Promissory notes are IOU’s, the physical evidence that a transaction took place a debt is owned. In real estate, these notes state that a specific amount of money is owned to a specific person on a specific date. It also states interest, length of loan, the real estate used as the guarantee or the debt to be paid, the amount due after the interest has been met, and any default terms.
When there is owner financing and the lender is an individual, there may be a situations where the original note has been misplaced and lost. A replacement needs to be made with new documents to ensure that the debt remains in place or to enforce the debt should a foreclosure occur. In some instances, the holder of the note might be the only one able to enforce it. The note is also needed should the note holder decide to sell to another lender/investor cashing out either all or part of the note.
Seek professional advice to help get a replacement note. An Affidavit of Lost Promissory Note needs to be signed, notarized and recorded. This will include a statement that the original note has been lost, stolen, or damaged. The affidavit will also include the circumstances surrounding the loss using as much detail as possible. Details describing the lengths taken to look for the document as well as any other details about its’ disappearance should be included.
The Affidavit of Lost Promissory Note instructions are clear asking for information on the debt, what has been paid, what has not been paid, and that the note is not in default. The affidavit should state that the note has not been sold or transferred to another party. The purpose of the affidavit also is to get the borrower to sign the new note with the agreement that if the original note is found, the replacement note supersedes the original note and it will not be used as a separate debt.
If a copy exists, review it. In some notes, lost, stolen, or damaged notes may be addressed in the contract. This may include provisions that should such an instance occur, the borrower must sign the new promissory note. Include by attaching a copy of the note to the affidavit. This affidavit is to be notarized.
Once completed, it is ideal to place the note in a secure location such as a safe deposit box. A third party servicing company can also take care of safe keeping the note to ensure it does not get lost or damaged again.
