Private Lending & Mortgage Glossary

This glossary explains common California private lending, mortgage, bridge lending, hard money lending, construction lending, trust deed, and real estate finance terms. It is intended as a practical reference for borrowers, brokers, referral partners, and investors reviewing California real estate-secured lending transactions.

Use the sections below to quickly find definitions related to private money loans, loan structure, underwriting, valuation, construction lending, trust deeds, foreclosure, investor terminology, and borrower documentation. For general program information, review our Hard Money Loan Programs, Hard Money Construction Loans, or Trust Deed Investments pages.

This glossary is for general educational purposes only and should not be treated as legal, tax, investment, or financial advice. California lending, foreclosure, title, lien, and securities issues can be fact-specific. Specific loan terms, rights, remedies, and obligations are controlled by the applicable loan documents, transaction documents, and law.

California Private Lending Terms

California Bridge Loan

A California bridge loan is short-term real estate financing secured by California property and used to bridge a timing gap, such as purchase, refinance, construction, renovation, stabilization, or sale. California bridge loans are often evaluated based on collateral value, borrower equity, lien position, title, exit strategy, and transaction timing.

California Hard Money Loan

A California hard money loan is a private, real estate-secured loan secured by California property. These loans are often used when the borrower, property, timing, or transaction structure does not fit conventional bank lending, subject to underwriting, collateral review, documentation, and applicable law.

California Private Money Lender

A California private money lender is a lender that provides real estate-secured financing outside the traditional bank lending process. In California, private money loans are commonly secured by a deed of trust and may be used for bridge, construction, rehab, acquisition, refinance, or business-purpose real estate transactions.

California Deed of Trust

A California deed of trust is a security instrument commonly used to secure repayment of a real estate loan. It generally involves the trustor, beneficiary, and trustee, and it is commonly used instead of a mortgage in California real estate lending transactions.

California Nonjudicial Foreclosure

California nonjudicial foreclosure is a foreclosure process that may be available under a deed of trust with a power of sale. The process generally involves recorded notices, statutory timing requirements, and a trustee’s sale if the default is not resolved. The exact rights, notices, timing, and remedies depend on the loan documents, property type, borrower status, and applicable law.

California Business-Purpose Loan

A California business-purpose loan is a loan made primarily for business, commercial, or investment purposes rather than personal, family, or household use. Business-purpose classification can affect compliance, documentation, licensing, and consumer-protection analysis, so lenders and borrowers should evaluate the actual purpose and structure of the transaction.

Bridge & Private Money Loan Terms

Asset-Based Lending

Asset-based lending is a lending approach where the value, equity, and marketability of the collateral are primary underwriting factors. In private real estate lending, the property often carries more weight than borrower income alone.

Bridge Loan

A bridge loan is a short-term real estate loan used to bridge a timing gap, such as acquiring, refinancing, renovating, stabilizing, or selling a California property before long-term financing or another exit is available.

Business-Purpose Loan

A business-purpose loan is a loan made primarily for business, commercial, or investment purposes rather than personal, family, or household use. Many California private money and bridge loans are structured as business-purpose loans, subject to the facts, documentation, and applicable compliance requirements.

Commercial Lender

A commercial lender provides financing for business-purpose or commercial real estate transactions. Commercial lenders may evaluate collateral, borrower strength, property income, market conditions, loan purpose, and exit strategy.

Hard Money Loan

A hard money loan is a short-term real estate loan usually made by a private lender and secured by real property. In California, hard money loans are often secured by a deed of trust and used when timing, property condition, borrower profile, or transaction complexity does not fit conventional lending.

Hard Money Lender

A hard money lender is a private or non-bank lender that provides real estate-secured loans, often with a focus on collateral value, borrower equity, timing, and exit strategy.

Non-Conforming Loan

A non-conforming loan is a loan that does not meet the standard guidelines of conventional or institutional lenders. Private lending may provide flexibility for certain non-conforming scenarios, subject to collateral, equity, documentation, and lender approval.

Non-Owner-Occupied Loan

A non-owner-occupied loan is a loan secured by property that is not occupied by the borrower as a primary residence. Many private money and business-purpose real estate loans are secured by non-owner-occupied properties.

Private Money Loan

A private money loan is a loan made by a private lender rather than a conventional bank or institutional lender. California private money loans are often secured by real estate and used for bridge, construction, investment, refinance, or time-sensitive transactions.

