Tennessee Balloon Secured Note is a financial instrument commonly used in real estate transactions, particularly in the state of Tennessee. It is a type of promissory note that involves a repayment structure where the principal amount borrowed is paid in smaller installments over a set period, with the balance due at the end as a "balloon payment". The term "secured" in Tennessee Balloon Secured Note refers to the fact that the borrower pledges collateral, often in the form of real estate or other valuable assets, to provide security to the lender in case of default. This collateral serves as a guarantee for the lender that they will be able to recover their investment in the event of non-payment. The balloon payment aspect of this note refers to the final payment, which is typically a larger amount than the periodic installments made throughout the loan term. This type of payment structure can be beneficial for borrowers who anticipate a large sum of money becoming available at the end of the loan term, such as proceeds from the sale of property or an expected inheritance. Different types of Tennessee Balloon Secured Notes can vary based on the terms and conditions set forth in the agreement between the borrower and the lender. Some common variants may include: 1. Residential Balloon Notes: These are balloon secured notes specifically used for residential real estate transactions, where the borrower pledges their residential property as collateral. 2. Commercial Balloon Notes: This type of balloon secured note is used for commercial real estate transactions, where the collateral can involve commercial property, such as office buildings, retail spaces, or industrial facilities. 3. Land Balloon Notes: Land balloon notes are utilized when the loan is secured by undeveloped land or vacant lots. These notes are prevalent in Tennessee, where the real estate market has diverse opportunities for land acquisition and development. 4. Construction Balloon Notes: Construction balloon notes are structured to support construction projects. The loan typically covers the cost of construction, and the balloon payment is due upon project completion. It's important to note that the terms and conditions, interest rates, repayment periods, and qualification criteria can vary for each specific type of Tennessee Balloon Secured Note. As with any financial instrument, it is advisable for both borrowers and lenders to seek legal advice and carefully review the terms before entering into such agreements.
Tennessee Balloon Secured Note
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Often, when a borrower has paid as agreed, but is unable to make the balloon payment, the bank will convert the loan to full amortization. This means it will become a full 25-year loan as opposed to coming due in five years.
In order for a promissory note to be valid and legally binding, it needs to include specific information. "A promissory note should include details including the amount loaned, the repayment schedule and whether it is secured or unsecured," says Wheeler.
A simple promissory note might be for a lump sum repayment on a certain date. For example, you lend your friend $1,000 and he agrees to repay you by December 1. The full amount is due on that date, and there is no payment schedule involved.
A promissory note can become invalid if it excludes A) the total sum of money the borrower owes the lender (aka the amount of the note) or B) the number of payments due and the date each increment is due.
You can use a template or create a promissory note online. But before you begin, you'll need to gather some information and make decisions about the way the loan will be structured. First, you'll need the names and addresses of both the lender (or "payee") and the borrower.
3 attorney answersPromissory Notes are legally binding. They do not have to be notarized but it does make them look more substantial which never hurts. If you have security (e.g. a Deed of Trust), it is notarized so might as well have the Note notarized as well.
Detailed Information The note has all the required information including the name of the drawer and payee, date of maturity, terms of repayment, issue date, name of the drawee, name, and signature of the drawer, principal amount, and the rate of interest, etc.
In Tennessee, there is no legal requirement to have a promissory note notarized. To make the document into a legal document, a Tennessee promissory note must be signed and dated by the borrower.
In any event, a promissory note does not have to be notarized to be binding. The private respondents have admitted signing the two notes and they have not succeeded in proving that they did so "under duress, fear and undue influence."
How to Write a Promissory NoteDate.Name of the lender and borrower.Loan amount.Whether the loan is secured or unsecured. If it's secured with collateral: What is the collateral?Payment amount and frequency.Payment due date.Whether the loan has a cosigner, and if so, who.