[TX] [TX] If a borrower defaults, do I get to keep the money?
How do I add a default clause in this? I want to put in that if he does not pay and must default, I want to make sure what he has paid in stays with me. He is my son, but still, life could change!!!
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There is never an obligation to repay prior payments back to the borrower if they default. This is the typical Default provision in a Note:
DEFAULT. The Borrower shall be deemed in default under this Note upon the occurrence of any of the following events (“Default”):
(a) Failure to make any scheduled monthly payment within ten (10) calendar days after its due date;
(b) Failure to comply with any other material term or covenant of this Note or any related agreement;
(c) Insolvency, bankruptcy filing, or assignment for the benefit of creditors by the Borrower.
Upon Default, the Lender may, at its sole discretion and without further notice:
(i) Declare the entire unpaid principal balance, accrued interest, and any other charges immediately due and payable (“Acceleration”);
(ii) Impose a late charge equal to five percent (5%) of the overdue payment if not received within ten (10) days of the due date;
(iii) Terminate Borrower’s rights to consummate the purchase and enforce any security interest or collateral rights provided under this Note or any related agreement;
(iv) Pursue legal remedies including but not limited to collection actions, foreclosure, or judgment enforcement.
The Borrower agrees to pay all reasonable costs of collection, including attorney’s fees, incurred by the Lender in enforcing this Note following Default.
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How do I add a default clause in this? I want to put in that if he does not pay and must default, I want to make sure what he has paid in stays with me. He is my son, but still, life could change!!!
Lexi, Chatbot
I understand your concern about adding a default clause. Have you already drafted a contract or agreement with your son regarding payments?
That is what I am doing now with you all.
Lexi, Chatbot
Are you looking to include specific consequences for non-payment in the default clause, such as forfeiture of any payments made?
Yes
Lexi, Chatbot
Is there anything else the Lawyer should know before I connect you? Rest assured they’ll be able to help with your default clause.
No other questions
Lori
Hey there! Welcome! I’m Lori, an attorney with many years of experience, and I’m here to help you. I am on live with you today.
- What city/state are you located in?
- What document are you trying to add a default clause to? A promissory note?
Texas
Promissory note between mother and son in buying the mobile home
Lori
Gotcha. Is it for payment over time with monthly payments? Or a demand note?
Over time (36 months) at 1,000.00, zero interest
Lori
Understood. Thanks for the information. Please give me some time to review/do some research and to draft my personalized response. I will get back to you as soon as possible.
Will it be shortly or a long wait? No offense, but I am trying to get this done today. You know, wait till the last witching hour! ha
Lori
Working on it now.
Lori
There is never an obligation to repay prior payments back to the borrower if they default. This is the typical Default provision in a Note:
DEFAULT. The Borrower shall be deemed in default under this Note upon the occurrence of any of the following events (“Default”):
(a) Failure to make any scheduled monthly payment within ten (10) calendar days after its due date;
(b) Failure to comply with any other material term or covenant of this Note or any related agreement;
(c) Insolvency, bankruptcy filing, or assignment for the benefit of creditors by the Borrower.
Upon Default, the Lender may, at its sole discretion and without further notice:
(i) Declare the entire unpaid principal balance, accrued interest, and any other charges immediately due and payable (“Acceleration”);
(ii) Impose a late charge equal to five percent (5%) of the overdue payment if not received within ten (10) days of the due date;
(iii) Terminate Borrower’s rights to consummate the purchase and enforce any security interest or collateral rights provided under this Note or any related agreement;
(iv) Pursue legal remedies including but not limited to collection actions, foreclosure, or judgment enforcement.
The Borrower agrees to pay all reasonable costs of collection, including attorney’s fees, incurred by the Lender in enforcing this Note following Default.
Have I answered your question?
Perfect. Thank you so much
Lori
You are welcome. Thank you for allowing me to assist you today. Have a nice day!
You too.
Lori
Ty.
Lori
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