Loan agreements typically are comprised of two main documents. First a promissory note, which sets out the terms of repayment, and second, a security agreement which allows the lender to hold collateral and take ownership of the collateral if the borrower defaults on it’s repayment obligations. Texas law is very specific, in fact unique, in the types of documents and procedures necessary to accurately document a loan. One must pay careful attention to the terms of repayment, the marital status of the borrower, the type of collateral offered, the homestead/exemption status of the collateral and filing requirements of the security instrument. The TLD Professor below will assist us in determining the correct documents to use in addressing your specific transaction.
Available Packages:
- Promissory Note Only-Unsecured, No Collateral
- If the lender is extending a loan of money to a borrower without requiring collateral, an unsecured note is the proper instrument to document the agreement. The parties should address issues related to payment terms, interest rate, late fees and prepayment penalties, among other issues. The document is signed by the borrower, but does not have to be filed of record. The lender should retain possession of the original Note, and return it marked “Paid in Full” upon full payment.
- Documents included:
- Promissory Note
- “Follow-Through” Instructions
- Promissory Note Secured by Real Estate
- When loaning money to property owners, especially when the loan proceeds are used to purchase real estate, the lender is well advised to take back a security interest in the property, which allows the lender to foreclose and take the property back in the event the borrower defaults on its obligations. Otherwise known as a mortgage, in Texas a security interest in real estate is known as a deed of trust. Texas laws are very strict and unique in the form the documents must take to be enforceable. Likewise, the state statutes limit borrowers from putting their homestead up as collateral except in very specific circumstances. If the property to be secured is indeed the homestead of the borrower, you are advised to call our office at 877.TLD.7773 to discuss the specifics. Otherwise, if the real estate is not the homestead of the borrower, a promissory note secured by a deed of trust is the proper way to document your transaction. In the Note, the parties should address issues related to payment terms, interest rate, late fees and prepayment penalties, among other issues. The document is signed by the borrower, but does not have to be filed of record. The lender should retain possession of the original Note, and return it marked “Paid in Full” upon full payment.
- Documents included:
- Promissory Note, Deed of Trust, Notice of Final Agreement and W-9 form
- “Follow-Through” Instructions
- Promissory Note Secured by Personal (non-real estate) Property
- When loaning money to a borrower, many lenders ask to hold some collateral to secure the borrower’s repayment of the debt. In non-real estate transactions, the borrower must provide the lender a Security Agreement and UCC-1 (and sometimes even possession of the item) in addition to the promissory note, in order for the lender to obtain an effective security interest in the item of collateral. The UCC-1 must be filed with the Secretary of State in order to perfect the security interest in non-real estate collateral. As for the promissory note, the parties should address issues related to payment terms, interest rate, late fees and prepayment penalties, among other issues. The Note is signed by the borrower, but does not have to be filed of record. The lender should retain possession of the original Note, and return it marked “Paid in Full” upon full payment.
- Documents included:
- Promissory Note, Security Agreement, UCC-1, Notice of Final Agreement, and W-9 form
- “Follow-Through” Instructions