With seller financing, your note sits behind the bank’s. But there are still various ways to protect your interests. Seller protections may include a first or second real estate mortgage, share in escrow agreement, control of business for non-payment clause, various collateral, minimum inventory levels, and/or expenditure and financing restrictions.
In the latter, you may set limits on how much the buyer can spend or borrow while they still owe you money. In some cases, we’ve seen buyers limited from spending more than 3% above the seller’s largest historical expense.
