Additional Clauses for Promissory Notes
Second Lien
The lien[s] securing this note [is/are] subordinate to the lien securing another note in the original principal amount of [amount] DOLLARS ($[amount]), dated [date], and executed by [name], payable to the order of [name].
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The lien securing this note is subordinate to the lien securing another note in the original principal amount of [amount] DOLLARS ($[amount]), dated [date], and executed by [name], payable to the order of [name], and described in a deed of trust recorded in [recording data] of the real property records of [county] County, Texas. If there is a default in payment of any part of principal or interest of that $[amount] note or a breach of any covenants contained in any instruments securing it, the debt evidenced by this note will immediately become payable at the option of Lender. If Borrower fails to perform any of Borrower’s obligations in that $[amount] note or in any instruments securing it, Lender may perform those obligations and be reimbursed by Borrower, on demand, at the Place for Payment for any amounts advanced, including attorney’s fees, plus interest on those amounts from the date of payment at the Annual Interest Rate on Matured, Unpaid Amounts. The amount to be reimbursed will be secured by all instruments securing this note.
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This note is the second of two notes that Borrower executed today in favor of Lender, and each lien securing payment of this note is and will remain subordinate to each lien securing payment of the first note in the original principal amount of [amount] DOLLARS ($[amount]).
Wraparound Lien
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The following paragraph is to be used for a wraparound loan transaction in conjunction with deed-of-trust forms, if modified as suggested in sections 8.3–8.5:4 in this manual. |
The lien[s] securing this note [is/are] subordinate to the lien[s] securing payment of the unpaid balance of a prior note in the original principal amount of [amount] DOLLARS ($[amount]), dated [date], and executed by [name], described in and secured by a deed of trust recorded in [recording data] of the real property records of [county] County, Texas. Borrower has not assumed payment of that prior note, but Lender is obligated to pay it according to its terms. If Lender defaults in payment of the prior note, Borrower has the right to cure the default and receive credit on this note. The subordinate lien[s] securing this note [is/are] also provided for in the warranty deed with vendor’s lien and deed of trust described above, which this note incorporates and is subject to.
Late Charge
If any installment becomes overdue for more than [number] days, at Lender’s option a late payment charge of $[amount] may be charged in order to defray the expense of handling the delinquent payment.
Guaranty of Payment
For value received, [I/we], [name[s]], [jointly and severally,] absolutely, irrevocably, and unconditionally guarantee payment of this note according to its terms to the same extent as if [I/we] were Borrower[s] on this note. [I/We] [jointly and severally] waive all demands and all notices, including notice of intention to accelerate maturity, notice of acceleration of maturity, notice of nonpayment or default, presentment for payment, protest, notice of protest, suit, and diligence. [I/We] also [jointly and severally] waive any notice of and defense based on the extension of time of payment or change in methods of payment or the release of any collateral securing this note and consent to all renewals, extensions, and other adjustments in the manner of payment of this note and any transfer of this note to any third party. This is an unconditional guaranty of payment and performance, not of collection, and it is an agreement of guaranty, not of suretyship. [I/We] [jointly and severally] waive defenses based on suretyship or impairment of collateral and all requirements of law, if any, that any collection efforts be made against Borrower or that any action be brought against Borrower before resorting to this guaranty, including rights under section 17.001 and chapter 43 of the Texas Civil Practice and Remedies Code and rule 31 of the Texas Rules of Civil Procedure.
[Name of guarantor]
Notice to Cure Default
Notwithstanding any other provision of this note, in the event of a default, before exercising any of Lender’s remedies under this note or any [deed of trust/security agreement/instrument] securing [include if applicable: or collateral to] it, Lender will first give Borrower written notice of default and Borrower will have ten days after notice is given in which to cure the default. If the default is not cured ten days after notice, (1) Borrower and each surety, endorser, and guarantor waive all demand for payment, presentation for payment, notice of intention to accelerate maturity, notice of acceleration of maturity, protest, and notice of protest, to the extent permitted by law [include if applicable: , and rights under sections 51.003, 51.004, and 51.005 of the Texas Property Code] [include if applicable: , and rights under section 17.001 and chapter 43 of the Texas Civil Practice and Remedies Code [and rule 31 of the Texas Rules of Civil Procedure]]; and (2) Lender may declare the unpaid principal balance, earned interest, and any other amounts owed on the note immediately due and may exercise all other rights and remedies available at law or in equity.
