The Land Note Seller Passed Away in Texas — What Happens Next?

When the original seller of a Texas land note passes away, the surviving family members are often left with urgent questions and very little guidance. What happens to the note? Do the borrower's payments stop? Who has the legal right to collect payments or sell the note? How does probate affect the situation? If the land note seller passed away in Texas, the answers to these questions depend on how the note was held, whether a will exists, and how the estate is administered. The good news is that a promissory note does not die with its holder — it is a financial asset that passes to the heirs or estate just like any other property. The note continues to be enforceable, the borrower continues to be obligated, and the heirs or estate representatives have the right to collect payments or sell the note. But getting from the moment of death to the point where you can actually exercise those rights requires navigating the Texas probate process, and understanding that process is essential for protecting the note's value during a difficult time.

Losing a family member is emotionally overwhelming, and dealing with financial and legal matters during a period of grief is one of the hardest things any family faces. This guide is written with compassion for that reality, while providing the practical, step-by-step information that surviving family members need to protect and manage a Texas land note after the note holder's death. Whether you are the surviving spouse, an adult child, a sibling, or an executor named in a will, this article will help you understand what happens next and what steps you need to take.

The specific process depends on several factors — was the note held individually or in a trust? Is there a will? Has the borrower been notified of the death? Are there multiple heirs? Each of these variables affects the path forward, and we will address all of them in this comprehensive guide to handling a Texas land note after the seller has passed away.

What Happens to the Note Immediately After Death

The Note Survives

The first and most important thing to understand is that the promissory note and the deed of trust survive the death of the note holder. The borrower's obligation to make payments does not end because the payee has died. The note is a binding contract, and the borrower remains legally obligated to make every payment on the terms specified in the note, regardless of what happens to the note holder. Similarly, the deed of trust securing the note remains a valid lien on the property. Nothing about the death of the note holder changes the borrower's obligations or the legal enforceability of the note and deed of trust.

However, while the note survives legally, the practical administration of the note may be disrupted. If the deceased note holder was personally collecting payments — receiving checks or electronic transfers — the incoming payments may stop arriving if the borrower learns of the death and becomes uncertain about where to send them. If the note holder was the only person with access to the payment records, those records may be temporarily inaccessible. If the note was being managed informally — without a professional servicer — the transition can be particularly disruptive. Taking steps to maintain continuity in payment collection and record-keeping is one of the first priorities for surviving family members.

Notifying the Borrower

The borrower should be notified of the note holder's death and given clear instructions about how to continue making payments during the transition period. This notification should be handled carefully — the borrower needs to know that their obligation continues, but they also need practical guidance about where to send payments. If a professional servicer is already in place, the notification is simpler — the servicer continues collecting payments as before, and the transition is transparent to the borrower. If payments were being collected directly by the deceased, the executor or family representative should provide the borrower with new payment instructions, such as a mailing address for checks or a bank account for electronic transfers. Maintaining the borrower's payment habit during the transition is important because a disruption in payments can lead to delinquency that reduces the note's value.

Securing the Note Documents

Locating and securing the note documents is another immediate priority. The original promissory note, the deed of trust, the payment history, and any other related documents need to be found and preserved. These documents may be in the deceased's home, office, safe deposit box, or with an attorney. If the note was professionally serviced, the servicer will have copies of the documents and payment records. If the note was self-managed, the family may need to search through the deceased's files to locate everything. Having these documents is essential for any future action — whether collecting payments, selling the note, or going through probate. Our guide on documents needed to sell a land note in Texas provides a comprehensive list of what you should be looking for.

The Probate Process and the Note

Why Probate Matters

In Texas, when a person dies, their assets — including promissory notes — must be transferred to their heirs or beneficiaries through the probate process (unless the assets were held in a way that avoids probate, such as in a trust or with a payable-on-death designation). Probate is the legal process through which a court validates the deceased's will (if one exists), appoints an executor or administrator to manage the estate, and authorizes the transfer of assets to the rightful recipients. Until probate is completed and the note is formally transferred to the heirs, the heirs do not have full legal authority to sell the note — they may collect payments as de facto managers of the estate asset, but a formal sale to a third party requires clear legal authority that typically comes through the probate process.

Probate With a Will

If the deceased left a valid will that names an executor and specifies how the note should be distributed, the probate process is more straightforward. The executor files the will with the appropriate Texas probate court, petitions for appointment as executor, and once appointed, has the legal authority to manage, distribute, and if authorized by the will, sell estate assets including the note. The will may specify that the note goes to a particular heir, is divided among multiple heirs, or should be sold and the proceeds distributed. The executor follows the will's instructions, subject to court oversight and the rights of creditors. The timeline for a straightforward Texas probate with a will is typically three to six months, although complex estates can take longer.