Short-Term Loan

A short-term loan is a loan with a shorter repayment period than conventional long-term financing. Bridge, construction, rehab, and private money loans are often short-term loans intended to be repaid through sale, refinance, stabilization, or another exit event.

Short-Term Rental Loan

A short-term rental loan is a loan secured by property used or intended to be used as a short-term rental. Underwriting may consider property value, income potential, market demand, regulations, borrower strength, and exit strategy.

Loan Payment & Term Terms

Acceleration Clause

An acceleration clause is a loan provision that may allow a lender to require the full loan balance to become immediately due if the borrower defaults or violates certain loan terms, such as failing to make payments, transferring the property without consent, failing to maintain insurance, or violating other loan covenants.

Amortization

Amortization is the process of paying down a loan over time through scheduled payments. In a fully amortizing loan, each payment typically includes both principal and interest.

Balloon Payment

A balloon payment is a lump-sum payment due at the end of a loan term. Many bridge and private money loans are interest-only during the term, with the principal balance due at maturity.

Default Interest

Default interest is an increased interest rate that may apply after a borrower defaults under the loan documents, subject to the terms of the loan and applicable law.

Extension Fee

An extension fee is a fee that may be charged if a loan maturity date is extended. Extensions are typically subject to lender approval, payment status, updated underwriting, and satisfaction of required conditions.

Extension Option

An extension option is a provision that may allow the borrower to extend the maturity date of the loan if specific conditions are met. Extension options are typically subject to lender approval, fees, payment status, and other loan requirements.

Interest-Only Loan

An interest-only loan is a loan where the borrower pays only interest during the loan term, with the principal balance due at maturity, payoff, sale, or refinance.

Interest Rate

The interest rate is the cost charged by the lender for borrowing money, usually expressed as an annual percentage of the loan balance.

Interest Reserve

An interest reserve is a portion of loan proceeds set aside to make interest payments during part or all of the loan term. Interest reserves are common in California construction and bridge loans where the property may not yet generate sufficient cash flow.

Maturity Date

The maturity date is the date when the loan balance becomes due and payable.

Points

Points are loan fees expressed as a percentage of the loan amount. One point equals one percent of the loan amount.

Prepayment Penalty

A prepayment penalty is a fee or charge owed if a borrower pays off a loan before a specified date or period. Private money and bridge loans may or may not include prepayment penalties depending on the loan structure.

Term

The term is the length of time between loan origination and the maturity date. Bridge, hard money, and construction loans are often shorter-term loans compared to conventional permanent financing.

Loan Metrics & Underwriting Terms

After Repair Value (ARV)

After Repair Value, or ARV, is the estimated value of a property after proposed construction, renovation, or rehabilitation work has been completed. ARV is commonly used in construction, fix-and-flip, and value-add bridge lending.

As-Is Value

As-is value is the estimated current value of a property in its existing condition, before any proposed improvements, repairs, leasing, or stabilization.

Basis

Basis refers to the borrower’s total cost position in the property, which may include purchase price, closing costs, improvement costs, and other capital invested. A borrower’s basis helps a lender evaluate equity, risk, and incentive alignment.

Borrower Equity

Borrower equity is the borrower’s financial stake in the property. Strong borrower equity can reduce lender risk because the borrower has capital at risk behind the loan.

Borrower Liquidity

Borrower liquidity refers to the borrower’s available cash or liquid assets. Liquidity is important because it helps determine whether the borrower can handle payments, delays, cost overruns, carrying costs, and unexpected issues.

Combined Loan-to-Value (CLTV)

Combined Loan-to-Value, or CLTV, is the ratio of all loans secured by the property compared to the property’s value. CLTV is especially important when there is a first trust deed and a second trust deed.

Debt Service

Debt service is the amount required to pay principal, interest, and other required loan payments during a given period.

Debt Service Coverage Ratio (DSCR)

Debt Service Coverage Ratio, or DSCR, is a ratio comparing a property’s net operating income to its debt service. DSCR is commonly used for income-producing commercial and rental properties.

Due Diligence

Due diligence is the investigation and verification process performed before funding a loan. Due diligence may include title review, valuation review, borrower review, entity documents, insurance, property condition, permits, leases, litigation searches, and exit strategy review.

