Should I notarize and record Promissory Note secured by DOT?

7 Replies

Hi All, I'm new to this forum. I live in Los Angeles County, CA and my parents are loaning me some money as a 2nd and want it documented with a promissory note and Deed of Trust on my LA County house to satisfy the IRS. My question is very specific so please try to be narrow and specific in the replies - thanks! Clearly the DOT needs to be notarized and recorded with the LA County Recorded. My question specifically is: Does the "Note Secured by Deed of Trust" ALSO need to be notarized? And does it need to be recorded? I cannot find that information, in fact I find conflicting information, some say yes, others say no. So which is it? Please do NOT tell me to hire an attorney. I wouldn't be asking on this forum if I wanted that answer :) Thanks!

The note is typically not recorded, so don't record unless the county recorder has some rule requiring it be recorded. If it must be recorded, it must be notarized. Having it notarized and not recorded does not cause any issue that I can foresee; notarization simply mean that a third party verified the signing and was shown ID as proof of identity. 

OP here, it seems like a "traditional" lender such as Chase, Wells Fargo, etc, record the Notes as well as the DOT here in CA, that's why I'm wondering if it's different for private lenders. Maybe the "traditionals" do it to protect themselves but it's not really required? Just trying to understand what's true and required and what's not. Thanks!

It's not customary to record the note in my area.  I would pull up recorded docs in LA county and search 'promissory note'.    If it appears standard there, then I would record it.  Some private party notes will probably show be in there if so.  

If you have it notarized, you can always record it later if need be.  If not notarized, you can't obviously.  Borrowing from family can get tricky @Valle Altobelli .  Glad you are doing it in a professional manner!

@Valle Altobelli  

notes are not typically notarized  they need not be notarized to be valid and enforceable.. if it makes your parents feel better then there Is no harm in it.

Notes are generally not recorded as well.. but you can basically  record anything you want to record  again if it makes them feel better.. but not necessary to be valid and enforceable.

The only issue I would see with recording the note would be clearing title later.. DT are cleared in CA by recording the Reconveyance .   not sure there is a doc to release a recorded note... I would simply call your title company and ask to speak to a title officer and pose the question.   AS we know Lawyers are not used in simple RE transactions on the west coast.. we do everything with title and escrow companies..

"Clearly the DOT needs to be notarized and recorded with the LA County Recorder."

This is true, @Valle Altobelli . It's not to satisfy the IRS, however, as you suggest above. They don't care. It's to secure your parents position.

The "Note Secured by Deed of Trust" can be notarized, but this is not necessary and it doesn't make the document any more enforceable. We do not ask that our notes be notarized. A simple signature is good enough.

"…but you can basically record anything you want to record again if it makes them feel better."

This is not true. Not only do notes not get recorded, the LA county recorder will not accept a note to be recorded. If you want to confirm this, go to the recorder near LAX and ask. Better yet, bring your note and try.

I can't find the link anymore, but if you can find it online, the LA County Recorder's Manual addresses this as well.

In sum:

The DOT gets notarized and recorded.

The Note is simply signed by the borrower without a notarization.