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Promissory Notes & Trust Deeds


Can I buy or invest in deeds of trust, mortgage-backed notes or secured notes using funds from my account?

Yes. Deeds of trusts, mortgage-backed notes, and secured notes are non-exchange traded alternative asset investment options available to our customers with SDIRAs. The documents pertaining to the loan transaction, such as the promissory note (which may be written by the lender, borrower or a third party) represent a promise to repay the borrowed sum, and the terms associated with the repayment such as interest and maturity date.

You may invest in either secured or unsecured promissory notes through your IRA. Secured notes are backed by collateral, which are then received by the lender if the borrow fails to repay the loan. Unsecured notes are not backed by collateral, and should the borrower fail to repay the loan, the lender’s only option is to take legal action against the borrower in order to recover the funds.

As your SDIRA custodian, Forge Trust Co. will be happy to help you conduct a promissory note transaction: once the appropriate paperwork has been completed and signed, we can send funds to a borrower once we receive instructions to do so.

As this is a self-directed account, you are responsible for the prompt and timely collection under a promissory note. This includes initiating any legal actions to enforce your rights under the note.


Can I make a convertible note investment with funds from my account?

Yes. “Convertibles” are securities, usually bonds or preferred shares, that can be converted into common stock.


Can I make an unsecured loan to an individual or company with funds from my account?

Yes, you can make both secured and unsecured loans through your Forge Trust Co. SDIRA.


I invested in a Deed of Trust (or other secured note) with funds from my account, but the borrower is unable or has refused to pay me back. What are my options?

Depending on the specifics of the investment, you may have several options. In the event the secured note is backed by collateral, you may take possession of the collateral as specified in your agreement. If the transaction involves the purchase of real estate, it may be possible to force the borrower to sell the property in order to meet the obligations of the loan. Please consult an attorney or financial professional to help you explore these options further.