Equity Cushion

Equity cushion is the value remaining in the property above the lender’s loan amount and senior liens. A larger equity cushion can help protect the lender if the borrower defaults or the property must be sold.

Exit Strategy

An exit strategy is the borrower’s plan to repay the loan. Common exit strategies include sale, refinance, stabilization, completion of construction, lease-up, or payoff from other capital sources.

Experience

Experience refers to the borrower’s or sponsor’s track record with similar real estate transactions, property types, construction projects, or investment strategies. Experience is often an important underwriting factor in private lending.

Leverage

Leverage is the amount of debt used in relation to the value or cost of the property. Higher leverage generally increases lender risk.

Loan-to-Cost (LTC)

Loan-to-Cost, or LTC, is the ratio of the loan amount to the borrower’s total project cost. LTC is commonly used in construction and rehab lending.

Loan-to-Value (LTV)

Loan-to-Value, or LTV, is the ratio of the loan amount to the value of the property securing the loan. LTV is a core underwriting metric in real estate lending.

Net Operating Income (NOI)

Net Operating Income, or NOI, is the income generated by an income-producing property after operating expenses, but before debt service, depreciation, and income taxes.

Sponsor

A sponsor is the person or entity responsible for executing the real estate business plan. In private lending, sponsor strength may include experience, liquidity, credit profile, track record, and ability to solve problems.

Stabilization

Stabilization is the process of improving a property to a more financeable or marketable condition, often through lease-up, repairs, renovation, entitlement, or operational improvement.

Underwriting

Underwriting is the lender’s process for evaluating the borrower, collateral, loan structure, exit strategy, market conditions, and overall risk before making a lending decision. In California private lending, underwriting often includes review of collateral value, lien position, title, borrower equity, entity authority, insurance, property condition, and exit strategy. FK Capital’s underwriting philosophy is focused on collateral strength, borrower experience, exit strategy, and disciplined risk review.

Valuation & Property Review Terms

Appraisal

An appraisal is an opinion of property value prepared by a licensed or certified appraiser. Appraisals may consider comparable sales, income, replacement cost, market conditions, and property characteristics.

Broker Price Opinion (BPO)

A Broker Price Opinion, or BPO, is an opinion of property value typically prepared by a real estate broker or agent. A BPO may be used as one valuation reference point, but it is not the same as a formal appraisal.

Comparable Sales

Comparable sales, often called comps, are recently sold properties used to help estimate the value of a subject property. The most relevant comps usually have similar location, size, condition, property type, and market timing.

Fair Market Value

Fair market value is the estimated price a property would likely sell for between a willing buyer and a willing seller under normal market conditions.

Market Value

Market value is the estimated value of a property based on market conditions, comparable sales, income potential, property condition, and other relevant valuation factors. Market value may be supported by an appraisal, broker opinion of value, comparable sales, income analysis, or other market data.

Property Condition

Property condition refers to the physical condition of the collateral, including habitability, maintenance, deferred repairs, construction status, safety issues, and marketability.

Valuation

Valuation is the process of estimating a property’s value. Valuation may involve an appraisal, broker opinion of value, comparable sales, income analysis, replacement cost, or other market data.

Construction & Rehab Lending Terms

Completion Risk

Completion risk is the risk that a construction or renovation project will not be completed on time, on budget, or according to plan. Completion risk is a major underwriting factor in construction and rehab loans.

Construction Budget

A construction budget is a detailed estimate of the costs required to complete a construction or renovation project. Lenders may review the budget for completeness, realism, contingency, and alignment with the proposed scope of work.

Construction Draw

A construction draw is a partial disbursement of loan proceeds used to fund construction work as the project progresses. Draws are commonly tied to inspections, budgets, lien releases, and completed work.

Construction Holdback

A construction holdback is loan proceeds held back by the lender and released over time as approved construction work is completed.

Construction Loan

A construction loan is a loan used to finance ground-up construction, major renovation, or rehabilitation of real property. California construction loans typically require review of plans, permits, budget, contractor information, draw schedule, borrower experience, title, insurance, and contingency reserves.

Contingency Reserve

A contingency reserve is additional money set aside to cover unexpected costs, delays, or budget overruns during a construction or renovation project.

Disbursement Control

Disbursement control is a process for controlling when and how loan proceeds are released. This is especially important for construction, rehab, and improvement loans.

