With security provided by the property itself, trust deeds are secure, managed, fixed rate investments with none of the uncertainty and worry investors hate.
Unlike fly by night, unsecured investments, trust deeds have several major advantages:
A) Our security is tangible – property. Instead of a company that could fold, or shares which could lose their value in a downturn, the properties we use as security offer solid, long term value. Why be at the mercy of strikes, SEC investigations or new competitors when trust deeds offer security you can touch and feel?
B) Our security is covered by hazard insurance. In the event of a fire or any other hazard, our investors get paid back their principals by the insurance company. This turns a crisis into an easily managed return to the status quo.
C) The lien doesn’t disappear – and there is title insurance that proves that the lien is in first position, and the investor’s name is listed as the insured on the policy. In the event, that your lien is not in first position (this is exceedingly rare), you can put in a claim to the title company, and get your money back.
Here is what makes a Secured Promissory Note so special:
A Promissory Note is a negotiable instrument with special properties that make it the same as cash in the eyes of the law (Uniform Commercial Code). The definition provided in Negotiable Instruments Act, 1881 clearly expresses the characteristics of a promissory note. Section 4 of the Act defines it as:
An instrument, in writing, containing an unconditional undertaking, signed by the maker, to pay a certain sum of money, only to, or to the order of, a certain person, or to the bearer of the instrument.
The definite characteristics are noted below:
1. Written Instrument
The promissory note is a written instrument. The terms of the instrument and the extent of liability, the amount to be paid, the maker’s name, the payee’s name and the other relevant details are to be written down. The whole undertaking should be in writing.
2. Signed Instrument
The promissory note to be complete should be signed. The signature is the primary evidence which gives presumption that the maker has executed the document. A promissory note without signature loses validity.
3. Unconditional Undertaking
As per the definition of promissory note, it is clear that there should be an undertaking to pay money. That undertaking should be free from any type of conditions. If the undertaking is subjected to some qualifying conditions, the instrument loses its validity as a promissory note.
4. Express Declaration
There must be an express declaration or promise to pay the money to the payee. A mere implied undertaking will not qualify the instrument to be a promissory note. The declaration must be on the face of the instrument. It should be clear to whom the amount is to be paid and how much amount is to be paid.
5. Payee Is Certain
The payee should be a certain person. The instrument can be rightly called a promissory note only if a payee ascertained by name or designation is provided.
6. Amount is certain
In a promissory note the amount is certain. It should be a figure which can be calculated. Uncertain sum entered will not make an instrument a promissory note.
7. Mode of payment
The payment has to be in terms of money. Any other thing than money is not the medium of payment with respect to a promissory note.