Sample Equity Sharing Note and Trust Deed

One of the key variations in equity sharing arrangements is the measures taken to protect the Investor from nonpayment by the Occupant.

A variation that provides greater Investor protection is to use an Equity Sharing Agreement, an Equity Sharing Note, and either an Equity Sharing Trust Deed (if the property is in a state where trust deeds are used) or an Equity Sharing Mortgage (if the property is in a state where mortgages are used). This approach is designed so that, if the Occupant is not paying, the Investor can foreclose without going to arbitration or court. The foreclosure process is the same one a bank would use following default under a mortgage. But the Agreement/Note/Mortgage approach is more complicated and expensive to create.

The document available from this page is an Equity Sharing Note and Deed of Trust. This type of document must meet fairly strict legal requirements and is therefore much more technical and difficult to understand than the other sample documents we offer. Please note two critically important things about this document: (i) It MUST be used together with an Equity Sharing Agreement (see Equity Sharing Agreements); and (ii) It can only be used in a trust deed state. The trust deed states are listed below; unlisted states are mortgage states, and it is necessary to use our sample Equity Sharing Mortgage (instead of this document) in those states (see Sample Equity Sharing Mortgage).

The trust deed states are Alabama, Alaska, Arkansas, Arizona, California, Colorado, District of Columbia, Georgia, Hawaii, Idaho, Iowa, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Mexico (for residential properties), North Carolina, Oklahoma, Oregon, Rhode Island, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming.