Well, Happy Holidays! IMO, the best way would be to build in lending opportunities into your LLC for a private lender to become a member and lend the money through the capital account. If properly drawn, there is no doubt that it is a commercial loan and the collateral is held by the LLC and assigned to that lender.
Drafting any clause that is contrary to state law may well be worthless as many rights, especially consumer rights or protections provided by law can not be relinguished by the consumer or individual even if by agreement. And, the fact that a borrower agrees to pay an amount over the usury rate is a violation of the lender, not the borrower.
An example of this is when a corporation, say a small cell phone company, incorporates penalties in their contracts that require additional fees for collections of a late payment. Usually under state law, late fees will have some cap and making additional charges in connection with such a payment will be viewed as part of the late fee. The consumer can not waive such rights.
Even by paying the fees.
I have also seen where usuary laws were violated that the lender ended up owing a fine to the state, but never had to remit overages to the borrower, especially when the loan had been paid off and the borrower was long gone.
Will is absolutely right that in a private lending arrangement, where no compliance audit is performed by the state that if a borrower never complains, it may go undetected. But borrowers die, they become incapacitated and others may end up standing in their place to wind up business, so from the lending side, it would not be wise, IMO, to simply have a usurus note.
State law should be investigated with peripheral laws as well, references to usury within any state may include tax law, commerce and other secured lending requirements where they may become applicable. So I suggest you see your attorney.
Any lender that does business in another state must abide by that state law, where the collateral resides, the home office is irrelevant. Think about it, Bank of America may have its national or international headquarters in one state, but the loans they make elsewhere are written to conform to the state law where the loan is made, and with real estate loans, that means where the collateral is located.
As to a shared appreciation arrangement, I'd suggest going back to the LLC suggested. If you have a formal partnership, that may also work out for you. To do any shared appreciation agreement in connection with a loan or subject to a loan being made, you will still be in viloation as the Truth In Lending Act requires all loan expenses or other charges made in connection with the loan be computed for the APR, and it will be generally be the APR that any usury rate will be applied to. Ahh, but this is a private lender and the TIL may not apply, ahhh, but, if the private lender is in the business of lending money, it may very well apply.
Without a doubt, IMO, the best way is for the lender to be in the LLC as a very limited member, make a contribution to capital and receive the applicable profits, a small rate of interest and his principal back. Good luck, Bill
Bill Gulley, General Real Estate Academy