Just like wills, there is generally no requirement that a contract be notarized in order to be legally binding. However, if a party who signed a business agreement decides to dispute that agreement in court, a notarized contract can help a great deal.
For a personal loan agreement to be enforceable, it must be documented in writing, as well as signed and dated by all parties involved. It's also a good idea to have the document notarized or signed by a witness.
A promissory note isn't required to be notarized in many US states. However, you may choose to have the document notarized by a notary public. This is because notarization can offer protection in the event of a lawsuit.
In attorney closing states, lawyers for the buyer and seller ensure the legal requirements of the purchase or refinance loan are met, and that the interests of both are protected. While an attorney must be present, a Notary Signing Agent may still perform the notarization of loan documents.
Do you need to notarize a Loan Agreement? First and foremost, understand that personal loan agreements fall into the classification of contracts. Technically, you don't have to notarize these documents. But if you want to make this document legally binding, then notarization is the best course of action.
Loan signing agents deal exclusively with loan documents and are specially trained and certified to do so. A notary public can be used for the notarization of most any other kind of document which is not related to loan agreements.
Payment Amount Missed
The promissory note could be declared invalid if it doesn't reveal the amount that the borrower owes the lender, or what installments are due. If there are multiple installments, then include each installment's due date.
Promissory notes are legally binding contracts that can hold up in court if the terms of borrowing and repayment are signed and follow applicable laws.
In most cases, a contract does not have to be notarized since the signed contract itself is enforceable and legally binding in state or federal courts. Many types of written contracts don't require a notary public to be valid.
If you're lending to or borrowing from friends and family, you might need to write your own personal loan agreement. If there's only a small amount of money involved, a simple promissory note might be sufficient. However, in some cases, you may need a more complicated contract.
Lack of legal capacity
For a contract to be legally binding, the parties signing the agreement should be of legal capacity. Meaning the individual should be capable of understanding what they are agreeing to. Lack of legal capacity makes a contract null and void.
Key takeaways
A loan agreement is a contract between a borrower and a lender that specifies what each party has agreed to. A promissory note is where one party promises, in writing, to pay a set amount to the other according to their agreement.
No, notarization itself does not make a document legally binding. While it verifies the identities and consent of the signers, the enforceability of a document depends on its content and compliance with the applicable laws, among other factors.
Finally, the contract for loaning money must be signed by the borrower and the lender in order to be made legally binding. 💡 Quick Tip: Swap high-interest debt for a lower-interest loan, and save money on your monthly payments. Find out why credit card consolidation loans are so popular.
Conversely, an agreement can be informal and may not always be legally binding. While contracts require elements such as consideration, legality, capacity, and mutual assent to be legally valid, agreements may lack such requirements.
Promissory note fraud is a crime and those involved in a scam can face a lengthy prison sentence if convicted of fraud offenses.
A promissory note could become invalid if: It isn't signed by both parties. The note violates laws. One party tries to change the terms of the agreement without notifying the other party.
In general, however, the first step to enforcing the note is to send a demand letter to the borrower. If no response to the demand is received, a collections lawyer can subsequently file a complaint with the court. Depending on the amount owed, a lawsuit may be filed in the Special Civil Part or Law Division.
Loan agreements should be used even when lending money to a friend or family member. Unlike a casual IOU, a formal contract makes every detail clear for both parties, can be legally binding, and can help prevent disputes.
A contract may be ruled null and void should the terms require one or both parties to participate in an illegal act, or if one party becomes incapable of meeting the contract terms.
A promissory note is a form of negotiable instrument, which does not need to be notarized to be legally binding, although both parties who are expected to adhere to the agreement must sign it.
A notary public is different from a notary. A notary public refers to “one who holds an Office relating to Notarial acts.” In other words, it is more concerned with the person who performs the duties as opposed to those being performed.