Your parent sold some land years ago and carried the note. Now they have passed, and a buyer you have never met is sending checks to an estate you are trying to settle. Do you keep collecting for the next eight years, or is there a way to cash it out?
You can do either. Here is what you inherited and how to decide.
What did I inherit when I inherited a promissory note?
The right to the buyer's remaining payments, backed by a lien on the land.
A promissory note is the buyer's promise to pay. The deed of trust or mortgage recorded with the county ties that promise to the land. When the holder dies, both pass to the estate, then to the heirs or a trust. You now collect the payments and, if the buyer stops paying, hold the right to foreclose.
Who can sign to sell an inherited note?
Whoever has legal authority over it: the executor, the trustee, or the heir it was passed to.
If the note is still in the estate, the executor or administrator signs, usually with letters testamentary or letters of administration from the court. If it was in a living trust, the trustee signs. If it was already passed to you, you sign, and you may need to show the paper trail. Get this settled first. A buyer and a title company will ask for it.
- Death certificate
- Letters testamentary, letters of administration, or the trust papers
- The original promissory note, or proof of what happened to it
- The recorded deed of trust or mortgage
- The payment history
Want a lump sum instead of payments?
We buy inherited land notes. Send the note and payment history for a bid within 24 hours.
Get a Free QuoteSell Your NoteHow is an inherited installment note taxed?
The heir generally pays tax on the same gain the original seller would have, as payments come in.
Under IRS rules, an installment note passed at death is "income in respect of a decedent." The heir reports the same share of each payment the seller would have reported, and selling the note triggers the rest (26 CFR 1.691(a)-5). In plain words, the note usually does not get the fresh tax basis inherited land would. I am not a CPA, so talk to yours before you sell.
Should I keep the note or sell it?
Keep it if you want monthly income. Sell it if you want to close the estate and split cash.
| Choice | Upside | Downside |
|---|---|---|
| Keep it | Monthly income, full value over time | Collections, default risk, slow to split among heirs |
| Sell it | Lump sum now, easy to split, estate can close | You take less than the balance |
In my experience, estates with several heirs usually sell. Splitting a monthly check four ways for eight years gets old fast, and one late payment can start a family argument.
How much is an inherited land note worth?
For a performing note that meets our criteria, usually 80% to 90% of the balance.
The price depends on the balance, rate, time left, the buyer's payment history, and the land. A note that has been paid on time for years is a good note. Get a quick number from the note value calculator. We buy promissory notes secured by a deed of trust or mortgage with a balance of $25,000 or more, on land with legal access and no major wetlands or flood zone, and not in CA, HI, LA, MD, NJ, NY, or PA.
Rule of thumb: find the original note before you do anything else. A lost original slows every option.
Frequently Asked Questions
Can I sell a promissory note I inherited?
Yes, once you have legal authority to sign, such as letters testamentary or trustee papers. Damen Capital buys inherited land notes.
Who signs to sell a note in an estate?
The executor or administrator if it is still in the estate, the trustee if it was in a trust, or the heir if it was already passed to them.
Do I pay tax on an inherited installment note?
Generally yes. The heir reports the same gain the original seller would have as payments come in, and selling the note triggers the rest. Ask your CPA.
How much will I get for an inherited land note?
For a performing note that meets our criteria, usually 80% to 90% of the balance.