Newton, NC asked in Contracts and Real Estate Law for North Carolina

Q: Promisorry note does not explicitly stipulate interest. Could I still be required to pay interest?

During an owner financed real estate transaction, I signed a deed of trust, a promisorry note, and a HUD-1 settlement statement.

The note states the "principle", $200,000, will be repaid over 120 months via monthly payments of $1,800. This results in a flat 8% interest rate if I paid for the full term. Great!

When looking over the documents, I noticed the first four items on the LOAN TERMS section of the HUD-1 (initial loan amount, loan term, interest rate, and initial monthly payment) was blank when I signed it.

I am concerned this document may have been modified after signing to reflect a higher interest rate or monthly payment. In the event of a contradiction, which document is binding (with regard to the deed of trust) , the promisorry note, or the HUD-1 settlement statement?

Could I still be required to pay (or be found in default for not paying) additional interest, if interest is not explicitly mentioned in the promisorry note?

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1 Lawyer Answer

A: The terms on the note will prevail over the other documents. In this case to remain current under the note all you need to do is pay the $1,600 monthly payment for 120 months.

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