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Promissory Notes

The Role of Promissory Notes in Real Estate Law

Promissory notes are legal "IOUs" that are usually used as instruments of negotiation in which the maker / issuer unconditionally promises (in writing) to pay a specific amount of money to the payee. Commonly referred to as "notes payable," promissory notes are popularly used within the practice of real estate law. When a potential buyer of real estate is unable to meet the financial expectations of the owner, a promissory note can sometimes be used to secure the property before the payment has been made in full. To do so in Arizona requires the professional legal assistance of a Scottsdale real estate attorney such as Grant N. McKeehan, PLC.

Involving a Real Estate Lawyer in Scottsdale

Once a legal professional has been involved, obtaining a real estate promissory note can be made infinitely easier. Essentially, it will be the job of your attorney to convince the seller to accept your offer, promissory note and all. One tactic for doing so is by making multiple offers to the seller. Typically, a low case offer will be made, followed by an all-terms offer. The all-terms offer should encompass the conditions that have been previously discussed with the buyer, as well as the terms of the promissory note that was created (your real estate attorney can create the promissory note on your behalf). Noted in the terms of the promissory notes' agreement should be identification of the following roles:

The Promisor: The promisor is the person who is making the promise, i.e. the person who has promised to repay the financial obligation that was expressed in the promissory note. Sometimes, the promisor can be referred to as the obligor.

The Promisee: The promisee is the person who is acting as the recipient of the promise that has been made, i.e. the person who expects to be paid the obligations that have been secured in the promissory note. Sometimes the promisee can be referred to as the obligee.

Consideration: Consideration is the value that is received in exchange for entering into the agreement of the promissory note. Consideration usually takes shape in the form of a loan, to which both the promisor and the promisee have agreed.

Make Sure Your Promissory Note Includes the Right Components

If your promissory note is not created by a reputable professional, the terms and conditions of the agreement could quickly go astray. To avoid this, it is wise to involve a real estate attorney as early on in the process as possible. Certain basic information needs to be included in the creation of any promissory note that is made, which makes it crucial to obtain an attorney in whom you can trust to execute the process correctly.

Promissory notes should include the names and contact information of all parties involved in the transaction, as well as the amount that has been paid as consideration. Additional information that makes up the basic components of a promissory note includes the amount of the note; the cash that is being paid to the seller; the collateral that will be pledged as security; the terms of when the payoff is expected to be met; the minimum payment that will be made on a regular basis; the percentage of simple or compound interest; the lump sum payment that will be made at the end (if applicable); and when and where the payments will be made.

Schedule an Appointment with a Scottsdale Real Estate Attorney

Whether you are looking for professional assistance in the creation of a promissory note, or you are a promisee who needs help securing the money that is rightfully due to you, an attorney at the law office of Grant N. McKeehan, PLC is here to help. The Scottsdale lawyer is skilled in his practice and he is ready to assist those who have questions or concerns about the terms and conditions of making a real estate promissory note in Arizona. You can contact the firm at 888-913-8943 for more information.

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Grant N. McKeehan, PLC - Scottsdale Estate Planning Attorney
Located at 4300 North Miller Road, Suite 220 Scottsdale, AZ 85251. View Map
Phone: (888) 913-8943 | Local Phone: (602) 791-6174.