When buying real estate, it is best to make sure that you are legally and contractually covered. As a real estate professional who has dabbled in the market for over thirty years, I’ve heard many stories of people getting scammed or losing out on a deal because they skipped the necessary due diligence. Don’t let this happen to you. Do your homework and make sure to document any agreements made between you and the other party.
A promissory note for real estate makes sure that all the legal obligations, including payments, terms and conditions are highlighted and agreed upon by the parties.
Sample Promissory Note Template for Real Estate
Principal Amount: $________________ (insert amount being loaned)
Date: ___________(insert date at the time of the contract being made)
For the value received of the amount stated above I, ________________ (Insert Name of Borrower) promise to repay Mr./Ms. ________________ (Insert Name of Lender) the total sum of $________________ (Insert amount), as well as interest, which has been set at the yearly rate of _______(Insert percentage of interest agreed) %.
I agree and state that the repayments of the amount borrowed will be made in monthly payments over a period of_______ (insert number of months the payment will span for) months. Each payment will be of an amount of $________________ (insert amount to be paid monthly) on the 1st day of each month. The payment will start at the date_________ (Insert date of the first payment month) and the final payment of the repayment of the loan will be due on _________(Insert date of the last payment month) or until the principal amount that was lent is paid back in full.
This promissory note is to be given in accordance with the sale of contract for the real estate between the two parries mentioned at the end of the promissory note. The note is secured by purchase mortgage money on real estate located in ________________ (insert name of location)
The borrower pledges ___________ (Insert the name of the real estate) to be owned by ___________ (insert name of the owner of the real estate) as a security for the note that is payable. The title to the collateral will be transferred to the lender in case of a loan payment default. Any proceeds that come after the sale of the collateral will be the property of the Lender until and unless the Note in paid back to the lender in full.
The note may also be repaid by the Borrower at any time fully subject to it being the exact amount borrowed without any penalties or premiums. If the payments prior to the loan are high enough the loan may be re-amortized. In case of any change of number of address, the lender needs to be promptly informed by the borrower.
The promissory note shall be joint and several on all makers, guarantors and endorsers.
Borrowers Printed Name: _________________________
Borrower’s Signature: _________________________
Address of the Borrower: ________________________________________________________________
Borrower’s Number: ______________________
Borrower’s Email: ______________________
Lenders Printed Name: _________________________
Lender’s Signature: _________________________
Address of the Lender: ________________________________________________________________
Lender’s Number: ______________________
Lender’s Email: ______________________
Witness Name: _________________________
Witness Signature: _________________________
Guarantor Name: ________________________
Guarantor Signature: _______________________