Security Instruments

Security Instruments and California Real Estate

Promissory Notes – Whenever someone borrows money, whether from private or institutional lender, the borrower will usually be asked to sign a document agreeing, or promising, to pay the money back.  This agreement in writing is the “PROMISSORY NOTE” and sets forth terms of repayment and other conditions or provisions agreed to between the borrower (obligor) and the lender.

Evidence of the Debt – This PROMISSORY NOTE is the evidence of the debt and as a NEGOTIABLE INSTRUCMENT is governed by article 3 of the U.S. Uniform Commercial Code (UCC).  This note is signed but usually not recorded.

The Promissory Note will contain the following:  (a)  the amount of the loan, (b) the interest rate, (c) the maturity date, (d) amount of the periodic payment, (e) to who and where the payment is to be sent, (f) what are rights and obligations of the parties with respect to default, and (g) other terms and conditions, such as prepayment penalty or a due-on-sale clause.


By Harrison K. Long – Professional real estate representative, REALTOR and broker associate, HomeSmart Evergreen Realty – 949-701-2515 (phone) – – CALBRE #01410855 – Now serving as an appointed director at the California Association of Realtors – also an attorney member of the California State Bar association #69137

This is for information only and is not the providing of legal or tax services.  You must consult with an attorney or income tax professional if you want to determine your own rights and responsibilities in California real estate.

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