Full question:
My tenants are moving out June 8 and are a few months behind on rent and are requesting to use their security deposit for a month and a half rent. They requested to remodel the bathroom because the husband was in that line of work in lieu of paying 100.00 extra a month for their dog. Both are on disability. Wife is having a risky pregnancy and husband has disk problems from a car accident. They are moving to Colorado with his parents. I may not get anything but will a promissory note help? Do you have any other suggestions?
- Category: Debts and Credit
- Subcategory: Promissory Notes
- Date:
- State: New Jersey
Answer:
A promissory note can be either secured or unsecured. A secured note means that the borrower offers collateral, which can be taken if they fail to repay. If the borrower goes bankrupt, the lender might recover their loan value through the collateral instead of just a portion of the borrower's assets after debts are settled. Collateral can include various types of property, such as stocks or accounts receivable.
Both parties must sign the promissory note, and a notary should witness the signatures. The note can include a choice of law clause, specifying which jurisdiction's laws apply in case of disputes. This document can also be recorded where the property is located.
Payments can be structured in installments or as a lump sum. The terms might allow for smaller payments at the start and a larger payment at the end, known as a balloon payment. Additionally, you might consider including a confessed judgment agreement, which requires the borrower to waive defenses and accept a judgment against them if they fail to pay and the matter goes to court.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.