What Documents Are Used To Protect Investors?

There are three documents that are executed as part of the transaction between Legacy Capital and investors for each deal. These documents are used to protect investors capital and secure investment to physical real estate assets. Here we going into a little greater detail about each document and the purpose for each document:

  • Promissory Note

In addition to specifying the amount the investor has invested in a particular deal, the promissory note spells out the terms of the agreement between Legacy Capital and the investor. Some aspects that are covered in the promissory note include but not limited to; interest rate paid to investor, timing of payments, prepayment options, events of default and remedies in the event that the agreement is breached.

  • Security Agreement & Collateral Assignment

While the promissory note specified the payment terms, it is the security agreement and collateral assignment that makes the investor’s capital secured to a specific piece of real estate. Exhibit B specifies the address of the real estate that is used to collateralize the investment. Essentially, this document gives the investor Legacy Capital’s interest in the agreements signed with borrower in the event that the real estate must be collected to recapture investor capital.

  • ACH Form

The ACH Form is what Legacy Capital uses as instructions of where to deposit money back to investor on a monthly basis. The repayment to investors happens electronically so no physical checks need to be deposited, rather they show up on the 1st of month every month.

Just to clarify these three documents are used between Legacy Capital and investors, there are a completely different set of documents executed by borrower prior to Legacy Capital funding a real estate transaction. For more information on the documents used to secure real estate loans made to borrowers, you can read blog post here:

8 Steps To Making Real Estate Loan More Secure

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