Reamortization
If the proceeds of a casualty or condemnation are applied to the Principal Amount of this note resulting in prepayment of more than 10 percent of the unpaid principal balance and more than one year remains until the Maturity Date, the unpaid principal balance will be reamortized over the remaining period of this note. The reamortization will be used to calculate the amount of the monthly payment that would be sufficient to pay in full the unpaid principal amount remaining on the prepayment date, plus interest, by the Maturity Date. The reduced payments of principal and interest to be made on this note as the result of the reamortization will be the new monthly amount, and the payments will begin the next month after the prepayment date.
Loan Agreements
This note is the [identify defined term from the loan agreement] note required under [specific provision] of a loan agreement of the same date as the note.
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The execution and delivery of this note are required under a loan agreement of the same date as the note.
Conflicts
If any provision of this note conflicts with any provision of a loan agreement, deed of trust, or security agreement of the same transaction between Lender and Borrower, the provisions of the [loan agreement/deed of trust/security agreement/note] will govern to the extent of the conflict.
Choice of Law
This note will be construed under the laws of the state of Texas, without regard to choice-of-law rules of any jurisdiction.
Attorney’s Fees (Consumer Loan under Texas Finance Code Chapter 342, Not Secured by a Lien on Real Estate)
Borrower also promises to pay court and other costs and attorney’s fees assessed by a court if an attorney is retained to collect or enforce the note. Borrower will pay Lender these expenses on demand at the Place for Payment. These expenses will become part of the debt evidenced by the note and will be secured by any security for payment.
Attorney’s Fees (Secondary Mortgage Loan under Texas Finance Code Chapter 342)
Borrower also promises to pay reasonable attorney’s fees and court and other costs and fees incurred if an attorney is retained who is not an employee of Lender to collect or enforce the note. Borrower will pay Lender these expenses on demand at the Place for Payment. These expenses will become part of the debt evidenced by the note and will be secured by any security for payment.
Notice to consumer: Under Texas law, if you consent to this agreement, you may be subject to a future rate as high as 24 percent per year.
Fair Credit Reporting Act Notice
Lender may report information about Borrower’s loan account to credit bureaus. Late payments, missed payments, or other defaults on this note may be reflected in your credit report.
Nonrecourse
Notwithstanding any other provision of this note, Lender may satisfy the debt evidenced by this note only by the enforcement of Lender’s rights in the [identify collateral] pursuant to [identify collateral documents], and Borrower will not be liable for a money judgment in the event of a default under this note or the [identify collateral documents].
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Notwithstanding any other provision of this note, Lender may satisfy the debt evidenced by this note only by the enforcement of Lender’s rights in the [identify collateral] pursuant to [identify collateral documents], and Borrower will not be liable for a money judgment in the event of a default in payment of the debt evidenced by this note; provided, however, Lender may recover against Borrower if Borrower defaults on Borrower’s obligation to [describe obligations, e.g., pay ad valorem taxes owed on the collateral].
Partial Recourse
Borrower has no personal liability for the obligations under this note or under the Deed of Trust, and no personal judgment may be taken and no claim for personal liability may be made against Borrower. Lender’s sole remedy for default under this note or the Deed of Trust is the foreclosure of the liens and security interests created hereunder. Exceptions to the foregoing provisions are limited to, and Borrower is liable for, the following: taxes, assessments, and charges for labor, materials, or other amounts that if unpaid may create an encumbrance against the collateral for this note; unpaid premiums for insurance required under the Deed of Trust; damage to the collateral for this note if any insurance required hereunder is not maintained; all rents, issues, profits, and income derived from the collateral for this note after a default occurs and not expended for operating expenses of the collateral for this note; tenant security deposits for leases of the collateral for this note; any condemnation or insurance proceeds not paid or applied as required hereunder; [include if applicable: damage to and depreciation of the collateral for this note beyond normal wear and tear caused by the negligence of Borrower or the failure of Borrower to keep the collateral for this note in good repair and condition; the return of or reimbursement for all personal property taken from the collateral for this note by or on behalf of Borrower;] damages resulting from any fraud or misrepresentation by Borrower; damages resulting from any breach of any warranty of title; interest on the note from the date of default through foreclosure, payment, or settlement of the debt; all interest on the note during any bankruptcy proceeding of Borrower and all reasonable attorney’s fees and expenses incurred as a result of Borrower’s bankruptcy; and all attorney’s fees and expenses incurred by Lender or other holder of the note to collect any of the foregoing amounts.
Spreading
All calculations of the rate of interest contracted for, charged, taken, reserved, or received in connection with this note that are made for the purpose of determining whether such rate exceeds the maximum nonusurious rate of interest permitted by law shall be made, to the extent permitted by applicable laws, by spreading, during the period of the full term of this note, all interest at any time contracted for, charged, taken, reserved, or received by Lender.