Legal Question in Real Estate Law in Colorado

Re: carry back a private loan

A promissory note is not security. It is the debt instrument itself. Security is provided by collateral. In real estate transactions, the usual collateral is a security interest (lien) in or on the property sold (although other kinds of collateral can be given instead of or in addition to a lien of the property).

I should add that under the common law of many states, a seller has an automatic lien of sorts for any unpaid portion of the sales price; nevertheless, it is wise to get your lien established through a recordable mortgage or deed of trust. You'll need to check with a Colorado attorney (or at least a Colorado real estate professional) to find out what kind of financing instruments are commonly used there.

One other thing I should mention is that land in some of these resort development areas, which I believe Poncha Springs suggests, is "sold" by the developer using a "contract for deed" or "land contract" under which the buyer (you) doesn't receive outright title, but only the right to acquire title when the contract is paid in full. If that should be the case here, you may not be in a position to take a security interest in the land (unless, of course, as an adjunct of your resale you also pay off the developer and (briefly) obtain title before reselling).

Re: carry back a private loan

Hi,

You must be very, very careful in structuring owner financing. Generally, you secure the note by a deed of trust on the property so if they default you can foreclose on the property via the public trustee. This needs to be done accurately to comply with deed of trust rules otherwise the note will be secured by a standard mortgage which would require the expensive and time-consuming judicial foreclosure process if they fail to pay the note.

I would not do this transaction without advice of Colorado counsel knowleagable in carryback financing. A real estate broker, if you are using one, cannot advise on this matter and if they do I would not take that advice.

You may want the purchasers to either pay the entire amount of the legal expenses as part of the purchase price or in advance. Be careful and good luck.

Re: carry back a private loan

The ''do-it-yourself'' method works only in small home repairs. Never, ever sell your property without competent real estate agents, brokers and an attorney on your side. Get yourself lawyered up and save yourself future pain and heartache. Smart people learn from others advice, not their own mistakes. Good luck.