Loan Documents Bundle

Description

When you purchase the Loan Documentation Bundle you save $85 off the individual document price and you get each of the following documents in editable Word 2007 format:

1.  Promissory Note – Do-It-Yourself for $47:  A Promissory Note is the legal document signed by a borrower that evidences a promise to repay and the payment terms and conditions.  It specifies the amount owed, if interest will be charged, the interest rate, when payments are due, the amount of payments and the maturity date.  It contains other important terms such as events that can cause a default and allow the holder of the Note to accelerate the entire balance due after a default, late payment charges and increased interest rate after a default.  The Promissory Note is the fundamental loan document, i.e., it is the primary document that evidences the borrower’s legally enforceable promise to repay.  If you are owed money and you do not have a Promissory Note signed by the borrower(s), you are at a great disadvantage if you have to sue to collect the debt.  Suing to collect a debt evidenced by a Promissory Note is one of the easiest types of lawsuits because you only have to prove the borrower gave you a note and didn’t pay in full.  Related Documents:  A Promissory Note can be secured by a lien on personal property (use our Security Agreement for personal property in Arizona) and by a lien on real property (use our Deed of Trust for real property located in Arizona).

2.  Limited Liability Company Borrowing Resolution – Do-It-Yourself for $47:  If the borrower or signer on a Promissory Note is limited liability company, the lender must obtain a borrowing resolution from the members of an limited liability company to prevent the company from claiming that the person who signed the Promissory Note or other loan documents did not have the authority to sign for the company and therefore the company is not obligated.  It is prudent business practice to obtain a borrowing resolution.  Commercial lenders almost always require a borrowing resolution as a condition to making a loan.

3.  Corporation Borrowing Resolution – Do-It-Yourself for $47:  If the borrower or signer on a Promissory Note is a corporation, the lender must obtain a borrowing resolution from the corporation’s board of directors to prevent the corporation from claiming that the person who signed the Promissory Note or other loan documents did not have the authority to sign for the corporation and therefore the corporation is not obligated.  It is prudent business practice to obtain a borrowing resolution.  Commercial lenders almost always require a borrowing resolution as a condition to making a loan.

4.  Security Agreement – Do-It-Yourself for $47:  If a lender wants to secure payment of a Promissory Note with a lien on personal property located in Arizona, the lender must obtain the borrower’s signature on a document that creates the lien.  When the lender has a lien on personal property and the borrower defaults under the Promissory Note, the lender can foreclose on the personal property and sell the encumbered property at an auction and apply the proceeds to the debt.  The Security Agreement is the document that when signed by a borrower or a guarantor creates a lien on the signer’s personal property that is described in the Security Agreement.  My Security Agreement gives you the option to describe specific items of personal property to be encumbered or you can use the all encompassing language that gives the lender a lien on all of the borrower’s personal property.  Note:  The Security Agreement is not a stand-alone document.  This document is intended to be used with a Promissory Note.  There must be a debt or obligation created to which the Security Agreement creates a lien.  No debt, no lien.  Additional Required Document:  The lender/secured party must immediately file a UCC-1 Financing Statement with the Arizona Secretary of State to perfect notice to the world that the lender/secured party has a lien on the collateral described in the UCC-1.  For more about the UCC-1 and a link to the form, see Richard Keyt’s article that explains the UCC-1 Financing Statement.

5.  Personal Guaranty – Do-It-Yourself for $47:  The Personal Guaranty is to be signed by a person or entity that promises to pay another person’s or entity’s debt.  For example, if Bart Simpson borrows $100 from Moe and signs a Promissory Note to evidence the debt, Homer and Marge Simpson could guaranty Bart’s debt, in which case they are called guarantors of the Promissory Note. The legal consequence of being a guarantor is that if the debt is not paid, the lender can sue and collect the unpaid debt from both the borrower and all guarantors.  If fact, unless there is a contract that prohibits the lender from first suing the borrower, the lender can sue ONLY the guarantors and collect 100% of the debt from the guarantors.  If there is more than one guarantor, the lender can pick and chose one or some or all of the guarantors to sue and can collect 100% of the debt from any one guarantor unless the Personal Guaranty provides otherwise.  Note:  The Personal Guaranty is not a stand-alone document.  This document is intended to be used with a Promissory Note.  There must be an existing debt or obligation to guarantee. No debt, no guaranty.  Related Documents:  A Personal Guaranty can be secured by a lien on personal property (use our Security Agreement for personal property in Arizona) and by a lien on real property (use our Deed of Trust for real property located in Arizona).

6.  Deed of Trust – Do-It-Yourself for $47:  The Deed of Trust is the document that creates a lien on Arizona real property to secure payment of a debt or satisfaction of an obligation.  It must be signed by a person, people, entity and/or entities that own the real property to be encumbered.  The Deed of Trust is the preferred method of obtaining a lien on Arizona real property.  Mortgages can also be used to create a lien on Arizona real property, but the Mortgage is rarely used in Arizona.  Common Usage:  When a borrower gives a lender a Promissory Note to evidence a promise to pay money to the lender and the lender wants security for the loan, the Deed of Trust is used frequently to create a lien on Arizona real property to secure the obligations contained in the Promissory Note.  If the borrower / debtor defaults on the Promissory Note or other contractual obligation secured by a Deed of Trust, the lender / creditor can foreclose the Deed of Trust and cause the real property that is encumbered by the Deed of Trust to be sold at an auction to the highest bidder for cash.

Caution #1:  A lender does not have a lien on any of the borrower’s real property simply because the borrower signs a Promissory Note or other document that creates a legal obligation that the lender may enforce.  If the lender wants a lien on Arizona real property, the lender must get the owner(s) of the Arizona real property to sign a Deed of Trust (best type of lien) or a Mortgage (rarely used in Arizona).

Caution #2:  The lender must record the properly signed and notarized Deed of Trust with the County Recorder of the Arizona county in which the encumbered real property is located.  For information on each Arizona County Recorder, recording fees and where to mail or deliver the Deed of Trust for recording, see our Arizona County Recorder information area.

Caution #3:  The Deed of Trust will not be valid unless the owner(s) of the Arizona real property owe a debt or other obligation to the lender / secured party.  For example, if Bart Simpson borrows $10,000 to buy a car and Homer and Marge give the lender a Deed of Trust on their home, the Deed of Trust will not be valid because Homer and Marge do not owe money or any obligation to the lender.  If the lender wants to be able to foreclose on Homer and Marge’s home if Bart defaults on the loan, the lender must have Homer and Marge sign a Personal Guaranty by which they guaranty Bart’s debt and then the Deed of Trust would secure the satisfaction of Homer and Marge’s obligations under the Personal Guaranty, not under the Promissory Note because they did not sign it.

Disclaimer: If you purchase this form, you are buying a product from Richard Keyt and KEYTLaw, LLC. (collectively the “Firm”), and you are not hiring the Firm to provide any legal services or legal advice or represent you in any capacity. If you modify the form in any way, you are solely responsible for the legal affect of the changes you make. The form is drafted to comply only with Arizona law because Arizona is the only state where Richard Keyt is licensed to practice law. Do not use this document in any state other than Arizona without first having it reviewed and modified as necessary by an experienced attorney in the state where you intend to use the form. The Firm makes no representations or warranties of any kind with respect to this form. The Firm disclaims all warranties for fitness for a particular purpose.