Does anyone have a template for a contract between a private lender and a real estate investor? Something that settles agreed upon lending rates, payment schedule and default follow up options.
Any thoughts would be great thanks!
if its a secured loan.. then its simply a deed of trust and or mortgage and promissory note.
if its unsecured its a unsecured Prom note...
deed of trust and mortgages you can get from any title company they are pretty much standard documents.
prom notes anyone can write one.. you can.. I can, a lawyer can ... just google them.. you will find tons of information on this
Jay nailed it
I couldn't figure out a good way to link to this so I just copied the text. I believe I got this from a NOLO book.
Promissory Note (for an amortized loan)
1. For Value Received, ___[borrower name]___ ("Borrower") promises to pay to the order of___[lender name]___, of ___[city, state]___ ("Lender"), the sum, in United States dollars, of ___[amount of loan, spelled out]___dollars ($__________), plus interest accruing at an annual rate of ___[interest rate, spelled out]___ percent (___%) on the unpaid principal amount beginning on ___[loan start month/day/year]___ (the "Debt").
2. Transferability. Borrower understands that the Lender may transfer this Note. The Lender or anyone who takes this Note by Transfer and who is entitled to receive payments under this Note is called the "Note Holder" and will have the same rights and remedies as the Lender under this Note.
3. Payments. Payment of the Debt shall be made in [choose one: monthly/quarterly/annual] installments by [choose one]:
[ ] personal check sent to __________[address where check is to be mailed]____________
[ ] direct deposit to ____[institution and account number where deposit is to be made]____
[ ] ________________________[describe other form of payment]____________________
Payments shall include principal and interest, as follows:
Beginning on ___[loan start date]___ and continuing [choose one: monthly/quarterly/annually] on the ___[for example, 1st or 15th]___ of each [choose one: month/quarter/year] (the "Due Date") until ___[month/day/year of last payment]___ (the "Final Due Date"), Borrower shall pay to the Lender or Note Holder the sum of $________ each [choose one: month/quarter/year] (the "[choose one: Monthly/Quarterly/Annual] Payment"). On the Final Due Date, Borrower shall pay all amounts remaining due under the terms of this Note.
___[Name of schedule]___ lays out the payment schedule for this Note.
4. Grace Period and Late Fee.If the Borrower fails to make any payment in the full amount and within ___[number of days, spelled out]___ (___[number in figures]___) calendar days (the "Grace Period") after the date it is due, Borrower agrees to pay a late charge to the Lender or Note Holder in the amount of $__________ (the "Late Fee"). Borrower will pay this Late Fee promptly but only once on each late payment.
[Choose one of the following alternative clauses:]
5. Security. This is an unsecured note.
[End Alternative A]
5. Security. Borrower agrees that until this Note is paid in full (including principal and interest, if any), this Note will be secured by a separate security agreement (incorporated here as Attachment __[fill in]__) and, if applicable, a Uniform Commercial Code Financing Statement, giving Lender a security interest in the following property:
[End Alternative B]
6. Default and Acceleration. If any installment payment due under this Note is not received by Lender within the Grace Period, the note will be in default and the entire amount of unpaid principal will become immediately due and payable at the option of Lender without prior notice of default to Borrower.
7. Prepayment. This Note may be prepaid in full at any time without cost or penalty to the Borrower.
8. Attorneys' Fees. If Lender prevails in a lawsuit to collect on this note, Borrower agrees to pay Lender's attorneys' fees in an amount the court finds to be just and reasonable.
9. Waiver. The undersigned and all other parties to this Note waive the following requirements:
- presentment of the Note for payment by Lender
- refusal of payment by Borrower after presentment of the Note by Lender, otherwise known as dishonor, and
- Lender's notification to Borrower of Borrower's refusal to pay.
10. Lender's Rights. Lender's decision not to exercise a right or remedy under this Note at a given time does not waive the Lender's ability to exercise that right or remedy at a later date.
11. Liability of Individual Borrowers. The term "Borrower" may refer to one or more borrowers. If there is more than one borrower, they agree to be jointly and severally liable.
12. Governing Law. This agreement will be governed by and construed in accordance with the laws of the state of __________________.
Borrower's signature: ________________________
Print name: ________________________________
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing