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The Longest Note Purchase Imaginable

Alan Noblitt
2 min read

Oh, about a month. 

That is the answer that I give to clients wanting to sell their real estate note and who ask me about the length of the process.  From the time that they send to me copies of the complete set of documents to the time that they receive their money is typically about four weeks.  Of course, there are a number of dependencies that speed up or delay the process such as the title company, appraiser, responsiveness of both the note holder and the payer, complications with the documents, etc.  When any of these moving parts slows down, the note buying process can be bogged down for additional days or even weeks.

In my article earlier this month, I wrote about my favorite note deal ever.  From start to finish, it took less than three weeks to close, which was exceptional by any standard and highly unusual.  At the other end of the spectrum, I had one note purchase that took ONE YEAR AND THREE DAYS, which is a personal record that I’d rather not break.  That’s right, 368 days from when the note holder first contacted me until they had the money in hand.  It wasn’t my most difficult and frustrating deal ever, but darn close.

The Property

The property tied to the note was a 24-unit mobile home park in Georgia.  Most, but not all, of the mobile homes were owned by the park and thus part of our collateral.  The complicating factors were many, including a payer who saw the note sale as an opportunity to try to negotiate better terms.  By far the biggest obstacle was the closing attorney.  He had done a terrible job in both preparing and recording the documents.  He was getting ready to retire and was only working part-time during the twilight years of his career, so was extremely slow to respond to our queries.  Worse, he was defensive and denied that he had made any mistakes.  Eventually, we were able to get one of the other lawyers in the office to review the transaction, and he agreed that it was a mess.  However, both he and his assistant were buried with other cases, so he assigned his assistant to help starting the following month.

During this time that the clock was ticking, the note holder and I stayed in constant contact.  Fortunately, the note holder was patient and recognized that the problem was with the attorney and not with us, though the constant delays were frustrating for everyone.

The legal assistant spent weeks straightening out the documents, including the mobile home titles.  I spent countless hours on the phone with her addressing issues and answering questions.  Eventually, she was able to resolve all of the problem areas to our satisfaction and we closed the deal.

A lesson to be learned here is that not all attorneys are equal, and a small percentage of them are downright incompetent.  In addition, patience and constantly keeping the note holder updated helped to save the deal and put money in everyone’s pockets.  The night after we funded, I do seem to recall celebrating with an extra glass of wine …  or two.

Photo: left-hand

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.