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This form is used by a transaction agent or escrow officer when a seller carries back a note which includes the principal remaining on an existing mortgage, to evidence the debt owed the seller on terms calling for installment payments of principal and interest with the carryback seller remaining responsible for payments on the existing mortgage. 


Your use of RPI Form 421

Flexible financing

The all-inclusive trust deed (AITD) and note is a debt instrument and security device for the carryback sale of mortgaged real estate. It provides agents, sellers and buyers with the flexibility needed to finance the balance of a sales price remaining to be paid after a down payment is made. [See RPI Form 421]

For a buyer with a down payment, the AITD carried back by a seller is all the financing needed to acquire the mortgaged real estate sought. [See RPI e-book Creating Carryback Financing Chapter 13]

The principal balance amount of the AITD includes:

  • the unpaid balance on the existing mortgage which will remain of record, called the wrapped mortgage or underlying mortgage; and
  • the seller’s equity in the property remaining to be paid after the buyer’s down payment.

With an AITD, the buyer makes monthly payments to the seller as negotiated in the all-inclusive note. Likewise, the seller continues to make monthly payments to the mortgage holder on the underlying mortgage.

The seller, buyer and underlying mortgage holder all mutually benefit from the carryback arrangement.

To benefit the seller, the AITD:

  • allows a greater yield than is ordinarily negotiated for the note rate on a regular second mortgage, a financial advantage generated by the overriding interest rate feature available by use of an all-inclusive note;
  • eliminates the risk of loss due to a default on the underlying mortgage since the seller remains responsible for its payment;
  • defers profit tax liability for a greater percentage of the transaction’s profit since an all-inclusive note increases the percentage of profit allocated to the principal in the carryback mortgage;
  • supports the price sought by the seller by providing non-institutional financing; and
  • provides for a trustee’s foreclosure on the buyer’s default, unlike other wraparound security devices, such as land sales contracts and lease-option agreements which require a judicial foreclosure (unless they contain a power-of-sale provision).

To benefit the buyer, the AITD provides more simplicity and flexibility than conventional or government insured mortgages, since:

  • the interest rate and payment schedules are fully negotiable and not tied to rigid secondary money market standards;
  • the carryback seller is less concerned with creditworthiness and income ratios than standardized institutional lenders due to the seller’s knowledge of the property and a more personal relationship with the buyer;
  • the buyer makes payments on only one debt obligation, the all-inclusive note; and
  • no third-party lender fees are required, such as points, garbage fees, private mortgage insurance (PMI), assumption fees or a separate lender’s American Land Title Association (ALTA) title insurance policy.

The AITD secured by a trust deed

The all-inclusive note is used with either the equity payoff or full payoff varieties of AITD addenda attached to a regular trust deed. [See RPI Form 421442 and 443]

The AITD consists of provisions from a regular interest-included installment note. The note is modified with additional provisions which disclose:

  • that the amount of the all-inclusive note incorporates the principal balance on one or more underlying mortgages; and
  • the payment on the underlying mortgage(s) remains the responsibility of the carryback seller.

A transaction agent or escrow officer uses the All-Inclusive Promissory Note Secured by Deed of Trust published by Realty Publications, Inc. (RPI) when a seller carries back a note which includes the principal remaining on an existing mortgage. It allows the seller to evidence the debt owed on terms calling for installment payments of principal and interest with the carryback seller remaining responsible for payments on the existing mortgage. [See RPI Form 421]

The AITD secured by a trust deed contains:

  • a promise to pay which states the payor’s promise to pay the debt on the terms and provisions contained in the note, including the identity of the payee, the place of payment, the amount of the debt, the interest accrual date (usually the date escrow closes) and the interest rate [See RPI Form 421 §1];
  • installment payments to be paid in scheduled installments which consist of a payment schedule, a first payment date (typically 30 days after the commencement of interest, or the first day of the month following 30 days after the close of escrow), a date of final installment, a form of payment and interest accrual [See RPI Form 421 §2];
  • AITD provisions which consist of the debt encumbering the property, including first and any second mortgages [See RPI Form 421 §3];
  • a default provision which provides for the mortgage holder to declare the entire amount of the note due and immediately payable on failure of the payee to timely pay an installment [See RPI Form 421 §4];
  • special provisions such as a late charge, grace period or final/balloon payment notice [See RPI Form 421 §5];
  • attorney fees which provide for the prevailing party in any litigation on the note to recover their attorney fees [See RPI Form 421 §6]; and
  • identification of the security which states the note is secured by a trust deed. [See RPI Form 421 §7]

The original trust deed is then converted into an AITD.

Revision history

Form navigation page published 09-2021.

Form last revised 2016.