Promissory Note Secured By Deed Of Trust: Fill & Download for Free

A Deed of Trust secures a Borrower's promise to pay back a loan (+ all interest) to a lender as set forth in the Promissory note.If you are a borrower, you need to execute the DOT as the borrower and record it against your property before a Lender will transfer you funds to purchase a property or refinance a property.

Very simple — you write a Promissory Note secured by a Deed of Trust (in a trust state) or a Mortgage (in a mortgage state).The Promissory Notes specifies how much they owe, the interest rate, etc. The Deed of Trust (or Mortgage) secures the Note. If they don’t pay, you can foreclose on them.The Note and Deed of Trust documents are easily obtainable online or from title company websites. You should have it reviewed to make sure you’re doing it correctly, but it’s no more complicated than that.This is exactly the same as any institutional lender does it.

Mortgages are, at their most basic level, protection for a lender.A loan is a contract between a lender and a borrower. The lender agrees to loan a given sum of money to the borrower, and in return the borrower agrees to pay back the loan under the terms of the promissory note. Most well-written promissory notes list a series of actions the lender has a legal right to take if the loan is not paid back per the stated conditions.However, promissory notes secured by real estate as collateral usually require a mortgage (or, in some jurisdictions, a “Deed of Trust”). The mortgage grants the lender (or trustee for the lender) specific legal powers over the real property.Imagine you loan a stranger $100,000.00 cash. The stranger signs a promissory note, promising to pay you back under the terms of the note. But, as added protection, you want to use the stranger’s home as collateral.What if the stranger attempts to sell the property before paying you back in full?What if the stranger refuses to pay for insurance, and the property is somehow damaged?What if the stranger dies?What if the stranger obtains a second loan in addition to yours, and uses the same property as collateral again?What if the stranger doesn’t pay his state or federal taxes, and the state or IRS slap a tax lien on the property?What if the stranger wants to dispute the terms of your promissory note?What if the stranger declares bankruptcy?What are your legal rights over the property should the stranger default on payment of your loan (i.e. the process of foreclosing on the property)?If I were your attorney, I would want to make sure you are legally protected from any and all potential risks…including (but not limited to) the above examples. The mortgage is the document which does exactly that. And it’s complicated because so many potential risks exist.