What Is a Reversion in a Partial Note Sale?

The reversion is the part of the note you did not sell: every payment due after the buyer has collected theirs, which comes back to you when the partial ends. Some people also use the word for the moment the note is handed back.

Reversion on an example note

Say your note pays $1,140 a month, 168 payments remain and the payer owes about $129,400. You sell the next 60 payments for $56,200.

Illustrative example. The price assumes a buyer yield of 8% on a note written at 6%, and the scheduled totals assume the payer makes every payment on time.

The reversion here is 108 payments of $1,140, and on the day the note returns the payer still owes about $94,950. What comes back is a note in its own right, with you as its holder.

Why it deserves as much attention as the price

Offers for a partial purchase invite comparison on the cash paid today. In this example the cash is $56,200 at closing, while the reversion is scheduled to pay $123,120 afterwards, so the piece you keep is the larger part of what the note will bring you. Two offers at the same price are unequal if one protects the reversion in writing and the other leaves it vague.

What you own while you wait

The question of who owns the note during a partial has a plain answer: the buyer normally holds it, along with the recorded security, meaning the mortgage or deed of trust that ties the debt to the property. Your reversion is a contract right: the buyer’s written promise to assign the note back to you once they have been paid.

Its strength therefore comes from the paperwork. A reversion mentioned only in a letter or an email is weak, whereas one written into a signed partial agreement, with the return documents prepared in advance, is far easier to rely on.

How the note comes back

Once the buyer has received the payments they bought, getting your note back should run in this order:

1. The buyer endorses the note back to you. An endorsement is the signature that transfers a note from one holder to the next.
2. A reassignment of the mortgage or deed of trust is recorded in the county where the property sits, so the public record shows you as the holder again.
3. The payer is told to pay you, or the servicing company collecting the payments redirects them.

Reversion terms to check in the agreement

Of the terms to look for in a partial purchase agreement, these bear directly on the reversion.

• The trigger. The return should happen when the buyer has received a stated number of payments or a stated dollar amount, without depending on the buyer choosing to act.
• Late and missed payments. If the payer skips a month, the buyer will want the partial extended until they have their full count. The agreement should say so plainly, because it pushes your reversion back.
• Early payoff. If the payer pays the whole note off during the partial, your reversion is paid in cash from the payoff. The agreement should show how the split is calculated.
• Costs and timing. Who prepares the return documents, who pays to record them, and how soon after the last purchased payment it has to be done.

What you can do with a reversion

You can wait for it, which costs nothing and, provided the payer keeps paying, brings in the most in total. You can also raise more cash later by selling a further block of payments, or the reversion itself, if a buyer is willing. A reversion is worth less today than the same payments would be if they started now, because whoever buys it has to wait for them.

Before you accept any partial, ask the buyer to put the reversion in figures: how many payments return, on what date, and with what balance owed. To see those three figures for your own note, give us the note’s details. Keep whatever a buyer gives you in writing, because years later, at the handover, it is the record you will check the returned note against.

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