Resources & Guides

When the seller of an asset acts as the lender, allowing the buyer to make payments directly to the seller over time instead of getting a bank loan. Also called owner financing or owner-carry.

A legal document in which the buyer promises to pay the seller a specific amount under agreed-upon terms (interest rate, payment schedule, term length). It's the "IOU" that makes the deal enforceable.

A legal instrument that secures a real estate note by placing the property title with a neutral third-party trustee until the loan is paid off. If the buyer defaults, the trustee can initiate foreclosure on behalf of the seller.

A large lump-sum payment due at the end of the loan term. Common in seller-financed deals where monthly payments are based on a long amortization (e.g., 30 years) but the full remaining balance is due sooner (e.g., after 5 or 10 years).

The process of spreading loan payments over time so that each payment covers both interest and principal. A fully amortized loan is paid off completely by the end of the term. A partially amortized loan leaves a remaining balance (balloon).

The minimum interest rate the IRS requires on private loans to avoid "imputed interest" — where the IRS treats below-market interest as a taxable gift. Published monthly by the IRS for short-term, mid-term, and long-term loans. HonestDeed automatically checks AFR compliance.

A tax treatment where capital gains from a sale are recognized proportionally as payments are received, rather than all at once in the year of sale. This can significantly reduce the seller's annual tax burden by spreading gains across multiple years.

A Uniform Commercial Code filing that publicly records a lender's security interest in personal property (businesses, equipment, vehicles, inventory). It's the non-real-estate equivalent of a deed of trust — it perfects the seller's claim on the collateral.

A core HonestDeed feature that gives sellers ongoing visibility into their buyer's financial health. Every 90 days, HonestDeed runs a financial health assessment on the buyer and delivers a clear report to the seller, along with proactive risk flags if the buyer's financial situation changes. This lets sellers act early rather than react after a missed payment.

The original purchase price of an asset plus qualifying improvements and acquisition costs. Subtracted from the sale price to determine capital gain. If you inherited the asset, your basis may be the fair market value at the time of inheritance (stepped-up basis).

A secondary market where sellers can list their performing notes for sale to investors. This gives sellers liquidity — if you need cash before the note is paid off, you can sell the remaining payment stream to an investor at a market price.

A retirement account that allows the holder to invest in alternative assets beyond stocks and bonds — including real estate notes, private loans, and seller-financed instruments. $120-150B+ in SDIRA capital is actively seeking yield from assets like HonestDeed notes.