The landlord must take into account that the security deposit will be made in the form of a promissory note (that is, this fact must also be clearly stated in the purchase agreement itself). A guarantee note must always be paid to the seller. That way, if the transaction is completed before the promissory note has been redeemed, the escrow company will have clear instructions from the Buyer and Seller regarding the disbursement of the funds. The purchase agreement shall specify the contingencies that either party must settle the elimination of contingencies.
Additions to the purchase agreement will identify whether or not those contingencies have been eliminated and this will determine which party will receive the disbursement of the guarantee. The company is a neutral third party, not a party to the transaction. Because the promissory note is a legally binding instrument, it acts as a repayment record for the borrower and can be applied to their credit history. If the buyer continuously pays the note on time and in accordance with the terms of the note, it will help establish you as a reliable borrower for future loans.
This is a Colorado form and can be used in real estate across the state. I understand that the guarantee money is put in place to protect the seller in the event that the buyer “gets out”, and it seems that it would be very difficult for him to collect with a promissory note. The main difference between a promissory note and a bank loan is that promissory notes allow anyone to become a lender of money or property and the only limiting factor is the lender's own discretion as to whom to lend and what the terms of the repayment will be. The guarantee money ends up in clients' trust accounts because, according to OAR 863-015-0255 (a real estate agent must transmit to his principal real estate agent any money, checks, orders, promissory notes, or other consideration that comes into his possession.
Once a strong repayment history has been established, the borrower can refinance the promissory note with a traditional mortgage if desired and pay the seller in full. The promissory note or promissory note is a binding legal instrument that acts as a borrower's promise to repay a private loan to a lender. The promissory note form dictates all the terms necessary for repayment of the loan, as well as the consequences of not repaying the loan. The buyer gives an advance to the seller that acts as a gesture of good faith and as a guarantee for the reimbursement of the promissory note.
Ask the buyer to hand over the promissory note to your real estate agent and then ask your agent to give you 1% cash. The deed to the house also acts as security on the promissory note and, in the event that the buyer defaults, the seller keeps the deed and the down payment. Promissory notes are instruments that allow people to lend and borrow money outside of normal channels based on the merits of the person borrowing the money and the guarantee they are placing.
