Does this Promissory Note look good?

Question

I have done my best to block out the names for privacy purposes. I'm wondering if this note looks good to any of you who have used or written promissory notes before?

http://darrae.com/public/note06052013.pdf

How does one ensure that the property address and parcel (crossed out) indeed under contract by the borrower and should there be a request to be the first lien holder instead of the second?

Thanks in advance.

http://darrae.com/public/note06052013.pdf

Will Barnard · Answer

Darrick P. my intent was not to be condescending, rather informative. It is very difficult, more accurately, impossible to catch tone in text, therefore, misunderstandings can often occur.

After reading my own post to you, I can see how you may have interpreted my comments that way, just know it was not the intent. My words of warning were for your protection only, after all, that is what you were looking for I suspect and I am a no BS guy that cuts to the chase. I prefer meat and potatoes over sloppy soup.

In this biz, you also have to have a tad of thick skin, taking offense so easily on this board will slow your roll. Just food for thought.

Will Barnard · Answer

You need to take this down, you failed to protect the privacy of the persons on the note. Secondly, you need to have an attorney draft your note for you. This one page note is not nearly sufficient. You will also need a deed of trust (or if a mortgage state, a mortgage.

Do NOT cut corners in an attempt to save money, it will only cost you dearly later. Spend the money to have it drafted professionally and legally. There are no short cuts for this item.

Jon Holdman · Answer

It may look like things are blacked out.  They're not.  I can cut and paste and see all the text you've tried to cover up.

What happens if they default?

What about insurance?

Can they put more liens on the property?

What about a lender's title policy?

This section:

Doesn't even make sense.  I think you're trying to say you're going to put a lien on the property.  I doesn't say that, and I've not clue what the "second lien holder" part means.  Your interest would be secured by recording a mortgage or deed of trust (or whatever's used in your state) on the property at the same time as making the loan.

I would never, ever, ever, ever be in second position.  The broker I work with doesn't even allow a second position lien after our first lien.  That's because even if you're in first position having the second makes your life complex in a foreclosure.

Darrick P. · Answer

I didn't run away - I have some personal connection to the building collapse that happened in CC Philadelphia last week and by virtue of being linked to the unfortunate situation I did speak with an attorney about the agreement.

[Off topic] I was in the then "CitiGroup" Building at 388 Greenwich Street during 911 and watched from the 32nd floor. Now the CC building collapse; I wasn't in the building but being linked is close enough. I will say that I'm beginning to form a stigma against high rises.[back on topic]

The attorney I spoke with said the following;

1) Being on the deed is a plus.
2) Being a lien holder is a plus. Push for 1st position.
3) Have borrower sign as a person, not a business. 
4) This would work if loan amount wasn't so large.
5) Prepare a private mortgage for the borrower.

Between last week and today the deal fell through because the ex-boyfriend (who's doing business on behalf of the absent owner) asked for more money after the additional deal was struck, but before the paperwork was signed. The deal was for 1 rowhome and 3 adjacent lots and although his asking price had been on the market for over a year with nobody interested; the ex-boyfriend felt like asking for an additional 80k was in order.

Dion DePaoli · Answer

Darrick P. as many suggest get a party involved that knows what they are doing which can be a licensed originator and/or attorney.

In the interim to give you a better example of a better instrument you can always review what the big boys use (Fannie Mae/Freddie Mac) here is a link, you would review the Multistate Note.

http://www.freddiemac.com/uniform/doc/3200-MultistateFRNote.doc

Account Closed · Answer

The note link is gone now, but, if I remember right the lender was receiving $15k after 6mo for a $50k loan, in addition to the suggestions above you should check your state usury laws, the note interest rate might be (way) too high unless originate by a broker.

Darrick P. · Answer

Jon Holdman Thanks for the response, probably much more geared toward the answers I was looking for.

Will Barnard Thanks for the response. Your response(s) would probably be better received if they were worded better and not in such a condescending tone.

FYI - no one was trying to cut corners. This note was not drafted by me but was presented to me and I didn't think it was sufficient.

Ramon Jenkins · Answer

Regardless of the responses you receive 
I would still consult with local real estate attorney

just wondering what the :
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pv , fmv , payments schedule , ltv , interest rate , etc

Does this Promissory Note look good?

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