The Offer Sheet With Payoff and Arrears Lines

On an offer sheet for a house that is behind on payments, the payoff and arrears lines show what has to be paid from the price before anything reaches you: the full loan payoff, which already contains the missed payments, late charges and foreclosure costs, then any second loan, property tax or special tax arrears, association dues and other recorded liens. Each line should name its source document and the date it is good through, and the arrears should appear once, not twice. Read that way, the sheet tells you whether a sale leaves equity, and whether it can close before the date on your notice.

This article is part of our series on behind on payments, liens and tax defaults. If you have not yet spoken with your lender and a HUD-approved housing counselor, start with behind on payments in California: your options, the timeline and the two numbers. A sale is one option among several, and no buyer can promise that a foreclosure will end.

The top of the sheet: dates before dollars

Before any figure, a sheet for a house in default should state three dates:

• The trustee sale date, if a notice of sale has been recorded, or "none set."
• The good-through date of each payoff figure used.
• The target closing date, written as a target that depends on title and payoff statements, never as a promise.

If the target closing falls after the trustee sale date, the rest of the sheet is a description of a sale that cannot happen without a written postponement. Read the dates with notice of trustee sale: reading the date.

The sheet, line by line

LineWhere the figure comes fromAmount

Purchase price

The buyer's offer, from comps and the walkthrough

-

Less: first loan payoff

Lender's payoff demand statement (Civil Code 2943)

-

Memo: arrears inside that payoff

Lender's reinstatement itemization (Civil Code 2924c)

-

Less: daily interest to closing

Per diem figure on the payoff statement

-

Less: second loan or credit line payoff

That lender's own payoff statement

-

Less: property tax, current and defaulted

County tax collector

-

Less: special tax arrears

The tax bill and the district's administrator

-

Less: association dues and assessments

The association's demand

-

Less: other recorded liens

Preliminary title report, then each lienholder

-

Less: transfer tax and escrow and title charges

County and city rates; escrow's estimate

-

Estimated net to you

Price less every line above

-

Every figure here is a dash, because yours comes from your loans and your house. Here is what each line should tell you.

First loan payoff

This is the largest line and the one most often estimated when it should be documented. Civil Code section 2943 defines a payoff demand statement as the amount needed to fully satisfy the loan as of the date it is prepared, with enough information to calculate a daily amount for up to 30 days. If the sheet says "estimated payoff" with no statement behind it, ask where the figure came from. Payoff statements and reinstatement figures: how to request them covers the request itself.

Arrears: a memo line, not a second deduction

Once a loan is in default, the missed payments, late charges and foreclosure costs are part of what the lender needs to be paid off. They are already inside the payoff. A sheet that deducts the full payoff and then deducts the arrears again has counted them twice, and the net it shows is too low.

Showing the arrears as a memo line is still useful. Under section 2924c, the reinstatement amount is the amounts in default plus permitted costs and capped trustee's or attorney's fees. Seeing that figure next to the net lets you compare two questions on one page: what catching up would cost, which keeps the house, and what selling would leave. That comparison belongs with your lender and counselor before any buyer.

Daily interest to closing

The Consumer Financial Protection Bureau notes that a payoff amount includes interest due through the day you intend to pay the loan off. So the payoff is good through a date, and every day past it adds interest. A sheet built on a payoff dated well before the target closing should add the per diem for the gap, or the net will shrink at the closing table.

Second loan or credit line

A second loan or home equity line needs its own written payoff. Under section 2943, a junior lienholder of record is also an "entitled person," and an escrow holder can request each statement once a sale is open.

Property tax and special tax arrears

Unpaid property taxes are paid through escrow so the buyer receives clear title. Under Revenue and Taxation Code section 3691, the county tax collector gains the power to sell residential property once it has been tax-defaulted for five years or more, so the age of the default matters, not just the amount. The tax collector's own figure is the one to use.

In newer tracts, a separate line often appears. The City of Rancho Cucamonga says its community facilities district special taxes are typically collected through the County of San Bernardino as separate charges on the property tax bill. An owner in Etiwanda or Terra Vista who is behind on the mortgage is often behind on that line too, and the sheet should show it on its own row so you can check it against the bill.

