[WSBARP] Modification of Proposed Promissory Note

[Paul Neumiller]

Listmates, comments would be greatly appreciated if I have missed any issues. Family member is buying a residence from elderly relative for FMV with the Seller carrying the loan.  Parties agree that if elderly seller dies during the course of the loan, the loan is forgiven.  (Client has already consulted with a tax advisor as to the tax implications of the forgiveness of the debt.)  Is the addition of this language to the standard LPB Form 28A Promissory Note enough?:

"If [name] dies at any time during the term of the loan evidenced by this Promissory Note while there is an outstanding balance of principal and accrued interest, the outstanding balance shall be forgiven.  Upon [name]'s death, [name]'s heirs or personal representative shall surrender this Promissory Note marked "paid in full" and the deed of trust securing this Promissory Note to the trustee under the deed of trust for cancellation and reconveyance. Maker shall be responsible for the payment of all trustee costs and fees and recording costs associated with the cancellation and reconveyance of this Promissory Note."


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