Below is a list of words used in the owner financing real estate note and business note areas  of Seascape Capital.

Acceleration Clause:
Language in a lease that secures payments for the full term of the lease.

The gradual, systematic payment of a debt, such as a mortgage or other loan, in installments of principal and
interest for a definite time, so that at the end of that time, the debt will have been paid in full.

Anything having commercial or exchange value that is owned by a business, institution or individual. A business’ assets might include its real estate, equipment inventory, intellectual assets such as copyrights or trademarks, and accounts receivable.

The ability to assign (or sell) an income stream to another individual or business.

The person or business entity who is given, obtains, or buys the right to an asset.

The transfer of the rights, title or interest of any debt instrument that is properly owned by another party.

The person giving or selling an asset, and subsequently, forfeiting rights to that asset.

“B” through “D” credit customers:
These consumers have less than perfect to bad credit and usually cannot qualify for traditional financing. Also called sub-prime credit customers.

The balance of principal that is due and owing in its entirety at a specified point in time, but in any event, less than the time required to fully amortize the debt.

A state of insolvency of an individual or organization. The inability to pay debts.

The person or party entitled to receive the benefits, or proceeds, of the life insurance policy upon the death of the insured person.

Bill of Sale:
A document used to transfer the title of certain goods from seller to buyer.

Business-based income streams:
Cash flow instruments that are paid to a business by another business or government.

Cash flow:
The flow of cash through a business or household. In business terms, cash flow involves the flow of cash into a company in the form of revenues, and out of the company in the form of expenses.

Chattel mortgage:
A mortgage on personal property, given to secure a debt. Typically used in the sale of a business. Also called a
security agreement.

Something of value (land, a home, a car, etc.) that is pledged as security to ensure the payment of a debt. Collateral is promised to a lender until a loan is repaid. If the borrower defaults, the lender has the right, by law, to seize the collateral.

One who is owed payments on a debt by a debtor.

One who owes something and makes payments to a creditor.

The omission or failure to perform or fulfill a legal duty, obligation, or promise

Due diligence:
Exhaustive research on a transaction, income stream, client, and/or payor. Due diligence may involve credit
checks, appraisals, UCC searches, lien searches, or on-site visits with clients.

The value or interest an owner has in property over and above any indebtedness owed on the property.

The system by which money documents, personal property, or real property is held in trust for another party by a disinterested third party until the terms and conditions of the escrow instructions are completed or terminated.

Face value:
The current principal balance on an income stream.

A legal proceeding in court to seize property given as security for a debt that is in default.

Funding source:
An individual investor or an investment company that buys income streams.

Borrowing funds from a lender, investing those funds in a debt instrument, and giving the lender a security interest in the debt instrument as the collateral for the loan.

Income stream:
A future payment or series of payments, or a debt that one party owes to another party. Also known as a debt
instrument or cash flow instrument.

Investment-to-value ratio:
A measure of how secure a creditor’s position is and how likely the creditor is to recoup all of his or her money in the event of a foreclosure.

Loan-to-value ratio:
A measure of how heavily mortgaged a property is and how likely the owner is to default on his or her debts.

Market value:
The price at which a ready, willing, and informed person would buy something; the price property would command in the current market.

A written instrument that creates a lien by pledging real property as security for a debt.

Owner financing:
A type of financing in which the seller of a tangible item accepts a promissory note as a portion of the purchase price. Also called seller financing.

Any part of a payment stream that is less than the full amount due.

Personal guarantee:
A contractual agreement between a funding source and a seller, whereby the seller assumes personal
responsibility and liability for the obligations of the income stream.

Profit and loss statement:
A financial statement that shows a historical record of a business’ income and expenses.

Promissory note:
A written promise to pay a specified amount to a specified party over a certain period of time.

Real property:
Real estate.

A legal proceeding in court to seize property (other than real estate) given as security for a debt that is in default.

The length of time payments have been made on a note or other debt instrument.

Secondary market:
The marketplace where individuals and businesses can sell privately held income streams to funding sources for cash.

The bundling and resale of debt instruments to investors; permitted only for parties licensed and regulated by the SEC.

Security interest:
An interest in property, other than real estate, which is given as security for a debt or other obligation. A security interest is created by execution of a security agreement and one or more financing statements under the Uniform Commercial Code.

The collection of payments of interest and principal, and trust fund items such as fire insurance, taxes, etc., on a note by the borrower in accordance with the terms of the note. Servicing by the lender also consists of operational procedures covering accounting, bookkeeping, insurance, tax records, loan payment follow-up, delinquent loan follow-up and loan analysis.

The act of a creditor acknowledging in writing that a debt due him or her by a debtor shall be inferior to the debt due another creditor by the same debtor.

Time value of money:
Concept that addresses the way the value of money changes over a period of time.

Title commitment
A commitment on the part of the insurer, once a title search has been conducted, to provide the proposed insured with a title insurance policy upon closing.

Title insurance:
Title insurance can benefit either the payor or the payee. Should the beneficiary suffer any damages due to clouded or false title to real estate, title insurance recompenses the damaged party to the extent of the damages.

Title policy:
An insurance policy that insures a party against loss due to a defective title.

Uniform Commercial Code (UCC):
Standardized set of guidelines protected by law that set down how business transactions must be conducted.


Written by Alan Noblitt

Alan Noblitt is the President of Seascape Capital, LLC, and works as both a real estate note buyer and a business note broker. Alan has an MBA from Arizona State University, a B.S. from the University of Wyoming, and is licensed as a California Real Estate Note Buyer.
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