Any forms or templates available for Promissory Notes

11 Replies

I am using my SD IRA and need to create a Promissory Note secured against Real Estate. Does anyone have any resources or examples of such a note for Texas? The custodian also ask for a Mortgage, HUD/Settlement Statement, Proof of Hazard Insurance and Title commitment. I'm looking for examples of the Promissory Note and Mortgage everything else I am familiar with. Cheers!

@Chad Statham
There are specific deed of trust forms for Texas if that is the state. Which state are you lending in.

Is it a first position note ? Is it for an investor or owner occupant ?

The closing attorney should be able to create the HUD and in many instances they can also create these documents for you. The other option is to use an MLO

Office depot...  then title company for hud.. mortgages or trust deeds or deeds to secure debt are usually state specific.. and prepped by title/escrow company.. in Texas.

Don't step over a dollar to save a dime. Have an attorney draft your first set of loan documents and then you'll have your template for future transactions.  

Awesome!  Thank you so much everyone what a great forum to be part of.

It is in the great State of Texas.

I'm not sure about first position, but I would think yes and I will certainly verify the importance.

It is for an Investor's LLC. borrowing from my SD IRA for a fix and flip.

Again, thank you all for the support.

Cheers!

Chad,

I'm curious about how you went on this. Care to share more details. You could even pm . I'm like on a very similar course as you are.  Trying to buy a building or two but looking for other more passive investments too.

I just wouldn't.  The pitfalls are everywhere if done incorrectly or doesn't include necessary items.  A note has "magical phrases" to make it enforceable.  All docs have to be signed in the proper capacity. The deed can include language to make it enforceable to foreclose (judicially) if there are defects in the DoT (and we don't use mortgages in Texas).

A set of closing docs usually isn't that expensive to have drafted by an attorney.  I'm only licensed in TX (all of Texas), and my Note, Deed, Deed of Trust, and closing instructions is only $500.  That falls pretty much in line for a one-off set of docs.  

As an IRA account holder, it is questionable if you can draft them for your IRA because a) might be practicing law, or b) more likely, providing services to your IRA (violation of the rules). It is odd that the custodian is asking for all that extra, and may be stepping over the line to providing legal advice. Finally, your custodian will need to have "read and approved" signed by you on at least some of the docs. Certain docs will need to be recorded. Your custodian MUST have the wet-ink signature of the note (and you ought to know why).

This all skips the part where you did your underwriting.  Get a copy of the borrower's TXDL. Credit check. Business references. Comps. Inspection. Appraisal. Scope of rehab. etc.

Just hire a lawyer, licensed in TX, and familiar with the process.  You will thank yourself later.

The easiest solution is to pull the TX docs from the Fannie Mae website.

If they are good enough for institutional lenders doing business in the state, they are probably good enough for you.

Originally posted by @Tom Gimer :

The easiest solution is to pull the TX docs from the Fannie Mae website.

If they are good enough for institutional lenders doing business in the state, they are probably good enough for you.

 To tout my own profession, that is for a different client with a different need. Institutional lender on a national scale vs. an individual with a single project.

I'm not saying it doesn't "work," but we should acknowledge some risk here.

Originally posted by @Ronald Rohde :
Originally posted by @Tom Gimer:

The easiest solution is to pull the TX docs from the Fannie Mae website.

If they are good enough for institutional lenders doing business in the state, they are probably good enough for you.

 To tout my own profession, that is for a different client with a different need. Institutional lender on a national scale vs. an individual with a single project.

I'm not saying it doesn't "work," but we should acknowledge some risk here.

Hence I said "they are probably good enough for you" ... I expect whoever wants to DIY would read them and figure out if they were appropriate. 

The point was they contain the magic language to be enforceable payment obligations as well as security interests in the jurisdiction in which they are marked for use by Fannie. I'd sooner rely on those docs than some random forms I found in the doc library on BP.

Originally posted by @Tom Gimer :
Originally posted by @Ronald Rohde:
Originally posted by @Tom Gimer:

The easiest solution is to pull the TX docs from the Fannie Mae website.

If they are good enough for institutional lenders doing business in the state, they are probably good enough for you.

 To tout my own profession, that is for a different client with a different need. Institutional lender on a national scale vs. an individual with a single project.

I'm not saying it doesn't "work," but we should acknowledge some risk here.

Hence I said "they are probably good enough for you" ... I expect whoever wants to DIY would read them and figure out if they were appropriate. 

The point was they contain the magic language to be enforceable payment obligations as well as security interests in the jurisdiction in which they are marked for use by Fannie. I'd sooner rely on those docs than some random forms I found in the doc library on BP.

 Sorry, it was not clear at all that "probably good enough" was a reference to the OP's position. I interpreted it to imply that because an institutional lender used it, then therefore it was "good enough" for an individual. 

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