You can, once the gift exists on paper. A buyer has no interest in how you came to own the note, only in proof that you do: the note signed over to you, and an assignment of the mortgage or deed of trust recorded in your name.
What finishes a gift
A parent who says “the note is yours now” and forwards you the payments has shown a kind intention, but on paper the note still belongs to them, and a buyer can only buy from the owner of record.
A real estate note changes hands through an endorsement and an assignment. The endorsement is the giver’s signature making the note payable to you, written on the note itself or on an attached page called an allonge. The assignment is a separate document that transfers the mortgage or deed of trust to you and is recorded at the county, and our page on the assignment of mortgage shows what it contains. Together they form the chain of title, the paper trail naming each owner in order, and a buyer checks every link.
Where your paperwork leaves you
| What you have | Where you stand |
|---|---|
| Endorsed note and recorded assignment in your name | Ready to sell |
| Endorsed note, assignment signed but never recorded | Recording it may be all that is needed |
| A letter or card saying the note is yours | The transfer still has to be documented |
| Nothing in writing, payments simply come to you | The giver still owns it on paper |
If the giver is living
Ask them to sign the endorsement and the assignment now, then have the assignment notarized and recorded. A title company or attorney can prepare both.
If the papers were never done, there is another route: the giver sells the note in their own name and gives you the money. Choosing between that and a completed gift followed by your own sale is partly a tax question, so put it to a CPA before anyone signs.
If the giver has died
A transfer completed during their lifetime stands, and the note is yours. An unfinished one may mean the note still belonged to them at death, in which case it probably passes through their estate and the executor or the court decides who receives it. That makes it an inheritance matter for the estate’s attorney, and our page on what to do with an inherited mortgage note follows that path.
What else a buyer will check
- Whether you were given the whole note or a share. If you own half, the other owner has to join the sale. A part interest on its own is harder to place, because the buyer would share the note with someone it did not choose.
- Whether anyone else has a claim. A spouse of the giver, a trust, or a lender the note was once pledged to can each complicate title.
- Whether the payer knows. The payer should have been told in writing to pay you, and a buyer will confirm the balance with them.
- Whether there is a payment record. Ask the giver for their history from before the gift. A long run of on-time payments supports the price, and it carries over when the owner changes.
The tax basis of a gifted note
Gifts are treated differently from inheritances and from notes you created yourself. Your basis, the figure used to measure any gain when you sell, can depend on the giver’s own position in the note, and the giver may have had a reporting duty when the gift was made. A CPA will need whatever the giver can tell you about the original sale, and should see it before you accept an offer. The general ideas are in our overview of taxes when you sell a note.
Does a gifted note sell for less?
Being a gift does not lower the price. A buyer prices the payments, the payer’s record, the property and the lien position, which is your place in line if the property has to be sold to repay the debt. Gifted notes lose value through their paperwork, since a gap in the chain of title brings delay, extra cost or buyers who decline. If you are not sure whether yours has a gap, ask us for a price on the note and say how it came to you, and we can point out what a buyer will want corrected before you pay to correct it.
Read the last endorsement
Take out the note and see whose name the last endorsement makes it payable to, then ask the county recorder or a title company whose name is on the last recorded assignment. If both say yours, the gift is complete and the note can be offered as it stands. If either still says the giver’s, that paper comes first, and it is easiest to put right while the giver is able to sign. A note that reached you through a will or a trust instead is a different one of the situations, with its own paperwork.
Related questions
What if the note was never formally signed over to me?
Then the giver still owns it on paper. If they are living, they can sign an endorsement and a recorded assignment now. If they have died, the note may belong to their estate, and the estate's attorney needs to sort out who receives it.
Can the person who gave me the note take it back?
A completed gift is generally final, but disputes do arise, especially where the paperwork is thin. Clear documents signed while the giver was able to make the decision are your protection. Ask an attorney if anyone is contesting it.
Do I need the payer's agreement to sell a gifted note?
A note can ordinarily be transferred without the payer's consent, so read yours for a clause that says otherwise. What the payer does need is written notice to pay you, which should date from the gift. A buyer will contact them to confirm the balance.