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  STACK METHOD — DRAFT TEMPLATE — NOT LEGAL ADVICE — ATTORNEY REVIEW REQUIRED
  Provided "as is," for education only. No liability accepted. [BRACKETS] = fill in.
  THIS IS THE FAIRNESS DOCUMENT. Have the seller read and sign it BEFORE the PSA /
  Security Agreement. Honest disclosure is what keeps the structure non-predatory
  (see the Risk module) and is your best protection too.
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           SELLER DISCLOSURE & ACKNOWLEDGEMENT
           (Plain-Language Explanation of the Structure)

Property: [ADDRESS]      Seller: [SELLER NAME]      Date: [DATE]

Please read this carefully. Ask questions. Get your own attorney and CPA.

1.  YOU ARE SELLING AT FULL PRICE. The agreed price is $[FULL PRICE]. You receive
    $[CASH DOWN] in cash at closing. The remaining $[CARRY] is paid to you later
    (see #3).

2.  TITLE GOES INTO AN LLC. The home will be owned by a new company,
    [PROPERTY LLC NAME], LLC. You will hold a protected position in that company
    until you are paid in full.

3.  HOW AND WHEN YOU ARE PAID THE REST. The $[CARRY] is scheduled to be paid in
    full at a balloon in about [60-84] months, when the company refinances the home.
    [No / $___ ] monthly payments in between. The balloon may extend [24-36] months
    if the home cannot refinance cleanly (vacancy, major repair, or a market dip).

4.  IMPORTANT — YOUR POSITION HAS CHANGED FROM A TRADITIONAL SELLER-CARRY.
    • In a traditional seller-carry, you would be a FIRST-LIEN lender (like the
      bank), and if the buyer stopped paying, you would foreclose and take the home
      back, clear.
    • In THIS structure, a lender (the senior loan, ~$[SENIOR LOAN]) is in FIRST
      position, AHEAD of you. Your carried amount is a SUBORDINATED position
      (equity in the LLC), not a first lien.
    • WHAT THIS MEANS: if things go wrong, the senior lender is paid before you. In a
      worst case (a senior-loan default/foreclosure), your carried amount could be
      reduced or lost, although the cash you already received is yours to keep.

5.  YOUR PROTECTIONS. (a) A 60-day cure: if an obligated payment (taxes, insurance,
    HOA, or your payment) is missed and not fixed in 60 days, you become the 100%
    owner of the LLC. (b) If you take over, you take the home SUBJECT TO the then-
    remaining senior loan (you do not separately owe yourself your carried amount).
    (c) Limits on additional liens (the buyer cannot pile on new debt without your
    consent). See the Default module for exactly what you would inherit.

6.  POSSIBLE TAX TREATMENT. The payout at refinance may be tax-advantaged, but this
    depends on your situation. WE ARE NOT YOUR CPA. Please confirm with your own.

7.  GET INDEPENDENT ADVICE. You have the right to, and we strongly encourage you to,
    have your own attorney and CPA review every document before signing. We will give
    you time to do so.

ACKNOWLEDGEMENT
I have read this disclosure. I understand I am moving from a first-lien position to a
subordinated position behind a senior lender, what happens in a default, and that I
was encouraged to obtain my own legal and tax advice.

Seller: ____________________  Date: ______
Buyer/Sponsor: ____________________  Date: ______