There are three essential documents that you will want to have on hand when purchasing a ticket. They are a description of the ticket you purchased, as well as proof that you now own it without dispute.

Since there are an almost infinite number of variations of these documents, I will not show the real ones, I will only describe what they are for and what are the critical components. You can use this as a checklist when the seller provides them.

The first is an accounts receivable sales contract. It lists the buyer, the seller, the receivable (the promissory note), and what has been agreed.

The first section the agreement needs is a description of the credit itself. Look for these:

  • Type of Guarantee Instrument (Mortgage or Deed of Trust, depending on the state)

  • Original buyer

  • Original Lender

  • Dated

  • Recording information

  • Unpaid balance

  • Monthly payments

  • Interest rate

  • Number of payments remaining

There may be a section that lists other documents requested by the buyer. These may include:

  • Promissory note payer credit report

  • Recent appraisal or other appraisal of the property

  • Insurance declaration page

  • Payment history

  • Preliminary title insurance commitment

  • Original note

  • Mortgage assignment

  • Approval of the note

There will be a section that describes the purchase price and how it will be paid.

The Agreement I use has a section for seller’s warranties. This is where the ticket seller claims to be the true owner of the ticket. If the seller is a corporation, the board has agreed to the sale. They can state that they have no knowledge of asbestos on the property. Read them carefully and ask questions if you are not sure what they mean.

The other two critical documents have already been listed, but they should also have their own page.

The assignment of the mortgage or deed of trust is proof that you or your entity now have the ability to obtain the property through foreclosure if the borrower defaults on payments. This is the “security instrument” defined in the Sales Agreement.

It will say something like, “The Assignor grants, sells, assigns, transfers and transmits all beneficial interests under that particular Mortgage described below …” My version goes further, but you have the idea that the seller is transferring all your rights under the Mortgage.

You will probably see many of the following lines:

  • Original Lender

  • Borrower (s)

  • Dated

  • Original loan amount

  • Property Address

  • Legal description

  • Recording information

The Assignment must be signed and notarized.

The last document also transfers ownership, but of the bill itself. This is called an Allonge al Promissory note or sometimes just the Allonge.

The Allonge is the shortest and simplest of the three. It simply lists:

  • Loan number

  • Original loan amount

  • Note date

  • Borrower (s)

  • Property Address

Then it will say:

Assigned by (the transferor)

Pay to the order of (you or your entity)

Critically make sure it says NO RESOURCE. It will be signed by the seller but does not need a notary.

In earlier times, the original bill itself could be turned over and “Pay to order of …” written on the back like a check. The Allonge seems to be the preferred method now.

I wanted to keep an exception from all of this until the very end. So far we have described the sale of a home using a note and mortgage or trust deed. However, many of the notes we see are actually land contracts. This is a hybrid form that combines the promise to pay and the guarantee agreement in one document. In this case, the seller retains the deed until the obligation is canceled.

If you are buying a Land Contract, instead of obtaining a Mortgage Assignment and an Allonge, you will get an Assignment of Interest from the Seller in the Land Contract. These can also be called the Sales Contract or the Deed Contract.

Once you have all of these documents on hand, you will be the proud owner of the document and will be able to register the appropriate documents in the county where the property is located.

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