does promissory note has legal power?

Question

I am planning to loan my friend $100,000 for her business with her pay me yearly interests, and I plan to write a promissory note, would appreciate these information

1) Do I need lawyer or notary is enough?
2) Does the note have legel power in court ?
3) Any good sample on the this type of notes? ( cash, personal, interest, when pay back, if not blah blah)

Thanks

Answer 1

Most states you have to sign it in front of a notary and that is enough for it to hold up in court. Just make sure every detail is perfectly clear and there is no way to get around it. If it just says this person owes me money and nothing else it won't do you any good. Also remember to keep any copies of reciepts you give her and it would be a good idea to have witnesses for each of those as well just to protect yourself. But my personal advice is Don't lend money to friends. One small problem and the friendship is ruined and you are going to have to go to court. Let the banks handle money issues.

Answer 2

He can't win a suit against you. Your promissory note is between you and the car dealer (or bank/whoever). Your obligation is to continue paying the bank as you promised. If you stop paying the bank, they'll come and repossess the car. You'll get a ding on your credit record and he wont have a car anymore. The only way he'd have a chance to win a lawsuit would be if he did something for you in exchange for the car. For instance, if he did construction work on your home and built you an add-on bedroom and received the car as payment for that work. But if it was something you gave him just because you loved him, then he isn't really entitled to continue receiving the payments. How much is the car worth and how much is still owed on it? You may want to contact the bank and find out how much of a hit you'd take if they repossess it. It's possible that in repossessing it they would be able to sell it for enough money to cover the remaining balance, in which case the credit hit wouldn't be as bad. With that information, you can then go back and talk with your ex and negotiate a deal. You can offer him $50 to sign the title over to you so that he at least gets something out of it. You can tell him that otherwise you're just going to let the bank repossess it because you just don't feel like making the payments anymore and are willing to take the credit ding (even if it's a bluff). Or he could go to the bank and secure his own loan to pay off the existing loan and keep the car as his. The key is to give him options so that he doesn't feel like he's being forced into anything. If he thinks you're forcing him to give you the car, then he's likely to just drive it into the lake instead of giving it to you. If you give him options, then he's going to pick and choose whichever is best for him and be thankful that he didn't screw up by picking one of the less favorable options. Just make sure none of the options you give him leaves you in a sucky position.

Answer 3

Yes you need a lawyer. There are lots of protections that can be put into the note and/or loan agreement.

Generally, the first protection is not to do it; There's usually a reason why your "friend" can't get a loan from a bank.

In my experience when people lend money to a friend they usually lose the friend and the money.

Answer 4

I got burnt with one big time. Everything was legal but they hired a lawyer and I didn't. The note was 6 months past due so I took them to court and the judge said I should have hired a lawyer and I could have worked something out in stead of bring the people to court. I had to pay their lawyer fee of $2500 which was deducted from the amount they owed me. Nice judicial system we have.

Answer 5

To avoid problems, have an attorney draw up a contract. Remember that if she goes belly up in this venture, you will probably lose everything, because she will have no assets from which to pay you what is owed.