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7 Key Promissory Note Questions and Answers

Does it make sense for me to draft the promissory note myself?

It makes about as much sense as filling your own tooth cavity.

There are several reasons why making your own promissory note is financially dangerous:

  • you probably do not know the current laws impacting private party lending
  • you probably have never had to enforce a note that you drafted in a court of law
  • you probably never had to justify the value of a note that you drafted to a banker
  • you probably never had to justify the value of a note that you drafted to a buyer
  • you probably never had to justify the value of a note that you drafted to the IRS

What sort of attorney should I engage to draft my promissory note?

Many attorneys honestly believe that filling in the blanks on a promissory note form is all that is necessary; they are badly mistaken. Many attorneys who call themselves real estate attorneys honestly believe that they are experts in and knowledgeable about promissory note; Generally, they are badly mistaken.

Only engage an attorney who has had a real experience-collection experience, enforcement experience, and note marketing experience. There are new and changing laws relating to private party promissory notes that must be followed. Only an active, experienced, specialized attorney will understand what is necessary to protect you.

What sort of collateral security should I demand and how much should I demand?

The basic rules are: "you can never have too much collateral security"

"the higher the quality of the collateral security the better"

Real estate is generally good security. As compared to an automobile, real estate places put, you can always find it; a car can be wrecked, it can be driven away, it can be hidden. The same problem applies to furniture, fixtures and equipment. Try to get a first mortgage on real estate as your primary collateral security.

How do I know if I have enough collateral security?

Do…

Read More…. by Lawrence Tepper

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The post 7 Key Promissory Note Questions and Answers appeared first on Note Investing Seminars.

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