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J. Warren
J. Warren, Attorney
Category: Business Law
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Experience:  Experience in general business transaction and formation matters.
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I have a Secured Promissory Note and Security Agreement that

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I have a Secured Promissory Note and Security Agreement that I acquired through Legal Zoom.com. Everything is very straight forward regarding remedies in the occurrence of default except in the case of the borrower’s death. The only reference to the death of the borrower is in Section 9:

9. SUCCESSORS AND ASSIGNS.
All references in this Note to the Borrower and the Payee shall be deemed to include, as applicable, a reference to their respective successors and assigns. The provisions of this Note shall be binding upon and shall inure to the benefit of the successors and assigns of the Borrower and the Payee.

It is our intention that in the case of incapacitation or death of the borrower that I take over the management of the business until such time as I can get back the full loan amount either by income or by sale of the business. Does this reference to successors and assigns negate that intention? If so, shall I delete that section?
Submitted: 1 year ago.
Category: Business Law
Expert:  J. Warren replied 1 year ago.
Hello! Thank you for your question today. My goal is to provide you with the information you seek.

Please note: (1) this is general information only, not legal advice; and (2) I will provide you with honest information and not necessarily to tell you might be hoping to hear.

The provision does not negate the intention per se and would not be a provision that if I were the lender would want to delete. This provision helps protects lenders estate and heirs in the event of lender's death and the agreement is an asset of the estate and the beneficiaries of such can continue to collect from the Borrower. In addition, if a default is by incapacity/incompetent or death of borrower the terms are binding on the beneficiaries of the borrower which means default and takeover by the lender. The provision states the borrower's beneficiaries agree to all the terms of the agreement, including takeover by lender.

One could also request a specific power of attorney be executed from the borrower which permits the lender to takeover the business in the event borrower is declared incompetent.

All my best & encouragement.

Please note that you are asked to rate my courtesy and professionalism, and not whether the answer supports your legal position. I only receive credit when rated 3 or higher. If for any reason you feel that a 2 or 1 rating is appropriate, please first give me the opportunity to address your concerns by clicking the "reply" or “continue conversation” tab.

All states have intricacies in their laws and any information given is simply information only and specifically is not intended to be, nor does it constitute, legal advice. This communication does not establish an attorney-client relationship with you.

J. Warren, Attorney
Category: Business Law
Satisfied Customers: 1129
Experience: Experience in general business transaction and formation matters.
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