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Promissory Notes in your Quest Trust Company IRA

Congratulations on Taking Control of Your Retirement! 

Promissory notes are great investments for self-directed IRAs! The exciting part of a self directed promissory note is that you get to negotiate all loan terms including, but not limited to: loan amount, initial payment date, maturity date, interest rate and payment or amortization schedule. Once you have the terms set, you will want to use the following guidelines to ensure timely funding of your promissory note.

Please see below for information on purchasing promissory notes with your IRA.

Funding Promissory Notes
The first step in funding this transaction is to make sure you have the vesting for the lender correct on the documents.

  •  You are not personally loaning the money, it is your IRA that is loaning the money. It will need to be vested in the name of the IRA to hold the asset. Thus, all documents must be registered as:
    • Quest Trust Company FBO (Your Name) IRA (Your Account Number)
  • When the lenders tax ID or physical address is required, please use Quest Trust Company’s information:
    • Tax ID: 61-1435085
    • Address: 17171 Park Row, Ste 100 Houston, TX 77084

IMPORTANT: It is up to the client to determine if the interest rate on your promissory note complies with the applicable state laws, such as usury laws in Texas.

Items Needed for Funding Notes

Funding Secured Notes:

  1. Submit a new Promissory Note investment – located in your Client Portal
  2. Promissory Note
  3. Security agreement ( IE Deed of Trust) .

** If the transaction is closing at a third party agent like a title company or attorney’s office, executed copies of the note and deed of trust must be submitted within 30 days. If there is not a third party involved then Quest Trust Company would need the original note and a copy of the signed deed of trust before funding. Quest Trust Company will also need to know who will be responsible for recording of the deed of trust.

Funding Unsecured Notes:

  1. Submit the Promissory Note investment – located in your Client Portal
  2. Original signed promissory Note

We must have executed copies of documents before funding can occur.

Funding Existing Notes:

  1. Submit the Promissory Note investment – located in your Client Portal
  2. Existing Deed of Trust and Existing Promissory Note
  3. Copy of the allonge and transfer of lien. Both of these items will put the note and Deed of trust into the name of your IRA.

We must have executed copies of documents before funding can occur.Que

Servicing the Promissory Note
tHow to service the promissory note? Quest Trust Company is not a loan servicer..

Clients do have a few options for ensuring payments get deposited into your IRA account:

  • Quest Trust Company does not accept cash. Payments or deposits must be made by check, money order or ACH Funds.
  • Payments can be sent directly to Quest Trust Company from the borrower and once deposited the client can monitor those payments with online access to their IRA account.
  • The client may also have the borrower make check payments out to “Quest Trust Company, Inc. FBO client name IRA # 12345-11” and hand those to you but, please be aware that you will be responsible for forwarding any payments to Quest Trust Company
  • Payments can NEVER be deposited to your personal checking account.
  • All payments must be forwarded to Quest Trust Company to be deposited.
  • Lastly, the client can also elect to get a third party servicing agent. They will then have the responsibility to collect the payments checks for your IRA and forward all payments to Quest Trust Company.
Resources

Resources:

Here are some additional resources for you as you complete your promissory note investment

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Submit Investment Documents:

DISCLAIMER: Quest Trust Company does not render tax, legal, accounting, investment, or other professional advice. If tax, legal, accounting, investment, or other similar expert assistance is required, the services of a competent professional should be sought.