The exciting part of a self directed promissory note is that you get to negotiate all loan terms including, but not limited to: loan amount, initial payment date, maturity date, interest rate and payment or amortization schedule. Once you have the terms set, you will want to use the following guidelines to ensure timely funding of your promissory note.
Download Quest IRA’s Internal Form:
The first step in funding this transaction is to make sure you have the vesting for the lender correct on the documents.
- You are not personally loaning the money, it is your IRA that is loaning the money. It will need to be vested in the name of the IRA to hold the asset. Thus, all documents must be registered as:
Quest IRA, Inc. FBO (Your Name) IRA (Your Account Number).
Submit Quest IRA’s Internal Form (Direction of Investment) along with the Promissory Note
- Please make sure all the necessary fields are completed on the Direction of Investment form for timely funding
- When the lenders tax ID or physical address is required, please use Quest IRA’s information:
- Tax ID: 61-1435028
- Address: 17171 Park Row, Ste 100 Houston, TX 77084
IMPORTANT: It is up to the client to determine if the interest rate on your promissory note complies with the applicable state laws, such as usury laws in Texas.
Items Needed for Funding Unsecured Notes:
2. Original signed promissory Note
Items Needed for Funding Secured Notes:
2. Promissory Note
3. Security agreement ( IE Deed of Trust) .
** If the transaction is closing at a third party agent like a title company or attorney office Quest IRA can accept unsigned copies of the note and deed of trust for funding. If there is not a third party involved then Quest IRA would need the original note and a copy of the signed deed of trust before funding. Quest IRA will also need to know who will be responsible for recording of the deed of trust..
Items Needed for Funding Existing Note:
2. Original deed of trust and Promissory note
3. Copy of the allonge and transfer of lien. Both of these items will put the note and Deed of trust into the name of your IRA..
How to service the promissory note? Quest IRA is not a loan servicer..
Clients do have a few options for ensuring payments get deposited into your IRA account:
- Quest IRA does not accept cash. Payments or deposits must be made by check, money order or ACH Funds.
- Payments can be sent directly to Quest IRA from the borrower and once deposited the client can monitor those payments with online access to their IRA account.
- The client may also have the borrower make check payments out to “Quest IRA FBO client name IRA # 12345-11” and hand those to you but, please be aware that you will be responsible for forwarding any payments to Quest IRA
- Payments can NEVER be deposited to your personal checking account.
- All payments must be forwarded to Quest IRA to be deposited.
- Lastly, the client can also elect to get a third party servicing agent. They will then have the responsibility to collect the payments checks for your IRA and forward all payments to Quest IRA..
- Procedures to Purchase Promissory Notes in your IRA
- Investor Awareness: Promissory Notes
- F.A.Q. for Promissory Notes
Submit Your Forms: All forms can be mailed or faxed to any of our locations or emailed to Transactions@QuestIRA.com.
Note: At this time E-signatures are NOT accepted.