Interpretation Of Promissory Note
If you were the holder of a note with the following language, how much would you expect to receive as of 9/5/04?
"For value received, the undersigned promises to pay to the order of <YOU>, in legal tender, the sum of $4500, with interest accruing thereon at the monthly rate of 22.2225 percent. This Note commences March 5, 2004 (hereinafter "Commencement Date"
, and all obligations set forth herein are measured from this date. No payments of principle or interest are required to be paid until the due date, which due date is no later than 30 days after the Commencement Date..."
Thanks in advance for the input!
A citation from the state of Michigan about usury?
The note would appear to call for about $10,500. Clearly this was intended as a 30 day loan and the borrower has not paid in a timely fashion. Negotitate something reasonable and get your money. 266% per year is outrageous.
With all due respect to c'king, it may or may not be usurious.
Although usury law varies state to state, quite broadly, generally business loans are NOT subject to usury limits, and could be any rate agreed upon between parties.
In most states it would be illegally usurious if for consumer, personal, or residential purchase.
If it were to be subsequently found to be usurious, lender/note holder could legally collect no part of it, P or I.
[addsig]
No offense taken, John. and the Usury thing was ment at least in part in jest. I could come up with an even higher payoff figure by figuring the intersted compounded each month. My only point is that somebody has written a very onerous note and rather than attempt to squeeze every dime try to work with the debtor and be a mensch.
Ah, yes, Scrooge is alive and well!
Been spotted all over the place...rascal sure gets around doesn't he?
[addsig]
Thanks folks for the insight....validates my thoughts on the matter.
Cheers.
Just a spin on this question.
You hold a note building a $1000.01 in interest a month. But the real question is how much can you get for it?
Quote:
On 2004-09-03 14:11, titletopics wrote:
Just a spin on this question.
You hold a note building a $1000.01 in interest a month. But the real question is how much can you get for it?
You might find it more profitable to sell the note for anything over principal you can get for it (and your cost of the note) and let them deal with it. :-D
"You might find it more profitable to sell the note for anything over principal you can get for it (and your cost of the note) and let them deal with it. :-D "
Such a note would be very difficult to sell, as any experienced note buyer is going to be very leery of that incredible interest rate.
A usurious* note could not be sold to a buyer "holder in due course" and have the same legal standing as a buyer of a valid, legal, current note.
*Although this note may not be in any way usurious or illegal.
The buyer HIDC would have these protections: note debtor couldn't legally claim no consideration, failure of consideration, or other possible defenses that might be available to debtor against the original payee.
I'm constantly seeing sellers who've taken funny or odd, or very high LTV notes, with the thought in mind that they'd immediately sell them for big bucks...only to be informed by knowledgable folk in the note business that the note they're so proud of is not nearly as valuable as they may have thought.
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Well, guys I don't think our poster actually holds the note-- I think he is the debtor. You will note that he never says he owns the note, just asks for our interpretation then when we say, "don't worry about collecting all that interest take some money and run" he agrees.
So my guess is that 13935 is the borrower, who failed to make his payment iin a timely fashion has now closed his deal and wants to pay off the loan and is told that his creditor wants a lot of money.
So, 139.... here's what I would do, I'd get a cashiers check for what you think is fair (perhaps two months of this high rate, whatever) and I would deliver it tothe debtor. I'd ask for a release of the note and the balance but if I couldn't get it I'd go ahead and leave the check. Now the remaining balance of the unpaid interest is not enough money to be worth sueing over and I guess I'd negotiate from there. I would not pay nothing until you get a resolution on the chance that the judge affirms this rate and says you have to pay interest during the litigation period.
Actually, CommercialKing, I am the holder of the note
. This was originally a loan to my uncle that needed cash to complete a real estate transaction. He agreed to give me a grand for my time so I wrote the Note to reflect that as interest. Unfortunately, the closing dragged out for some months and he reassured me that he was comfortable paying the interest that was accruing.
My post was intended as a sanity check for me to ensure it means what it says but also to determine what's exactly owed so that I know what I am entitled to...that is not to say that I will attempt to collect the entire thing.
A tip that might be of help to you:
Every knowledgable note buyer requires, among his/her other due diligence, an Estoppel Letter, signed by debtor, to the effect that the debt is valid, he's claiming no defenses, he's current (or reason he's not), etc.
And he won't pay $1 without getting that estoppel letter.
So if there's not problem with your getting such a letter, your note might be of interest to note buyer.
A breach of contract in legal terms amounts to a broken promise to do or not do an act. Breaches of a contract are single, occurring at a single point in time, or continuing breaches. A lawsuit for breach of contract is a civil action and the remedies awarded are designed to place the injured party in the position they would be in if not for the breach. Remedies for contractual breaches are not designed to punish the breaching party. A contract legally enforceable promise, either made in writing or orally. However, certain promises must be reduced to writing in order to satisfy the Statute of Frauds, a rule of evidence that specifies certain matters must be evidenced by a written instrument.
You may consider a lawsuit if:
Characterizing a bad faith lawsuit as a tort or as a breach of contract may have numerous ramifications. These can include: the damages available, the applicable statute of limitations on bringing the claim, restrictions on who can sue, and the availability of various defenses. If characterized as a tort action, most states permit a broader range of damages for the individual bringing the lawsuit.
Four distinct theories of tort recovery have emerged in bad faith law. These areas of bad faith include: (1) fraud, (2) intentional infliction of emotional distress, (3) interference with a protected property interest, and (4) breach of good faith and fair dealing. Damages arising out of bad faith can include: loss of profits, loss of a business, loss of interest, loss of rents, damage to credit rating, loss of property, loss of use of property, defense costs, damages for emotional distress, and in some jurisdictions punitive damages. The only substantial limitation on the recovery of tort damages is the requirement of proving that the alleged bad faith proximately caused the damages claimed.
An agent is obligated to use reasonable care and diligence when pursuing the principal's affairs. The standard of care expected of a buyer's or seller's real estate broker is that of a competent real estate professional. By reason of his/her license, a broker is considered to have skill and expertise in real estate matters superior to that of the average person.
As an agent who represents others in their real estate dealings, a broker or salesperson is under a duty to use superior skill and knowledge while pursuing the principal's affairs. However, no broker is expected to perform tasks or know information outside the scope of his/her real estate license. Real estate licensees are not expected to perform services normally provided by engineers, lawyers, accountants, or other professionals. If concerns arise outside the scope of a broker's responsibility, the broker should acknowledge that and suggest that the principal seek assistance from a reliable outside source.
I'm confused... first you state that YOU are trying to sell a duplex.... then you complain that you can't reach the Seller.
What are you? The Buyer? The Seller? Or somewhere in between?
ShortSalePro,
I have edited the original message to eliminate the confusion. I am the seller.