Junior Bene Buyouts


#1

Has anyone had luck buying second TD’s at auction with the intention of curing the first TD once in the property? Just because I now hold a second position note, how can I be assured that the first position note holder will allow me to buy them out? What have I really bought if I buy the 2nd?


#2

Happens more often than you might think. If there’s equity after paying off senior liens (1st DOT etc) may investors will buy the 2nd (junior) DOT at the steps. You own the property once you’ve purchased the junior DOT with the important caveat that you are obligated to pay off any senior loans/liens. Many steps investors are successful in making payments on senior debt while they endeavor to sell the property. Senior DOTs often have the right to enforce a payoff upon title transfer (after you’ve bought the junior DOT and recorded the deed) but they will sometimes work with you if you make the loan current (payoff any past due balance) and continue making payments. In any case, be fully ready/capable of paying off the senior debt, or stay away from buying junior debt at the steps. It can be a deadly $ mistake.


#3

Danny is absolutely right!!