Draw Schedule

A draw schedule is a schedule outlining when construction or rehab funds may be released based on completed work, inspections, budget categories, and lender approval.

Fix-and-Flip Loan

A fix-and-flip loan is a short-term loan used by a real estate investor to purchase and improve a property for resale.

Permit Status

Permit status refers to whether required building permits, approvals, or entitlements have been obtained for proposed construction, renovation, or improvement work.

Rehab Loan

A rehab loan is a loan used to finance repairs, renovation, or improvement of an existing property.

Scope of Work

A scope of work is a detailed description of the construction, renovation, or repair work to be completed. The scope of work is usually reviewed together with the budget, plans, permits, contractor information, and draw schedule.

Site Inspection

A site inspection is a physical review of the property, often used to evaluate property condition, construction progress, occupancy, access, repairs, or other collateral-related issues.

Trust Deed, Collateral & Lien Terms

Assignment

An assignment is the transfer of a right, interest, contract, loan, deed of trust, lease, or other property interest from one party to another. The specific effect of an assignment depends on the document being assigned and the applicable transaction documents.

Assignment of Deed of Trust

An assignment of deed of trust is a document that transfers the beneficial interest in a deed of trust from one party to another.

Assignment of Rents

An assignment of rents is a document or loan provision that gives a lender rights to collect rents from the property if the borrower defaults, subject to the terms of the loan documents and applicable law.

Beneficiary

In a deed of trust, the beneficiary is generally the lender or other party that benefits from the security interest in the property.

Blanket Loan

A blanket loan is a loan secured by more than one property. If the borrower defaults, the lender’s rights may apply to multiple properties securing the same debt, depending on the loan documents.

Collateral

Collateral is the property or assets pledged to secure repayment of a loan. In real estate lending, collateral is typically secured through a deed of trust or mortgage.

Cross-Collateralization

Cross-collateralization is a loan structure where more than one property secures the same loan. This may be used to improve lender protection or support a larger loan amount.

Deed of Trust

A deed of trust is a security instrument commonly used in California to secure a real estate loan. It generally involves a trustor, beneficiary, and trustee, and may allow a trustee’s sale process if the borrower defaults and required foreclosure procedures are completed.

First Trust Deed

A first trust deed is a deed of trust with first priority against the property. In California real estate lending, a first trust deed is generally paid before junior liens in the event of foreclosure or sale, subject to property taxes, title matters, and other priority issues.

County Recorder

The county recorder is the local office where real estate documents such as deeds, deeds of trust, assignments, reconveyances, notices of default, and notices of trustee’s sale may be recorded in the public land records.

Grant Deed

A grant deed is a document commonly used in California to transfer ownership of real property. It is different from a deed of trust, which is used to secure repayment of a loan.

Junior Lien

A junior lien is a lien recorded behind a senior lien. A second trust deed is a common example of a junior lien.

Lien

A lien is a legal claim or security interest against property. In real estate lending, liens may secure repayment of loans, taxes, judgments, mechanics lien claims, or other obligations.

Lien Priority

Lien priority is the order in which liens are paid from the property. In California, priority is often determined by recording date, but can be affected by property taxes, mechanics liens, subordination agreements, title issues, and other legal or statutory priority rules.

Mechanics Lien

A mechanics lien is a lien that may be filed by contractors, subcontractors, laborers, or material suppliers who claim they were not paid for work or materials provided to improve a property. In California, mechanics lien timing, priority, validity, and enforcement can be highly fact-specific.

Mortgage

A mortgage is a security instrument used to secure repayment of a real estate loan. In California, deeds of trust are commonly used instead of mortgages for many real estate-secured loans.

Quitclaim Deed

A quitclaim deed transfers whatever interest the grantor may have in the property, if any, without the same warranties commonly associated with a grant deed.

Real Property

Real property generally refers to land and things permanently attached to land, such as buildings and improvements.

Power of Sale

A power of sale is a provision in a deed of trust that may allow the trustee to sell the property through a nonjudicial foreclosure process if the borrower defaults and required procedures are completed.

Reconveyance

A reconveyance is a recorded document showing that a deed of trust has been released after the secured loan has been paid off or otherwise satisfied.

Release Price

A release price is the amount that must be paid to the lender to release a specific property from a blanket loan or cross-collateralized loan structure.

