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do i write the note for the land only, or package the barn into it too

0brandonlee36Passive
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so i've got 18 acres in eastern tennessee, free and clear, with a small barn on it that i built out about four years ago. been sitting on it since i bought it in 2021 for 142k, and now i've got a buyer who wants to carry. he's offering 185k with 25k down and wants a 7 year amortization at 6.5%. fine with me on the terms. the question i keep going back and forth on is whether to structure the note against the whole 18 acres plus the barn as a single collateral package, or write the note on the land alone and treat the barn separately somehow, maybe as personal property or just leave it absorbed into the land value without calling it out. my concern with bundling everything is that if he goes sideways, i'm foreclosing on a barn that somebody has been using hard for four or five years and is worth a lot less than what i'm implying in the note price. the land holds value, the barn depreciates. on the other hand splitting them feels like i'm complicating a deal that doesn't need to be complicated, and i'm not sure a buyer wants two instruments on one purchase. the gap between 142k what i paid and 185k what he's paying is partly because of that barn, so i can't just pretend it's not there.

2 replies

0carlos_nunezcarlos_nunezActive
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the barn is a fixture the moment it's attached to the land, and in tennessee that attachment is almost certainly already done legally whether you called it out or not. trying to carve it off as personal property after the fact gets messy and a title company will ask questions.

what i'd do is write one note, one deed of trust against the whole parcel including the barn as improved land, but get an appraisal or at least a written broker opinion that breaks out the land value versus the improvement value before you close. that way if you're ever sitting in a foreclosure four years from now you know exactly what you're actually holding, and you can make a cleaner decision about whether to foreclose or negotiate.

the depreciation risk on the barn is real but 160k in remaining note balance against 18 acres of eastern tennessee land that cleared 142k in 2021 is still decent coverage even if that barn is worthless by year five.