Attorney needed for promissory notes?

Question

Hello everyone,

Has anyone ever used promissory notes with investor capital on a property?  I'm looking at a property where I would be using two different passive investors.  The numbers won't work if I have to pay a securities lawyer, so I was hoping to sign promissory notes.

Thank you for any and all help!

Steph Martinson

Jerry W. · Answer

@Stephanie Martinson, actually promissory notes are very simple to draft.  It the documents that secure the notes that get complicated.  It doesn't sound like you are into the security areas yet.  I am not familiar with them much, but the big thing is don't advertise for investors.  If you use folks you already have a relationship with, and follow a few other simple rules you should be OK.

Stephanie Martinson · Answer

@Jerry W. Hi Jerry, thank you for your response.   I figure there is something in this investment that includes securities.  The investors would be equity investors, therefore I wonder if more has to be involved than just a promissory note.  Maybe I should just look for debt investors on a deal like this?  Is your source for promissory notes located in Thermopolis?

Jerry W. · Answer

@Stephanie Martinson, I know someone who can help you with promissory notes.  They are actually very simple.  The security part can be more complicated.

Brent Shields · Answer

@Stephanie Martinson If your just borrowing money on a property from someone,  I would call a title company, they usually draw up a note for free if you do your escrow through them.

Michele Wax · Answer

I think you need to google promissory notes for your state.

https://www.legalcontracts.com/contracts/promissory-note-forms/?loc=US&pid=bingppc-promis_us-promissorynote_a4x-msnkey_wyoming%20promissory%20note&utm_source=bing&utm_medium=cpc&MSCLKID=37f1262251721e119d9f7adb4d35cd14

This link says you can get one free at this link.  I would then google and find out about the tax liability.

Good Luck and happy hunting.

Stephanie Martinson · Answer

Thank you for your responses.   @Taylor L.  I'm in Northern Wyoming, know anyone?  Ha!  I'm sure I can find someone- my husband works as a commercial lender in a bank- do you suppose I could use a promissory note from a lender?

@Hadar Orkibi I will definitely ask my CPA about the interest liability.  Thank you for that note.

Hadar Orkibi · Answer

You can do that @Stephanie Martinson . the key thing is to talk to an accountant that would indicate whats the interest liability in that loan agreement.

Also talk to a Lawyer to make sure the Promissory note is drafted correctly.

Some lenders would want a Leans / Caveat on the Title/ Deed and some wouldn't.

Taylor L. · Answer

Folks do this all the time. There are different requirements than a syndication. Where are you? You might be able to find someone to write it up for you nearby.