Transferring funds to and from private lender

[James Masotti]

Good Morning BP,

I hope that everyone else on the East Coast is surviving the snow. Saw some crazy videos from down at the shore with all the flooding.

Anyway...I'm setting up my first private lender. Attorney is drafting promissory note that will be used as the template for future deals but I had a few other questions on how folks structure these sort of things.

1) I will be using a construction loan for a good chunk of the acquisition cost, they require to be in first position, Do you put your private lender in a secondary position by actually recording the loan? If not than what recourse would the lender have in the hopefully unlikely situation of needing to foreclose?

2) What is the most ideal way to obtain the funds from the private lender? Should I set up a new bank account for them to transfer money into? Do I pay the expense of just having them wire the money into my account? When I have to pay them (no monthly payments, all interest due upon sale of property) what's the best way to pay them off?

3) Once the loan is paid off what do I need to do to "prove" this, meaning if the loan is officially recorded as a secondary lien is this something the title company takes care of? 

Anyway...these are just some of the questions I have floating around in my head right now. Any guidance anyone can provide would be greatly appreciated!