Posted by Abdenour on July 16, 2007 at 16:33:34:
I own a business note that that states “At the end of 5 years if the Borrower want to express their option to renew lease on store and cannot payoff the balance of the note, Borrower can renegotiate a 2nd note for the balance due on the first note at a new rate of 12% cap. Terms to follows”.
The end of 5 years is in a couple of weeks. I don’t believe the Borrower can pay the balloon. What are my options (and pitfalls to watch for) for extending the note ? Should I draft and have him sign a brand new note ? I don’t know if Borrower borrowed any additional money in the last 5 years. How do I make sure (if possible) that my loan has the same priority/superiority as it had in the last 5 years.
I am familiar with mortgages laws (in general investor terms), but not familiar with business notes ?
Should I just the same note I have, except change the date, names, loan amount, interest rate, payments, etc. ?
Or should I draft some kind of “allongement” (or whatever the right term is) for the existing note ?