The Complete Guide to Hard Money
& Private Money Loan Documents

By Anthony Geraci, Managing Partner & CEO, Geraci LLP  |  May 2025

If you're originating hard money loans or private money loans — whether fix-and-flip, bridge, or short-term investment property loans — your documents are the foundation of every deal. They determine whether you can enforce your loan if things go wrong, whether you're compliant with state and federal regulations, and whether your portfolio is protected against legal challenges.

After 30+ years of drafting, litigating, and enforcing private money lending documents at Geraci LLP, I've seen firsthand what happens when lenders cut corners on documentation. This guide covers every document you need, what each one does, and why getting them right is non-negotiable.

Related: Deed of Trust vs. Mortgage: State-by-State Guide  |  Fix-and-Flip Loan Documents Checklist  |  Private Money Lender Compliance Guide 2026

The Core Document Package

1. Promissory Note

The promissory note is the borrower's legally binding promise to repay the loan. It establishes the principal amount, interest rate, payment schedule, maturity date, default provisions, and late fee structures. Without a properly drafted promissory note, you don't have an enforceable loan — period.

Key provisions to watch: prepayment penalties, default interest rates, acceleration clauses, and waiver of presentment. Each of these can vary significantly by state, and getting them wrong can render portions of your note unenforceable.

2. Deed of Trust or Mortgage

This is the security instrument that ties the loan to the real property collateral. In "deed of trust" states (like California, Texas, and Arizona), a third-party trustee holds title until the loan is repaid. In "mortgage" states (like New York and Florida), the borrower grants a lien to the lender.

The distinction matters enormously for foreclosure. Deed of trust states generally allow non-judicial foreclosure — faster and less expensive. Mortgage states typically require judicial foreclosure through the court system, which can take months or even years.

Your deed of trust or mortgage must be properly drafted for the specific state where the property sits. Using a California deed of trust on a Texas property is a recipe for an unenforceable security interest.

3. Loan Agreement

While the promissory note covers repayment terms and the deed of trust covers collateral, the loan agreement fills in everything else: representations and warranties, covenants, conditions to closing, events of default beyond non-payment, insurance requirements, and environmental provisions.

For hard money lenders, the loan agreement is where you set the rules of engagement. It's where you require the borrower to maintain insurance, prohibit additional liens, mandate property maintenance, and define what constitutes a default beyond simply missing a payment.

4. Personal Guaranty

Most hard money loans are made to LLCs or other entities — which means the entity, not the individual, is the borrower. A personal guaranty from the principals ensures you have recourse against the actual people behind the deal if the entity defaults and the collateral is insufficient.

Without a guaranty, your recovery is limited to whatever the property sells for at foreclosure. With a well-drafted guaranty, you can pursue the guarantor's personal assets — a critical backstop that experienced lenders never skip.

Required Disclosures & Compliance Documents

5. State-Specific Disclosures

Many states require specific disclosures for private lending transactions. California, for example, requires a Mortgage Loan Disclosure Statement (MLDS) for certain broker-arranged loans. Other states have their own disclosure requirements that vary based on loan type, property type, and borrower type.

Missing a required disclosure can give the borrower grounds to rescind the loan, avoid paying interest, or claim damages. This is one area where state-by-state compliance is absolutely critical — and where most template-based approaches fall dangerously short.

6. Compliance Riders

Compliance riders are addenda attached to your core documents that address state-specific regulatory requirements. They cover usury limits, licensing disclosures, right-to-cure provisions, and other jurisdiction-specific rules that vary from state to state.

A lender operating in multiple states needs different compliance riders for each jurisdiction. This is one of the most operationally complex parts of private lending documentation — and one of the primary reasons lenders turn to automated platforms rather than trying to maintain 50 different sets of riders manually.

Specialized Documents

7. Construction & Draw Documents

If you're lending on construction or renovation projects, you need documents that go beyond a standard loan package. Draw agreements, holdback provisions, completion guarantees, and inspection requirements all need to be documented. The draw schedule should tie disbursements to verified completion milestones — not just borrower requests.

8. Extension & Modification Agreements

Loans don't always go according to plan. When a borrower needs more time, or when terms need to change mid-loan, you need a properly drafted extension or modification agreement that preserves your existing security interest while documenting the new terms. A handshake or email exchange is not sufficient — and can actually undermine your legal position.

The Cost of Getting It Wrong

In 30+ years of private money lending litigation, the most common problems I see are lenders using generic templates that don't account for state-specific requirements, documents that are internally inconsistent (the note says one thing, the deed of trust says another), missing disclosures that give borrowers legal ammunition, and guaranties that are unenforceable because they weren't properly drafted.

Every one of these issues is preventable with properly drafted, state-compliant loan documents. The cost of fixing a bad document in litigation is orders of magnitude higher than the cost of getting it right from the start.

How Automate Loan Docs Solves This

Automate Loan Docs was built specifically to solve the documentation challenges private lenders face. Every template in the platform was drafted by the attorneys at Geraci LLP — the same attorneys who enforce these documents in court. The platform's AI-powered compliance engine automatically applies state-specific requirements, disclosures, and riders to every document package you generate.

The result: closing-ready, litigation-tested loan documents in minutes — not days. For any state. For any loan type.