Business Documentation: Core Information for a Real Estate Investment Loan

Ensure that you have this accurate and certified business information to supply to your mortgage broker when applying for a loan.

Your business documentation is the most important collection of official information that you will assemble for the purpose of getting a real estate investment lone. Here, we will delineate the core documentation all investors should have in place when preparing to apply for an investment property mortgage.

Promissory Note

A promissory note supplies the lender certified proof that the borrower will repay the borrowed funds to the lender. The note commonly includes the total loan amount, amortization schedule, terms of repayment, and the interest rate. When a borrower signs a promissory note, a lender is able to then resell this loan on a secondary market. This is why borrowers should not sign more than one promissory note. If two lenders end up seeing that a single borrower has signed more than one note, then both can demand full repayment.

Non-Recourse Obligations

On occasion, a borrower’s obligations are considered non-recourse. This means that if a borrowed defaults on the loan, then the lender may take remedial advantage of the collateral as compensation. However, the lender cannot sue the borrower for a personal judgment for loan repayment. Non-recourse notes achieve climax when a high number of loans were securitized. Yet, even for such loans, there were often contingent details associated with the non-recourse aspect, such that the lender could pursue the borrower for damages caused by wrongful conduct.

Deed of Trust

This is what most borrowers refer to as a mortgage. The deed of trust certifies the borrower’s obligation to fulfill the terms of the loan through repayment by pledging the purchased property. In the event that the borrow defaults, a lender will most commonly foreclose on the property and assume the collateral in lieu of the note’s fulfillment.

Assignment of Leases and Rents

For commercial loans, lenders will commonly require borrowers to assign its interest in the leases of tenants. Yet, this document usually allows borrowers to collect and utilize rent income for business operations under the condition that the loan is not in default. Yet, the first obligation of the rent payments is often designated toward the principal of the loan.

Security Agreement

A security agreement is supplied by a borrower for personal property which is not attached to the building’s structure. This commonly includes fixed furniture such as refrigerators, beds, and other stationary fixtures connected to a utility.

UCC-1 Financing Statement

A lender will submit a UCC-1 Financing Statement in order to give notice of its lien on the borrower’s personal property in the event of a forfeiture of the note’s obligations.


Since most commercial borrowers are corporations with minimal liability, protected by the structure of a corporation or LLC, a lender will require that a company agent, investor, or owner become a guarantor for the agreement so that they become personally liable for the fulfillment of the note’s obligations.

Environmental Indemnity

This agreement requires borrowers to assume cost of environmental remedy in the case that the borrower somehow contaminates the property or makes it unsuitable for resale or rental. In the event that the property is foreclosed due to an unfulfilled note, the lender would then technically be responsible for the cost of environmental remediation. To accommodate this contingency in the risk calculation of the loan, the lender requires borrowers to indemnify such costs.


Use the list above as a checklist to ensure that you business documentation meets the minimum requirements that lenders uphold for determining the amount, length, and terms of an investment property mortgage. Schedule a consultation with one of our loan experts to build a profitable loan strategy for your 1031 Exchange.

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