Trustor’s Offset Statement (Sale or Assignment of Note Secured By Deed of Trust)

TRUSTOR’S OFFSET STATEMENT, is a critical document used in real estate finance, primarily in California, during the sale or assignment of a promissory note that is secured by a deed of trust.

Here’s a breakdown of its purpose, how it’s used, and why it’s important:

Primary Purpose

The main purpose of this form is to protect the buyer of a promissory note (the new lender/beneficiary) by officially confirming the exact terms and status of the loan from the borrower’s (trustor’s) perspective.

It acts as a formal verification that prevents the borrower from later claiming they owe a different amount or have different loan terms than what the seller of the note represented.

When Is It Used?

This form is typically used in these key scenarios:

1. Sale of a Note (Note Assignment): When the current lender (the “beneficiary”) sells the promissory note to a new investor, the new buyer will require this signed statement from the borrower (the “trustor”) before finalizing the purchase.
2. Due Diligence for a New Loan: If the borrower is applying for a new loan from a different lender, the new lender might request this statement to verify the status of existing debts secured by the property.
3. Loan Modification or Refinance: To ensure all parties agree on the current loan balance and terms before modifying them.

How It Works: A Step-by-Step Process

The form is a two-part conversation:

SECTION I: The Request

• Who fills it out: The current Beneficiary (the lender who is selling the note).
• What it does: This section formally requests the borrower (Trustor) to verify the basic details of the loan: the original amount, date, recording information, and the property address.

SECTION II: The Verification & Response

• Who fills it out: The Trustor/Owner (the borrower/homeowner).
• What it does: The borrower confirms or corrects the loan details and provides crucial, up-to-date information, including:
  • Unpaid Balance: The exact amount owed as of the statement date.
  • Payment Status: Confirms the last payment received and the next payment due.
  • Interest Rate & Terms: Verifies the interest rate and payment amount.
  • Balloon Payments: Discloses if a large final payment is looming.
  • Taxes: States if there are any unpaid property taxes.
  • Validity of the Loan: The borrower affirms that the loan is valid and was received for proper consideration.

The “Offset” Concept: Why It’s Powerful

The term “Offset” in the title is a legal term that gives this document its teeth. By signing this statement, the borrower is estopped (legially prevented) from later claiming in court that the loan terms were different.

For example, if the borrower signs this form stating the unpaid balance is $100,000, they cannot later sue the new note holder claiming they only owed $90,000. Their own signed statement can be used as a defense to “offset” or defeat their claim. This makes the loan a much safer and more valuable asset for the new investor.

Summary of Key Functions:

• Protects the Note Buyer: It is a primary form of due diligence, giving the new lender confidence in the investment.
• Establishes Reliance: The form explicitly states that the borrower makes these representations for the benefit of the new assignee, who will rely on them.
• Prevents Future Disputes: It creates a legally binding snapshot of the loan that is very difficult for the borrower to challenge later.
• Facilitates Transactions: It makes the secondary market for mortgages and trust deeds function smoothly by providing a trusted verification mechanism.

In essence, the Trustor’s Offset Statement is the borrower’s notarized, sworn affidavit that certifies the definitive status of their loan, making it a cornerstone document for the secure transfer of real estate debt.

TRUSTOR’S OFFSET STATEMENT

DATE: ___________________, 20, at _____________________________________________________, California.

SECTION I: TO OWNER

TO OWNER: __________________________________________________________________________________

Loan No.: ______________________________

1. I hold a promissory note in the original amount of $________________, dated ,
   1.1 executed by________________________________________________,
   1.2 secured by a deed of trust recorded on __________________, as Instrument No. __________________,
   1.3 in the Official Records of ___________________________________________________ County, California,
   1.4 encumbering property you own referred to as ________________________________________________.
2. Please confirm whether the information in this statement conforms with your records.
   2.1 Please make any necessary changes. Then sign and return the original copy of this statement to me at the address below. Retain a copy for your records.
3. Until further notification, continue making payments as you have in the past.

BENEFICIARY REQUESTING STATEMENT: _________________________________________________________

Address: ____________________________________________________________________________________
City, State, ZIP: _____________________________________________________
Phone: ________________________________

SECTION II: TO BENEFICIARY

TO BENEFICIARY: _____________________________________________________________________________

Address: ____________________________________________________________________________________

1. I/WE are the Owner(s) of real estate located at the common address of:

4.1 legally referred to as (Assessor’s Parcel Number or Legal Description):

4.2 encumbered by a trust deed recorded on __________________, as Instrument No. ____________________,
4.3 in the Official Records of ___________________________________________________ County, California.

1. Terms of the note, trust deed and title include:
   5.1 Promissory note dated .
   5.2 Original amount of the note is **$**.
   5.3 Unpaid balance is **$**.
   5.4 Payments are **$___** payable monthly _____________.
   a. Interest rate is ______% per annum.
   b. Principal and interest is paid through ___________, 20.
   c. Next payment is due on ___________, 20.
   d. Final/balloon payment is due on ___________, 20. (Write “N/A” if not applicable)
2. Unpaid taxes or special assessments total $_______________. (Write “None” if applicable)
3. The note secured by the trust deed on the real estate is valid.
   7.1 The original payee of the note received full and valid consideration.
4. It is understood the note and trust deed are being assigned.
   8.1 This statement is made for the benefit of the Assignee(s) and Assignee’s reliance on its contents.

Date: ___________________, 20

TRUSTOR/OWNER: __________________________________________

Signature: __________________________________________________

TRUSTOR/OWNER: __________________________________________

Signature: __________________________________________________

NOTARY ACKNOWLEDGMENT

State of California )
) ss.
County of ___________)

On _________________, 20, before me, __________________________________________________,
a Notary Public, personally appeared __________________________________________________________________,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

Witness my hand and official seal.

Signature of Notary Public

(SEAL)

This form is based on standard California practice. Consult with a qualified California real estate attorney for specific legal advice.