How to Sell a Non-Performing Land Note in Texas: 2026 Recovery Guide

If your Texas land note buyer has stopped making payments, you're holding a non-performing note — and it can feel like a headache. But you still have options: foreclose yourself (expensive and slow) or sell the note to a buyer who specializes in defaults.

At Longhorn Money Services, we purchase many non-performing Texas notes every year, turning your problem into cash without you handling foreclosure.

This comprehensive 2026 guide covers everything: what makes a note non-performing, realistic pricing, the recovery process, Texas-specific legal issues, timeline, and tips to maximize your payout.

For performing notes, see our main selling guide.

What Makes a Land Note Non-Performing?

A note becomes non-performing when the buyer misses payments (typically 30-90+ days late) or stops entirely.

• Common causes: buyer financial hardship, property issues, disputes.
• Impact: You stop receiving income, risk property taxes/insurance, face foreclosure costs.

Unlike performing notes (see discount guide), non-performing sell at steeper discounts due to recovery work.

Pricing Expectations for Non-Performing Notes in 2026

Discounts are higher because buyer assumes default risk and foreclosure/recovery costs:

• Partially performing (late but recoverable): 40-60% discount
• Fully non-performing (stopped 6+ months): 50-80% discount
• Severe cases (liens, damaged property): 70-90%+ discount

Value comes from underlying land equity — low LTV still helps.

The Recovery Process When Selling Non-Performing

Direct buyers like us handle everything:

1. Evaluate note and property (desktop + drive-by valuation).
2. Quote based on recovery potential.
3. Due diligence (title, liens, payment history).
4. Close and fund you.
5. We pursue reinstatement, workout, or foreclosure/post-foreclosure sale.

You get cash upfront — we take the risk. Requires solid documents.

Texas-Specific Legal Considerations for Non-Performing Notes

• Deed of Trust: Non-judicial foreclosure — fast (60-90 days posting).
• Contract for Deed (Chapter 5): Stricter rules — forfeiture process, buyer rights, disclosures.
• Homestead claims: Can complicate foreclosure if buyer claims homestead.
• Tax liens: Must be addressed.

We know Texas law inside-out — critical for non-performing.

Timeline for Selling Non-Performing Notes

Longer than performing: 4-12 weeks due to extra verification/recovery planning.
See full timelines comparison.

Your Options Besides Selling

• Foreclose yourself: Expensive ($5K-$20K+), slow, risky.
• Workout with buyer: Reinstate payments (hard if already stopped).
• Deed in lieu: Buyer voluntarily returns property.

Selling often fastest cash solution.

Tips to Maximize Cash from Non-Performing Note

1. Act early — longer default = lower value.
2. Provide all documents and default details.
3. Get quotes from specialists (not general buyers).
4. Consider partial structures if some payments possible.
5. Avoid brokers — fees cut deep on already discounted notes.

Compare direct vs broker.

Real Recovery Examples (Anonymized)

• Note stopped 8 months: $100K balance, rural land → sold for $45K cash (buyer foreclosed and resold).
• Late payments recoverable: $80K balance → $50K cash, buyer reinstated.
• Contract for deed default: Complied with Chapter 5 → smooth transfer.

Common Myths About Non-Performing Notes

• Myth: "Worthless" → Land equity almost always has value.
• Myth: "No one buys them" → Specialists like us do regularly.
• Myth: "Same price as performing" → No, but still cash positive.

Avoid related mistakes like waiting too long.

Frequently Asked Questions

Don't let a defaulted note drain you. Call Sandy Henderson at (210) 828-3573 or submit your note details — even non-performing notes turn into cash fast with the right buyer.