Probate Without a Will (Intestate Succession)

If the deceased did not leave a will, their assets are distributed according to Texas intestacy laws, which specify a hierarchy of heirs based on family relationships. The court appoints an administrator (similar to an executor but appointed by the court rather than named in a will) to manage the estate. The administrator has the authority to manage estate assets, including the note, but may need court approval to sell assets depending on the type of administration. The intestacy process can be more time-consuming and expensive than probating a will because the court plays a more active supervisory role. For families dealing with an intestate estate that includes a valuable promissory note, consulting with a Texas probate attorney early in the process is strongly advisable.

Alternatives to Full Probate

Texas offers several simplified probate alternatives that may apply depending on the estate's size and circumstances. A small estate affidavit (for estates valued at $75,000 or less, excluding homestead and exempt property) can be used to transfer assets without full probate. A muniment of title proceeding, which is a simplified probate process available when there is a will and no unpaid debts (other than those secured by real property), can be faster and less expensive than a full administration. An independent administration, which is available when the will authorizes it or all heirs agree, gives the executor broad authority to manage and sell estate assets without ongoing court supervision. Each of these alternatives can simplify and accelerate the process of transferring the note to the heirs, and a probate attorney can advise on which option is best for your specific situation.

Selling the Note After the Holder's Death

Who Has Authority to Sell

The authority to sell the note depends on the stage of the probate process and the type of administration. If an executor has been appointed under a will that grants the power to sell estate assets, the executor can sell the note as part of administering the estate. If an administrator has been appointed in an intestate estate, the administrator may need court approval to sell the note, depending on the type of administration. If the note has already been distributed to the heirs and the probate is complete, the heirs (who now own the note) can sell it themselves, individually or collectively if multiple heirs share ownership.

If the note was held in a revocable living trust that designates a successor trustee, the successor trustee has the authority to sell the note without going through probate at all. This is one of the significant advantages of holding notes in a trust — the transition of authority is immediate and does not require court involvement. For guidance on selling trust-held notes, our article on selling a land note held in a trust in Texas provides detailed information.

The Process of Selling

Once the person with authority to sell has been identified and their authority documented, the note sale process proceeds essentially the same as any other note sale. The authorized person contacts a note buyer, provides the note documentation along with proof of authority (letters testamentary for an executor, letters of administration for an administrator, or a trust certificate for a successor trustee), the buyer evaluates the note and provides a quote, and if accepted, the closing involves the authorized person endorsing the note and assigning the deed of trust on behalf of the estate or trust. The buyer wires the purchase price to the estate's or trust's bank account, and the transaction is complete.

Why Selling Often Makes Sense After a Death

Selling the note after the holder's death is often the most practical choice for several reasons. The heirs may not want the responsibility of managing a promissory note — collecting payments, tracking records, dealing with borrower issues, and handling potential defaults. Multiple heirs may find it easier to divide cash than to share ownership of an illiquid note. The estate may need liquidity to pay debts, taxes, or administration expenses. And simplifying the estate by converting the note to cash can accelerate the probate process and reduce ongoing complications. For many families dealing with the loss of a note holder, selling the note to an experienced buyer provides relief from a complex responsibility at a time when emotional bandwidth is limited. Our comprehensive guide on selling a note after death in Texas explores the complete process in additional detail.

Protecting the Note's Value During the Transition

Keep Payments Coming In

The most important thing you can do to protect the note's value during the post-death transition is to ensure that the borrower continues making payments. A performing note is worth significantly more than a non-performing note, and a gap in payments caused by confusion about where to send them can unnecessarily reduce the note's value. Notify the borrower promptly, provide clear payment instructions, and confirm that payments are being received. If the note was professionally serviced, the servicer can manage this transition seamlessly. If the note was self-managed, setting up a dedicated bank account for receiving payments is advisable.

Maintain Records

Continue maintaining payment records from the date of death forward. Every payment received should be documented with the date, amount, and method of payment. If payments were being tracked informally, establishing a more structured record-keeping system now protects the note's value and makes the eventual sale or transfer smoother. A complete, unbroken payment history from the note's creation through the present day is one of the most valuable assets you can present to a note buyer, and gaps in the record reduce buyer confidence and note value.

Do Not Ignore Borrower Issues

If the borrower stops paying, starts paying late, or communicates about financial difficulties, address these issues promptly — do not wait for probate to be completed before dealing with them. As a practical matter, the estate or family can and should manage borrower issues during the probate process, even if formal authority has not yet been established. Ignoring a borrower who has stopped paying can result in a default that dramatically reduces the note's value. If a default occurs, the note may need to be sold at a significantly lower price than would have been available had the performing status been maintained. Acting quickly to address borrower issues protects the note's value for the benefit of all heirs.