Second Trust Deed

A second trust deed is a deed of trust recorded behind a first trust deed. A second trust deed has junior priority and generally carries more risk than a first trust deed.

Senior Debt

Senior debt is debt that has priority over other debt secured by the same property. A first trust deed is typically senior debt.

Subordination

Subordination is an agreement where one lienholder agrees to take a lower priority position behind another lien.

Title

Title refers to legal ownership of real property and the rights associated with that ownership. Title review is important in real estate lending because defects, liens, or ownership issues can affect collateral protection.

Title Insurance

Title insurance protects against certain covered defects in title to real property or lien priority. Lenders typically require a lender’s title insurance policy when making real estate-secured loans.

Trust Deed Investment

A trust deed investment is an investment secured by a deed of trust against real property. California trust deed investors should evaluate collateral, lien position, borrower equity, loan terms, valuation, title, documentation, exit strategy, and downside risk.

Trustor

In a deed of trust, the trustor is generally the borrower or property owner who grants the security interest in the property to secure repayment of the loan.

Loan Structure & Closing Terms

Capital Stack

The capital stack is the order and structure of all debt and equity in a real estate transaction. A capital stack may include senior debt, junior debt, preferred equity, common equity, and sponsor equity.

Cash-In Refinance

A cash-in refinance is a refinance where the borrower brings additional cash into the transaction to reduce leverage, cure deficiencies, or meet the new lender’s underwriting requirements.

Cash-Out Refinance

A cash-out refinance is a refinance where the borrower receives loan proceeds after paying off existing debt and closing costs. In private lending, cash-out proceeds are often evaluated based on collateral value, loan purpose, borrower equity, and exit strategy.

Closing Costs

Closing costs are fees and expenses paid in connection with closing a real estate loan or real estate transaction. These may include lender fees, escrow fees, title fees, recording fees, legal fees, taxes, insurance, and third-party report costs.

Escrow

Escrow is a neutral closing process where funds, documents, and instructions are held and processed by an escrow holder until the conditions of the transaction are satisfied.

Guarantor

A guarantor is a person or entity that agrees to be responsible for repayment or performance if the borrower fails to meet its obligations.

Impounds

Impounds are amounts collected and held for expenses such as property taxes and insurance. Depending on the loan structure, impounds may be collected monthly or funded at closing.

Letter of Intent

A letter of intent is a preliminary document that outlines proposed terms or the intent of parties to continue negotiating a transaction. A letter of intent may be non-binding or partially binding depending on its language.

Loan Commitment

A loan commitment is a lender’s conditional or final agreement to make a loan under specific terms. Commitments are typically subject to satisfaction of required conditions and documentation.

Loan Documents

Loan documents are the legal documents that evidence and secure a loan. They may include a promissory note, deed of trust, guaranty, assignment of rents, business loan agreement, security agreement, escrow instructions, and other transaction documents.

Payoff Demand

A payoff demand is a written statement showing the amount required to pay off a loan as of a specific date.

Permanent Financing

Permanent financing is long-term financing used to replace short-term debt such as a bridge loan or construction loan.

Personal Property

Personal property generally refers to movable property that is not real property. In certain transactions, personal property may be separately identified or pledged as additional collateral.

Pre-Approval

A pre-approval is a preliminary indication that a borrower may qualify for financing based on information reviewed at that stage. A pre-approval is not the same as final loan approval and is typically subject to underwriting, collateral review, title, documentation, and final lender approval.

Promissory Note

A promissory note is a written promise by the borrower to repay a loan according to stated terms, including principal, interest, maturity, payment obligations, and default provisions.

Protective Advance

A protective advance is money advanced by a lender to protect its collateral position, such as payments for taxes, insurance, property preservation, legal expenses, or necessary repairs.

Purchase Money Loan

A purchase money loan is a loan used to finance the acquisition of real property.

Preliminary Title Report

A preliminary title report is a title company report that identifies the apparent ownership, liens, exceptions, and other recorded matters affecting a property. In California private lending, preliminary title review is an important part of evaluating lien position and collateral risk.

Recording

Recording is the process of filing a document with the county recorder so it becomes part of the public land records. Deeds, deeds of trust, assignments, reconveyances, notices of default, and notices of trustee’s sale are examples of documents that may be recorded.

Refinance

A refinance is the replacement of an existing loan with a new loan. Refinances may be used to lower payments, extend maturity, access equity, pay off maturing debt, or reposition the capital stack.

