Drafting Documents for Loans: What Should You Know and How Can an Attorney Help?
A loan document should accompany any monetary loan. Whether you are a commercial or real estate lender or need to draft a contract document for a loan you will be issuing personally, here are some things you may need to know.
What Should Be Included in Drafted Loan Documents?
All loan documents should include some basic information and clauses, including:
Identification of the parties involved: The names of the lender and borrower(s) must be included. All parties should be identified by their full legal names, and their addresses are usually included also. The name of the lender’s company and its address should be listed.
The purpose of the loan: In this section of the loan application, you should identify the type of loan involved: an unsecured personal line of credit or a secured loan. If it is a real estate loan, you should state that the property will be used as collateral.
Dates: Important dates may include the date on which the loan was initiated, when it was approved, and the closing date. Dates may be listed at the beginning of the document or in the signature area.
Loan Amount: The loan’s principal amount is usually provided in the first paragraph.
Interest Rate: The interest is expressed as an annual percentage rate in the body of your loan document draft. It is essential to be aware of required federal and state laws that are in place regarding interest— you want the contract to be enforceable in court. Having the assistance of a knowledgeable loan document drafting attorney is extremely valuable in this area.
Terms of Repayment: The terms of repayment are usually listed in the body of your loan document draft. These terms should include monthly payments and any penalties for late or missed payments.
Default definitions: Default on an installment loan happens when the borrower fails to make a payment when it is due. The loan document should define default and detail the lender’s remedies in case of default.
Space for Signatures: Each party involved must have a space to sign the document. Areas for any witnesses to sign and for a notary attestation may also be included.
Benefits of Having an Experienced Attorney Draft Loan Documents
Working with a New York attorney in drafting loan documents improves clarity and reduces potential errors and risks. Professional loan drafting is critical for lenders to ensure measures are in place to pursue your rights in case of a loan default.
Loan documentation drafting also ensures that all legal matters are addressed and that lenders and borrowers thoroughly understand the terms. Legal professionals can also identify elements or terms that may be outside your best interests.
Contact the knowledgeable loan documentation attorneys at Danziger Legal PLLC to discuss your document drafting needs.