How Do I Sell My Real Estate Promissory Note
Certain types of promissory notes, such as corporate bonds or retail installment loans, can be sold at a discount—an amount below their face value. The notes can be subsequently redeemed on the date of maturity for the entire face amount or prior to the due date for an amount less than the face value. The purchaser of a discounted promissory note often receives interest in addition to the appreciated difference in the price when the note is held to maturity.
In addition to our expertise in providing private mortgage note solutions, our expert contract buyers can also assist you in the sale of an owner financed business note or in receiving a lump sum distribution in exchange for the monthly or periodic payments you are currently receiving for a structured settlement annuity, or lottery / gaming award. We also provide assistance in providing immediate capital for...
What Is A Promissory Note? - Definition
The individual who promises to pay is the maker, and the person to whom payment is promised is called the payee or holder. If signed by the maker, a promissory note is a negotiable instrument. It contains an unconditional promise to pay a certain sum to the order of a specifically named person or to bearer—that is, to any individual presenting the note. A promissory note can be either payable on demand or at a specific time.
How To Sell My Promissory Note
n. a written promise by a person (variously called maker, obligor, payor, promisor) to pay a specific amount of money (called "principal") to another (payee, obligee, promisee) usually to include a specified amount of interest on the unpaid principal amount (what he/she owes). The specified time of payment may be written as: a) whenever there is a demand, b) on a specific date, c) in installments with or without the interest included in each installment, d) installments with a final larger amount (balloon payment).
A promissory note may contain other terms such as the right of the promisee to order payment be made to another person, penalties for late payments, a provision for attorney's fees and costs if there is a legal action to collect, the right to collect payment in full if the note is secured by real property and the property is sold ("due on sale" clause), and whether the note is secured by a mortgage or deed of trust or a financing statement (a filed security agreement for personal collateral). The promissory note is usually held by the party to whom the money is owed.
There are legal limitations to the amount of interest which may be charged. Charging a rate in excess of the legal limit is called "usury," and this excess is legally uncollectible. When the amount due on the note, including interest and penalties (if any) is paid, the note must be cancelled and surrendered to the person(s) who signed it. A promissory note need only be signed and does not require an acknowledgement before a notary public to be valid. (See: interest, obligor, obligee, usury)
Sell Promissory Notes Real Estate
The payments section of the promissory note is used to describe when and where a borrower is to make payments. It establishes that a borrower is to make payments once and month, every month, and that the payments will be made on the first day of each month beginning on a specified date. Also included is the maturity date and the declaration that if payment in full is not received by this date, the borrower is responsible for the total unpaid balance. The lender's preferred address to receive payments is given, as well as the agreed upon payment amount.
There are also usury laws that could affect a promissory note, which is the maximum rate of interest that may be charged to a borrower, and the IRS has something to say about promissory notes, too, especially those that charge no interest. If the promissory note is under a certain amount, the IRS can impose its own rate of interest and force the lender to pay taxes on it.
If your home is used for security and you default on the promissory note, you could lose your home. Most promissory notes attached to property are secured by either a trust deed, also known as a deed of trust, a mortgage or a land contract, and those instruments are recorded in the public records. Promissory notes are generally unrecorded. Is an instrument of value. If the payee loses the original prom note, you might have to get insurance. It's a big hassle and expensive.
Borrowers who fail to repay an obligation to which an item of value is used as security could involuntarily lose that security. For example, I had an ex-husband, well, several, and one of them asked me to cosign a promissory note so he could buy a car. When he stopped making the payments, the lender called me to ask for payment. I learned a valuable lesson. Do not co-sign a promissory note, especially if you're married to a deadbeat.
The first section of a promissory note, the promise to repay, details the constructs of the transaction and gives specific definitions of loan terms. The loan amount is listed in the section as well as the name of the lender. In the event of litigation, these specifications will be admissible in court and can carry heavy legal weight in determining fault. This section establishes that the borrower agrees to pay his debt and assumes responsibility for defaulting on payments
Sell Promissory Note Fast
Provide the note buyer(s) with the documents they request. They will want to see a copy of the mortgage or the deed of trust, a copy of the promissory note that you wish to sell to them, the closing or settlement statement if the promissory note is secured by real estate, and they will want the name and Social Security number of the person making payments on the note so they can confirm that person's credit rating.
