1. amount owed
2. interest rate
3. Note due date
4. Payment plan
5. Late charge on monthly payments
6. Late charge if note not paid on time
7. Notice of Delinquency - This will notify you if the borrow is late on their senior notes
8. Due on sale clause
9. Borrower to keep insurance on property and provide you evidence
10. I would also put in the note that the property to be owner occupied so that the owner doesn't rent to someone else
11. If you need an attorney, recommend Roger Wintle 408-925-0146
Keller Williams Realty
Before you do anything, as the others have mentioned, it's a good idea to contact and hire an attorney. This is especially important since:
1) You and your friend do not appear to have initially agreed to set up the loan in this manner (it may have been a more casual arrangement) and
2) Filing a lien on the home can cause the first or primary lien holder to call the loan on the property, causing your friend to lose the home.
3) Filing liens and "perfecting" a security must follow the rules of the Uniform Commerical Code in the State of California, so while you CAN do this yourself, since we are talking about several hundred thousand dollars and the title company will not advise you on how this is done, it's best to do this properly with the help of an attorney.
Area Pro Realty-People's Choice
As Terri Vellios saide, you need to have a promissory note memorializing the terms of the loan and deed of trust naming you as beneficiary drawn up by either an attorney or a title company. Then record both with the county clerk recorder. This assumes that the property on which the loan was made is in California.
The promissory note is the instrument that spells out the terms of the loan. It includes the amount, length of the loan, whether it is fully amortizing, what late payment fees are, the interest rate, and the payments. The deed of trust is the is the instrument that "secures" the loan. It is through a deed of trust that you can get the property back using a non-judicial foreclosure process. Through that process, you would evict your friend for non-payment.
You really need to sit down with a real estate attorney who can explain all this in detail. You now have rights and responsibilities you must understand in order to protect yourself and maintain your relationship with your friend, which must be pretty special if you loaned that much money to her or him.
Please be sure you do the above so no one can later claim your loan was a gift. If you do not get everything down in writing, you may find yourself in a situation where the courts will not help you get your money or the home back if your friend ends up not paying. Generally speaking loans of this nature must be in a written contract or they "violate the statute of frauds" in which case the courts won't get involved to protect your interests. Written contracts also help keep the contracting memories from failing.
You must be a very good friend and generous person to have made the loan, now be a good business person and maintain a good friendship by going to an attorney to get a full understanding of the above and the documents recorded with the county recorder.
All the best to you.
The questions you posted can have many answers depending on several factors. You have received some very good answers and in my opinion you really need the advice of a real estate attorney.
Realty World/Blue Property Group