Family Loan - how to secure?

[hookedbyfamily]

What is the name of your state (only U.S. law)? Texas - I loaned money to a relative (yep, I know!) for use with a commercial property he owns. I would like to secure this loan against the property (2nd behind mortgage with equity), but am not sure where to start. He is willing to enter into an agreement, but I want to make sure any agreement/contract we enter into is legally sound. What are the steps I should take?

Thanks!

 

[tranquility]

See an attorney.

You might not be able to "secure" the loan in the way you want. Even if there is a signed agreement at this time, what did you give up to get it? There may not be consideration for a contract to be enforceable. (You could work around that fact, but that's why you want an attorney.)

 

[hookedbyfamily]

See an attourney... OK, but...

Real Estate? Credit/collections? I am basically trying to make sure that if/when the property sells, that I get paid before funds are used for other purposes. I am trying to "get in line" behind the holder of the note on the property. I am not sure I understand what you mean by "what did you give up to get it". Do you mean to get the signed agreement?

 

[Zigner]

You would want to consult with a real-estate attorney.

 

[hookedbyfamily]

Thanks...

...for the fast answers!

 

[tranquility]

Do you mean to get the signed agreement?

Yes. The loan is already in place. You want security for something already in existence. You can't just make the deal better for you even if the other party agrees to it because it would not be enforceable.

See an attorney. Again, I am uncertain you can secure at this time. But, you might be able to work around the problems with an attorney who has access to all the facts.

 

[HomeGuru]

To OP:

Have an attorney draft a mortgage and note, once all parties sign have it recorded.

You ar enot entitlted to any equity in the property, unless that was the deal. If so, you should also be on title.

 

[ashlay]

It is secure a family loan is any loan between family members. It does not matter what the money is for. It is just a loan does not use a bank or other traditional lender.

 

[nextwife]

It is secure a family loan is any loan between family members. It does not matter what the money is for. It is just a loan does not use a bank or other traditional lender.

Actually, if securing a loan, it DOES matter what it is for. Regardless whether a loan between family members,. A purchase money mortgage, for example, is different than funds given to refinance or pay off a current open mortgage. Or funds to buy a car. How one secures it may be dependent upon what one used the funds for.