Reserves

Reserves are funds set aside to cover interest payments, taxes, insurance, construction costs, operating shortfalls, or other expected obligations.

Term Sheet

A term sheet is a preliminary summary of proposed loan terms. A term sheet is usually subject to underwriting, due diligence, documentation, title review, and final approval.

Default, Foreclosure & Workout Terms

Default

Default is a borrower’s failure to comply with the terms of the loan documents. Defaults may include failure to pay, failure to maintain insurance, unauthorized transfers, property waste, bankruptcy, or violation of loan covenants.

Deed in Lieu of Foreclosure

A deed in lieu of foreclosure is a transaction where a borrower voluntarily transfers title to the lender or lender’s designee as an alternative to foreclosure. This type of resolution is subject to lender approval, title review, documentation, and other transaction-specific factors.

Forbearance

Forbearance is a temporary agreement by a lender to delay or modify enforcement of certain loan obligations. Forbearance does not usually eliminate the debt; it changes how the lender will proceed for a limited period.

Notice of Default

A Notice of Default is a recorded notice that generally begins the nonjudicial foreclosure process in California after a borrower defaults under a deed of trust. The effect and timing of a Notice of Default depend on the loan documents, property type, borrower status, and applicable law.

Notice of Trustee’s Sale

A Notice of Trustee’s Sale is a recorded and published notice stating the date, time, and location of a trustee’s sale under a deed of trust. In California, the notice and sale process must comply with applicable statutory and contractual requirements.

Reinstatement

Reinstatement is the process of curing a loan default by paying the amounts required to bring the loan current, subject to the terms of the loan documents and applicable law.

Right of Redemption

A right of redemption is a right, if available under applicable law, that may allow a borrower or other party to recover property after foreclosure by paying the required amount. Redemption rights depend on the type of foreclosure, jurisdiction, and specific circumstances.

Trustee

A trustee is the neutral third party named in a deed of trust who may conduct a trustee’s sale if the borrower defaults and the required California foreclosure process is completed.

Trustee’s Sale

A trustee’s sale is a public sale of property conducted under the power of sale in a deed of trust after required foreclosure steps have been completed. In California, trustee’s sales are commonly associated with nonjudicial foreclosure under a deed of trust.

Workout

A workout is a negotiated resolution between a lender and borrower when a loan is in default or at risk of default. Workouts may include extensions, forbearance, additional collateral, partial paydowns, payment plans, or other modifications.

Investor & Private Credit Terms

Accredited Investor

An accredited investor is a person or entity that meets specific financial, income, net worth, professional, or regulatory criteria under securities laws. Accredited investor status is often relevant in private investment offerings.

Capital Preservation

Capital preservation is an investment objective focused on protecting principal and limiting downside risk. In real estate-secured private credit, capital preservation depends heavily on collateral quality, lien position, leverage, documentation, and exit strategy.

Collateral Protection

Collateral protection refers to the steps a lender takes to protect the value and enforceability of its security interest. This may include title insurance, insurance requirements, reserves, inspections, covenants, and default remedies.

Investor Yield

Investor yield is the return an investor receives from an investment, usually expressed as an annualized percentage. Actual yield can depend on timing, fees, loan performance, defaults, extensions, and other factors.

Preferred Return

A preferred return is a return threshold that may be paid to certain investors before other distributions are made, depending on the investment structure and governing documents.

Private Credit

Private credit refers to loans or credit investments made outside traditional public debt markets. Real estate-secured private credit is typically backed by real property collateral.

Real Estate Secured Private Credit

Real estate secured private credit refers to private loans or credit investments backed by real property collateral. These investments are typically evaluated based on collateral, lien position, borrower equity, loan terms, market conditions, and downside protection.

Risk-Adjusted Return

Risk-adjusted return refers to the return on an investment relative to the amount of risk taken. In private real estate lending, risk-adjusted return depends on collateral, leverage, borrower strength, lien position, documentation, market conditions, and exit strategy.

Entity, Borrower & Documentation Terms

Articles of Incorporation

Articles of incorporation are formation documents filed with the state to create a corporation. Lenders may review these documents when the borrower or guarantor is a corporation.

Articles of Organization

Articles of organization are formation documents filed with the state to create a limited liability company. Lenders may review these documents when the borrower or guarantor is an LLC.

