Collecting payments - Posted by Jeremy FL

Posted by Russ Sims on July 19, 2001 at 01:13:37:

It’s hard to believe you have a note with no payment terms addressed. A good note should stipulat the amount of each payment, when the payment begins,what day of the month the payment is due, how many payments there will be, how much the late penalty is, etc. In short, a note should address and define every veriable.
If your title company created a note without the key perameters defined (like when payment begins) then perhaps you should look for a title comany that knows what they are doing.

Of course you can send statements to the borrower, and since your note is vague on some terms, perhaps that’s your best bet.

As far as selling the note, well,you’ll probably need to collect payments on it for a year to make it somewhat marketable. And then figure on at least a 20% discount form a note buyer

Collecting payments - Posted by Jeremy FL

Posted by Jeremy FL on July 18, 2001 at 17:58:15:

I recently created a small 2nd in order to rid myself of a property I have been trying to unload for a while. I have never created a note before so I am wondering what is the best way to set this up. Do you send your clients a bill each month? If so, do you include the balance & interest rate and all that with it? I had the title company take care of the paper work and recording it. Now I am wondering what to do. We never even discussed when the first payment is due. Oh well, I am just happy to have this property almost off my hands. Incase it matters it is a 5 year $4750 loan @ 12%. I also would consider selling it. Thanks in adavance.

Missing paperwork - Posted by SusanL.–FL

Posted by SusanL.–FL on July 19, 2001 at 08:55:27:

I find it very hard to believe too—that you aren’t aware of all the terms/dates involved!

My guess is: your first payment will be due a month from the date you closed.

Hopefully, the title company ALSO gave you a copy of your amortization schedule on your Note. If they didn’t, I’d ask them to print one up for you. It’ll list each payment over the five-year term (with a break-down of the principal and interest per month).

Each year at tax time, your buyer will want to know how much interest he paid you so that he can put that on his income tax return.

The Schedule will also show your CPA the amount of income you will be taxed for that particular year.

If I were you, I would look through the paperwork you received from the title company. A copy of it should be in there somewhere and it will more than likely be one page long (one little paragraph).

If you don’t find it, contact your title company right away. That piece of paper is as good as cash–so don’t loose it. Put it in your safe or a strong box.

I keep my Notes and Mortgage papers in my safe filed according to property addresses. Makes it easy to find quickly.

P.S. If it makes you feel any better, I can’t find a copy of my mortgage papers for one of the three loans on my commercial property. The ONLY thing I can remember is signing for the $60,000 check on 10/6/96 and rushing home with the check.

When I think back, I don’t think he gave me any papers that day. The guy got fired several months after that
—for making toooooooo many loans to our real estate club in town.