Private Lending Risks and Mitigation

[Nazar Trilisky]

Are both a Promissory Note as well as a Deed of Trust needed for a small private loan (~10% of single-family house cost)?  I've gotten two "yes" and two "no" responses regarding the need for a Deed of Trust.  All four people were weathered investors.  Could someone clarify.

[Tim Watcke]

Yes you need both. The note spells out terms of loan (int rate, late fee, payment schedule , amount etc) The trust deed or mortgage (depending on state) is the document that is recorded with county that encumbers/liens the property and that gives the beneficiary power to foreclose.