Locate one or more promissory note buyers. Note buyers can be found online or through your local yellow pages. Your banker or most real estate agents will also know several note buyers. It is a good idea to contact more than one note buyer, as the price a note buyer will pay for a promissory note can vary greatly and you want to get the best price possible.
Negotiate when appropriate. Negotiation should include new information that was not already used when the buyer structured the offer you have received. If no new information is available then negotiation is unlikely to result in a higher payment. Be prepared to reject an offer if you do not feel it is sufficient.
The mortgage note also contains a section dedicated to explaining different payment default scenarios and their potential outcomes. Late charges for overdue payments are calculated by a percentage listed in this section. Some notes will define a late payment as being 10 days overdue, while others allow 15 days. The promissory note details how the note-holder is to contact borrowers who fail to make a payment, and issue notice that they are required to pay the principal amount plus additional interest. Note-holders may not be required to issue notice of default, depending on waivers agreed to by the borrower.
Depending on which loan type or program you choose and the stipulations of repayment, the promissory note will include verbiage describing the legal waivers or concessions that you are agreeing to. The two most common waivers found on mortgage notes are the waiver of rights to presentment and the notice of dishonor. Right to presentment is essentially the borrower's right to be formally issued a demand of payment. If this right is waived, the borrower is liable to payment of default penalties without being formally informed. Similarly, waiving the right of notice of dishonor gives the creditor the ability to legally inform other parties of the debtor's default.
Every state has its own laws about the essential elements of a promissory note. You should never attempt to draw your own promissory note if you ever want to have a chance to collect should the payments stop. Some people think a promissory note is so simple that they can create their own or download a form they found online. If the debt is important enough to you to want to be repaid, it is important enough to hire a lawyer to prepare a promissory note for you.
PROMISSORY NOTE, contracts. A written promise to pay a certain sum of money, at a future time, unconditionally. 7 Watts & S. 264; 2 Humph. R. 143; 10 Wend. 675; Minor, R. 263; 7 Misso. 42; 2 Cowen, 536; 6 N. H. Rep. 364; 7 Vern. 22. A promissory note differs from a mere acknowledgment of debt, without any promise to pay, as when the debtor gives his creditor an I 0 U. (q.v.) See 2 Yerg. 50; 15 M. & W. 23. But see 2 Humph. 143; 6 Alab. R. 373. In its form it usually contains a promise to pay, at a time therein expressed, a sum of money to a certain person therein named, or to his order, for value received. It is dated and signed by the maker. It is never under seal. 2. He who makes the promise is called the maker, and he to whom it is made is the payee. Bayley on Bills, 1; 3 Kent, Com, 46. 3. Although a promissory note, in its original shape, bears no resemblance to a bill of exchange; yet, when indorsed, it is exactly similar to one; for then it is an order by the indorser of the note upon the maker to pay to the indorsee. The indorser is as it were the drawer; the maker, the acceptor; and the indorsee, the payee. 4 Burr. 669; 4 T. R. 148; Burr. 1224. 4. Most of the rules applicable to bills of exchange, equally affect promissory notes. No particular form is requisite to these instruments; a promise to deliver the money, or to be accountable for it, or that the payee shall have it, is sufficient. Chit. on Bills, 53, 54. 5. There are two principal qualities essential to the validity of a note; first, that it be payable at all events, not dependent on any contingency; 20 Pick. 132; 22 Pick. 132 nor payable out of any particular fund. 3 J. J. Marsh. 542; 5 Pike, R. 441; 2 Blackf. 48; 1 Bibb, 503; 1 S. M. 393; 3 J. J. Marsh. 170; 3 Pick. R. 541; 4 Hawks, 102; 5 How. S. C. R. 382. And, secondly, it is required that it be for the payment of money only; 10 Serg. & Rawle, 94; 4 Watts, R. 400; 11 Verm. R. 268; and not in bank notes, though it has been held differently in the state of New York. 9 Johns. R. 120; 19 Johns. R. 144. 6. A promissory note payable to order or bearer passes by indorsement, and although a chose in action, the holder may bring suit on it in his own name. Although a simple contract, a sufficient consideration is implied from the nature of the instrument. Vide 5 Com. Dig. 133, n., 151, 472 Smith on Merc. Law, B. 3, c. 1; 4 B. & Cr. 235 7 D. P. C. 598; 8 D. P. C. 441 1 Car. & Marsh. 16. Vide Bank note; Note; Reissuable note.