Private Lending Contract

[Glen Dall]

I've been approached by a friend who's interested in participating in our REI venture by private lending to us. Does anyone out there have any contract forms they could share with me? Thanks!

[Bill Gulley]

Glen, yes, see an attorney, but an easier way, just go do your thing with your friend, he holds his money but must be able to fund the loan.

When you find the property to buy you'll go to closing.

Tell the settlement/closing agent you need a promissory note and deed of trust for settlement.

Have your friend give the agent his proper name, SSN, address, where payments are to be sent  and the terms of he loan, (like 30 year amortization 5 yr. balloon, whatever). 

He will deposit his funds with the settlement agent in escrow.

When you close you'll make the note and deed of trust or mortgage as required, give it back to the agent and they will file it for record and the copy or original (depending on local requirements) will be sent back to him. You don't do anything but sign it. 

Then pay as agreed. 

You can ask a title company for a copy of the note and deed of trust prior to settlement to review, both of you can look it over before closing. 

A title company will charge you, from their attorney, but it will probably be much less than going to your attorney for a simple boiler plate form where they just fill in the blanks. 

This is for a standard note, now if you go nuts with odd terms, like interest only, scheduled principle payments quarterly and adjustable rates, you'll need the title company to have a custom note made...$$$, so, keep it simple. 

Let the title company take care of it and your deal,  transaction and settlement will be insured by your title coverage. Good luck :)