Should my Contract For Deed include a promissory note?

[Bob Malecki]

I'm selling a property in S. Carolina via Contract For Deed (CFD). I have a good contract to use but one of my peers say that I should also have the buyer sign a promissory note as well. This makes sense to me, does anyone have any thoughts for any reason why a promissory note should not be executed in tandem to the CFD? Fyi the note has a balloon due in 36 months and the buyer is an investor who will be renting the property out, so I will assume that Dodd-Frank issues for owner occupant do not apply.

Thanks, Bob

[Cameron Skinner]

In manny states a contract for deed has the legal effect of a mortgage.  In other words the property owes the money to the lender not the individual.  This goes back to common law in England when a some Catholic rule about a Christian could not charge another another Christain interest, so the "property owed the debt" not the individual.  A promissory note binds the individual to pay back the debt.  This is why when you get a loan from a bank you sign a mortgage and a promissory note at closing.  If you only have him sign a contact for deed your only recourse may be to foreclose on the property, again state specific, but promissory note would give you the option to sue for any money loss you incure above taking the property back.  Hope this helps, Good Luck!