Borrower

A borrower is the person or entity that receives loan proceeds and is obligated to repay the loan according to the loan documents.

Borrowing Entity

A borrowing entity is the legal entity that obtains the loan. Common borrowing entities include limited liability companies, corporations, partnerships, and trusts.

Certificate of Good Standing

A certificate of good standing is a state-issued document showing that an entity is active and in compliance with certain state filing requirements as of the certificate date.

Corporate Resolution

A corporate resolution is a written authorization by a corporation approving a specific action, such as borrowing money, pledging collateral, signing loan documents, or authorizing officers to act on behalf of the corporation.

Entity Documents

Entity documents are the formation and governance documents for a borrowing entity or guarantor. These may include articles of incorporation, articles of organization, operating agreements, bylaws, partnership agreements, resolutions, certificates of good standing, and ownership information.

Operating Agreement

An operating agreement is the governance document for a limited liability company. Lenders often review operating agreements to confirm ownership, management authority, borrowing authority, and signing authority.

Personal Guaranty

A personal guaranty is an agreement by an individual to be responsible for a borrower’s obligations if the borrower fails to perform. Guaranties may be full, limited, recourse, non-recourse, or subject to specific carveouts depending on the documents.

Signing Authority

Signing authority refers to the legal authority of a person to sign documents on behalf of a borrower, guarantor, corporation, limited liability company, trust, or other entity.

California Private Lending FAQs

What is a California bridge loan?

A California bridge loan is short-term real estate financing secured by California property and used to bridge a timing gap. Common uses include purchasing, refinancing, renovating, stabilizing, or selling a property before long-term financing or another exit is available. Bridge loans are typically evaluated based on collateral value, borrower equity, lien position, title, property condition, and exit strategy.

What is the difference between a bridge loan and a hard money loan?

A bridge loan describes the purpose of the financing: short-term capital used to bridge a timing gap. A hard money loan describes the type of lender and underwriting approach: private, real estate-secured financing that often focuses heavily on collateral, borrower equity, lien position, and exit strategy. In practice, the terms often overlap.

What is the difference between a hard money loan and a private money loan?

Hard money loan and private money loan are often used interchangeably. Both generally refer to real estate-secured loans made by private or non-bank lenders. These loans are commonly used when timing, property condition, borrower profile, or transaction structure does not fit conventional bank lending.

What is a deed of trust in California?

A deed of trust is a security instrument commonly used in California to secure repayment of a real estate loan. It generally involves three parties: the trustor, beneficiary, and trustee. In California private lending, deeds of trust are commonly used to secure bridge loans, hard money loans, construction loans, and trust deed investments.

What is the difference between a first trust deed and a second trust deed?

A first trust deed has first priority against the property and is generally paid before junior liens in the event of foreclosure or sale. A second trust deed is recorded behind the first trust deed and has junior priority. Because a second trust deed is behind senior debt, it usually carries more risk and requires careful review of collateral value, senior loan balance, borrower equity, title, and exit strategy.

What is Loan-to-Value, or LTV?

Loan-to-Value, or LTV, is the ratio of the loan amount compared to the value of the property securing the loan. For example, if a property is valued at $1,000,000 and the loan amount is $600,000, the LTV is 60%. LTV is one of the core risk metrics used in real estate lending.

What is the difference between LTV and LTC?

LTV compares the loan amount to the value of the property. LTC, or Loan-to-Cost, compares the loan amount to the borrower’s total project cost or acquisition cost. LTV is commonly used across real estate lending, while LTC is especially common in construction, rehab, and value-add financing.

What is an exit strategy in private lending?

An exit strategy is the borrower’s realistic plan to repay the loan. Common exit strategies include selling the property, refinancing into long-term debt, completing construction, stabilizing a rental property, leasing a commercial property, or paying off the loan from another capital source. A clear exit strategy is a key part of private lending underwriting.

What is a construction holdback?

A construction holdback is loan proceeds retained by the lender and released as approved construction or renovation work is completed. Holdbacks help control disbursements and reduce the risk that loan funds are advanced before the work is performed.

How do I submit a California loan scenario to FK Capital?

Brokers and borrowers can submit a California loan scenario online. The review process generally depends on the collateral, requested loan amount, lien position, borrower information, valuation support, title, property condition, and exit strategy.

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