Wording for Substitution of Collateral - Posted by Steve C (TX)

Posted by Phillip Baty on August 31, 2001 at 08:40:44:

Steve,
I just asked the title company who prepared the docs to word it for me. As long as the lender is agreeable you can say whatever you want in the note. My attorney advised me what to put in and the title co. just added it to their standard promissary note. The wording went something like this:
(description of property to be secured by deed of trust) However, both the holder of this note and the undersigned borrower agree that the above real property as more particularly described in said Deed of Trust securing this note may be substituted at a later date so long as the real property being substitued is of equal or greater value than the real property described hereinabove, and agreed to in writing by Note holder and undersigned Borrower.

I’d have your attorney check it out before registering it to make sure it will hold up in your state.

Regards,

Phil Baty
Baty Investment Group

Wording for Substitution of Collateral - Posted by Steve C (TX)

Posted by Steve C (TX) on August 29, 2001 at 23:07:07:

I posted this on the main forum, but then thought it fits better over here. Here’s how it went:

I am buying a property and the seller is taking back a 1st lien. I want to put in some substitution of collateral wording into the note so when the house is sold or refinanced, I can transfer that lien onto the back end of another property. In other words, If I pay off (through sale or refi) this 50K loan, I want to transfer that loan to a second position on a different property with that much equity. That way, when I sell this house, I can pocket the profit plus the underlying loan amount. What kind of phrases need to be put in the Note and Deed of Trust?

Regards,
Steve Carlson