Association dues

If the house is in an association, the association's written demand supplies this line. If you dispute an association charge, the rules for that are covered in disputed liens and a sale.

Other recorded liens

Judgment liens, mechanic's liens and code liens show up on the preliminary title report once escrow opens. A sheet prepared before title is ordered should say that this line may change. See mechanic's liens and judgment liens on a house for how each one is paid.

Transfer tax and closing charges

Where the house sits changes this line. The Los Angeles County Registrar-Recorder lists a county documentary transfer tax and five cities that add their own; Pomona is one of them, so a Pomona sale carries both. Escrow and title charges come from the escrow company's estimate.

The other column: the open-market read

The same payoff and arrears lines appear in the second column, the open-market read, because a listing has to clear them too. That column adds commissions, any repairs or preparation you would pay for, and the months the house carries while it is on the market, with interest still running on the payoff. The open-market read is a preliminary estimate, not an appraisal; it is not an automated estimate and not a certified appraisal.

LineAs-is cash offerOpen-market read

Price

-

-

Less: loan payoffs, including arrears

-

-

Less: tax, special tax and other liens

-

-

Less: repairs, commissions and closing costs

-

-

Less: added interest while the sale runs

-

-

Estimated net to you

-

-

Can it close before the sale date?

-

-

When listing wins: if the sale date is far enough away for a listing to find a buyer, get through the buyer's loan and appraisal, and close, and the house shows well, the open market will usually net more, and the written recommendation says so. You are then introduced to a designated local expert, an independently licensed agent who works your area. Mr. Cali Offers never lists a house. When the calendar is short, the cash column may be the one that can close in time, once title is clear and the payoffs are confirmed.

When neither column works: if the payoffs and liens add up to more than either price, the sheet should say so on the bottom line. That is the territory of short sales, which only your lender can approve.

Five checks before you rely on the bottom line

1. Every payoff line names its source document and its good-through date.
2. The arrears are counted once, inside the payoff.
3. Daily interest is carried to the target closing date.
4. Tax and special tax lines match the tax collector's figures, and the sheet says whether title has been ordered.
5. The target closing date sits before the trustee sale date, with the conditions written next to it.

Two California rules also protect you when you sell a home in default that you live in, including a right to cancel certain contracts with an investor; the pillar guide summarizes both. A HUD-approved counselor can read the sheet with you; see what a housing counselor does. If the amounts or fees on a payoff look wrong, that is a question for your servicer and an attorney.

What this looks like in practice

These are the kinds of files that come in, described without names or figures.

• A Pomona owner holding a mailed offer that deducted the payoff and the arrears separately. The corrected sheet showed the arrears as a memo line and a higher net.
• A Rancho Cucamonga owner behind on the mortgage and the special tax line, whose first estimate left the special tax out until the tax bill was read line by line.
• An owner whose payoff was good through a date weeks before the target closing, so the sheet added the daily interest for the gap.

If you want both columns built from your own payoff statements, see how the numbers are mapped against your trustee sale date, or call (909) 498-3977. There is no cost and no obligation to get the two numbers and the written report.

Sources

• California Civil Code section 2943 (payoff demand statements and entitled persons), copy read on california.public.law, accessed November 6, 2026
• California Civil Code section 2924c (reinstatement amounts and fee limits), copy read on california.public.law, accessed November 6, 2026
• California Revenue and Taxation Code 3691 (tax collector's power to sell), copy read on california.public.law, accessed November 6, 2026
• Los Angeles County Registrar-Recorder/County Clerk, Documentary Transfer Tax, general information: lavote.gov, accessed November 6, 2026
• City of Rancho Cucamonga, Special Districts: cityofrc.us, accessed November 6, 2026
• Consumer Financial Protection Bureau, What is a payoff amount? Is it the same as my current balance?: consumerfinance.gov, accessed November 6, 2026

Mr. Cali Offers is not a law firm, a lender or a housing counseling agency, and does not offer foreclosure consulting. Cash offers come from independent buyers and investors who buy for their own account and may resell for profit; a cash offer is generally below what the open market would bring. Any value shown is a preliminary estimate, not an appraisal. Nothing here is legal, tax or financial advice.