Common Questions and Complications

Multiple Heirs with Different Goals

One of the most common complications after a note holder's death is disagreement among multiple heirs about what to do with the note. Some may want to sell immediately for cash, while others may prefer to continue collecting payments. Resolving this disagreement is essential before the note can be sold, because all owners must consent to a sale. Open communication, a shared understanding of the note's value (which can be established by getting a professional quote), and a willingness to compromise are the keys to reaching agreement. If one heir wants to hold and another wants to sell, a buyout arrangement — where the holding heir purchases the selling heir's interest — can satisfy both parties. Our article on selling a note with shared ownership in Texas addresses these dynamics in detail.

The Borrower Claims They Do Not Owe Anymore

Occasionally, a borrower will claim after the note holder's death that the note has been paid off, that the deceased forgave the debt, or that some other arrangement was made that eliminates their obligation. Without written documentation supporting such a claim, the borrower's obligation continues as specified in the promissory note. A promissory note is a written contract, and its terms can only be modified or discharged through proper legal means — typically a written modification, a recorded release, or a court order. Verbal agreements, even if they occurred, are extremely difficult to enforce under Texas law, particularly against a written promissory note. If a borrower makes such a claim, consult with a Texas attorney before accepting it at face value.

Lost or Missing Note Documents

If the original promissory note cannot be found after the note holder's death, the situation is more complicated but not necessarily fatal. Texas law provides procedures for enforcing a lost or destroyed note, typically involving an affidavit attesting to the note's existence and terms, combined with other evidence such as the recorded deed of trust, payment records, and any copies of the note. A note buyer will be less comfortable purchasing a note without the original document, and the pricing may reflect this additional risk, but experienced buyers like Longhorn Note Buyers can often work with the available documentation to complete a transaction. If the original note is missing, do not despair — consult with an attorney about your options and with a note buyer about the practical implications for a sale.

Ready to Sell Your Note?

If the holder of a Texas land note has passed away and you need guidance on selling the note, Longhorn Note Buyers is here to help. With over $46 million in Texas notes purchased since 2007, a 100 percent close rate on every deal quoted, and extensive experience handling estate and probate situations, Longhorn provides the compassionate, professional service that families need during a difficult time. Founded by Nick McFadin — buying notes since 1983 — and partnered with Sandy McFadin since 2013, Longhorn Note Buyers is based in San Antonio and works exclusively in Texas. Call (210) 828-3573 or visit longhornnotebuyers.com today for a free, no-obligation quote within 24 hours. Whether probate is complete or still in progress, Longhorn can help you understand your options and plan the best path forward for your family and the estate.

Frequently Asked Questions

Does the borrower have to keep paying if the note holder dies?

Yes, absolutely. The borrower's obligation under the promissory note continues regardless of the note holder's death. The note is a binding contract that survives the death of either party. The borrower must continue making payments as specified in the note. If the borrower stops paying because they believe the death somehow releases them from their obligation, they are wrong, and the estate or heirs have the right to enforce the note and pursue all available remedies, including foreclosure.

How long does it take to sell a note after the holder dies?

The timeline depends primarily on the probate process. If the note was held in a trust with a successor trustee, the sale can proceed almost immediately — within the normal two to four week note sale timeline. If probate is required, the timeline depends on how quickly the executor or administrator is appointed, which typically takes one to three months in straightforward cases. Once the person with authority to sell has been identified and documented, the note sale itself takes the standard two to four weeks. Working with a note buyer early in the process — even before probate is complete — allows you to plan and prepare so the sale can close as quickly as possible once authority is established.

Can the executor sell the note before probate is finished?

In many cases, yes. Once the executor is formally appointed by the court and receives letters testamentary, they have the authority to manage and sell estate assets. In an independent administration (the most common type in Texas when the will authorizes it), the executor has broad authority to sell assets without further court approval. In a dependent administration, the executor may need court permission for the sale. The executor's authority to sell typically becomes effective as soon as they are appointed, which can be within weeks of filing the will — full probate does not need to be completed for the executor to begin acting.

What if there is no will and I am the only heir?

If there is no will and you are the sole heir under Texas intestacy laws, you will need to be appointed as the administrator of the estate through the probate court. Once appointed, you have the authority to manage and sell estate assets, including the note. Alternatively, if the estate qualifies, you may be able to use a small estate affidavit or other simplified procedure to establish your rights without a full administration. A Texas probate attorney can advise you on the fastest and most cost-effective path based on the estate's specific circumstances.

Should I sell the note or keep collecting payments after the holder dies?

This depends on the heirs' financial needs, their willingness to manage the note, and the note's characteristics. Selling provides immediate cash, eliminates ongoing management responsibilities, and simplifies the estate. Keeping the note preserves the income stream but requires ongoing management, record-keeping, and assumption of default risk. For many families, particularly those with multiple heirs or limited experience with note management, selling is the more practical choice. Getting a quote from Longhorn Note Buyers gives you the information needed to make this decision — you will know exactly what the note is worth in cash, which you can compare against the remaining payment stream to determine the best course of action for your family.