portfolio and had a larger appetite and capacity to take on risk. 

Private lending partners as either debt or equity investors.

Would it be wise for an investor (me) to look at selling off partial ownership in a building to either eliminate (commercial loan) debt or use toward purchase of a new property.

Once you open escrow, the title company will let you know if/how many liens exist, and what the debtors are owed.  

Splitting the deal with others is painful, but nowhere near as painful as the feeling of despair when the market moves against you and you realize that you are undercapitalized can't service your debt or expenses.On the bright side, leveraging other people's money allows you to scale much faster and higher than you could do on your own.  

Do I have to get permission from the borrower to pay off their debt, or can I just do it by calling the bank and handing them a check.  

I don't know about the foreclosure process in Oak.. but it sounds like there has to be a comfirmation post sale.. that should be easy I guess unless the debtor has the right to BK and foul you up. 

CrowdSourcing real estate might work for you in that case as you can still pull 9% or more with debt, or more with equity investments, and you can diversify yourself out of single property and your local area risks.  

Depending on how much high interest consumer debt or car payments I was carrying, I would consider retiring that or keeping this as an emergency fund.