The partial agreement decides it. Either a third-party loan servicer collects the payments or the buyer does, and a buyer has little reason to leave collection with you, since their return would then depend on your bookkeeping. Whoever does it should keep a payment record that you can see too, because the payments after the partial are yours.
What servicing covers
Servicing is the day-to-day work of running a note: collecting the monthly payment, recording it, tracking the balance, sending year-end statements and following up when a payment is late. A note servicing company, or loan servicer, does this for a fee. If you have been collecting the payments yourself and logging them in a notebook or a spreadsheet, you have been the servicer, and a partial is the point at which a buyer will want that to change.
Why the record matters to you in particular
During a partial the payments go to someone else, so you have no direct way to tell whether the payer is on time. You still need to know, because the health of the note in year three decides what comes back to you in year six.
A third-party servicer gives you an independent record showing each payment and the date it arrived. If the payer starts slipping, you learn about it that month and can raise it with the buyer while there is time to act. The same record settles arguments later: when the note pays off early or returns to you, the balance is the servicer’s figure and neither side has to take the other’s word for it.
How it can be set up
| Who services | How it works | What to check |
|---|---|---|
| A third-party servicer | The payer pays the servicer. The servicer passes the money to the buyer during the partial and to you afterwards. | That you get your own login or regular statements. |
| The buyer | The payer pays the buyer direct. The buyer keeps the record. | How and how often you will be shown the payment history, and that you get written notice of a missed payment. |
| You | You keep collecting and forward the payments to the buyer. | Whether the buyer will accept it at all, and what proof of each payment they want. |
Which row applies depends on the buyer and on what is already in place. A note that already has a servicer may simply stay there, with new instructions about where the money goes.
What it costs, and who pays
A servicer charges for the work, so ask whether that means a setup fee, a monthly fee or both, and who covers each. The agreement might put the cost on the buyer during the partial and on you afterwards, or build it into the price. On any offer you are comparing, find the line where servicing appears in the numbers. If you send us your note details, the worksheet with each offer is where to look for it.
What your payer is told
For your payer, a partial brings the same handover as any note sale: a written notice with the new place to send payments and the date the change takes effect. Their interest rate, payment amount and payoff date stay exactly as the note sets them. The notice carries more weight coming from you, or from you and the buyer together, because the payer knows your name.
When the buyer’s payments are finished
Once the buyer has received the payments they bought, the note is assigned back to you. With a third-party servicer this is a small change: the servicer redirects the money to you and the payer carries on as before. With buyer servicing, the payer needs a second notice and you need the full payment history handed over, which adds one more item to the paperwork for getting your note back after a partial. From there you service the note yourself or keep a servicer on.
Servicing questions for any partial offer
Servicing belongs with price and the return of the note among the terms of a partial purchase to compare between offers. Put these to each buyer:
- Who collects the payments, and can the buyer change that later without asking me?
- What will I be able to see, and how often?
- How soon am I told about a late or missed payment?
- Who holds the payment history, and when is it handed to me?
Two offers at the same price are worth different amounts to you if one of them leaves you unable to see the record for five years.
Related questions
Can I keep collecting the payments myself during a partial?
Only if the buyer agrees, and a buyer has a reason to refuse: their return would depend on your record keeping. Plan on the payments going to the buyer or to a servicing company.
Will I know if my payer misses a payment during the partial?
Only if the arrangement gives you a way to see the record. Ask a third-party servicer for statements or online access. If the buyer services the note, ask for notice of missed payments in writing.
Do I need to set up a servicer before I ask for a partial offer?
No. You can ask for offers first. If a buyer wants a servicer in place, that can be arranged as part of closing.