I REPEAT: Both parties must sign the promissory note! This means both the lender and borrower must sign the original document (plus any amended versions). Without the signatures, the promissory note has no legal leg to stand on.
A promissory note is a written agreement between a borrower and a lender saying that the borrower will pay back the amount borrowed plus interest. The promissory note is issued by the lender and is signed by the borrower (but not the lender).
Signatures: Make sure signatures of both the borrower and the lender are included on the promissory note.
If more than one person signs this Note, each person is fully and personally obligated to keep all of the promises made in this Note, including the promise to pay the full amount owed. Any person who is a guarantor, surety or endorser of this Note is also obligated to do these things.
In a promissory note, the person borrowing the money, known as the borrower or maker, is the one who signs the document. The lender or payee, who is receiving the promise of repayment, does not typically sign the promissory note but retains the legally binding document for reference and enforcement if needed.
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.
Typically, there are two parties to a promissory note: The promisor, also called the note's maker or issuer, promises to repay the amount borrowed. The promisee or payee is the person who gave the loan.
An unconditional promise to pay a certain amount of money to a named party or the holder of the note, or to deposit that money as such persons direct. A promissory note must be in writing and signed by the maker of the promise.
Whatever the scope of the promissory note, the basic tenet is that once it is signed by the involved parties, it becomes a legal instrument that can be enforced via legal remedy if one of the parties does not uphold their end of the bargain.
If a promissory note is not signed, it will be up to the court to determine the contract's enforceability based on all the facts and documents involved. A contract requires a knowing acceptance of the terms it contains. Acceptance is typically made by the parties signing the contract.
At closing, however, lenders should consider obtaining wet signatures. Nothing in E-Sign or UETA prohibit use of an e-signature on a promissory note. However, because paper promissory notes are “negotiable instruments” under the UCC, having “possession” of the “original” signed note is legally significant.
Promissory notes are quite simple and can be prepared by anyone. They do not need to be prepared by a lawyer or be notarized. It isn't even particularly significant whether a promissory note is handwritten or typed and printed.
FOR VALUE RECEIVED, the undersigned, [NAME], an individual residing at [ADDRESS] (“Maker”), hereby promises to pay to the order of Masimo Corporation, a Delaware corporation, having offices at 40 Parker, Irvine, CA 92618-1604, or its successors and permitted assigns (“Lender” or the “Company”), the principal sum of [ ...
Depending on which state you live in, the statute of limitations with regard to promissory notes can vary from three to 15 years. Once the statute of limitations has ended, a creditor can no longer file a lawsuit related to the unpaid promissory note.
If timely payment is not made by the borrower, the note holder can file an action to recover payment. Depending upon the amount owed and/or specified in the note, a summons and complaint may be filed with the court or a motion in lieu of complaint may be filed for an expedited judgment.
Circumstances for release of a promissory note
The debt owed on a promissory note either can be paid off, or the noteholder can forgive the debt even if it has not been fully paid. In either case, a release of promissory note needs to be signed by the noteholder.
If both parties agree to cancel the promissory note agreement, they may sign a cancellation or release agreement. This agreement releases the borrower from their obligation to repay the loan and releases the lender from their right to collect the loan.
Promissory notes don't have to be notarized in most cases. You can typically sign a legally binding promissory note that contains unconditional pledges to pay a certain sum of money. However, you can strengthen the legality of a valid promissory note by having it notarized.
Unsecured Promissory Note: This type of promissory note does not allow the party that lends the money to secure an asset for the loan. If the borrower fails to make the payment, the lender must file it in small claims court or go through other legal processes to enforce the promissory note.
Best Practices for Promissory Notes
Avoid legal jargon or complex terminology that may lead to confusion or misinterpretation. Clearly define key terms, such as the loan amount, interest rate (if any), repayment schedule and due dates.
Starting with UCC Article 3 (Negotiable Instruments), nothing in the UETA prohibits the use of an electronic signature on a promissory note. Because paper promissory notes are “negotiable instruments” under the UCC, hpwever, having “possession” of the “original” signed note is legally significant.
Elements of an Enforceable Promissory Note
It must have a written statement in which one party promises to pay the other party a specific sum of money. The principal amount indicated on the note must be static, though the interest amount can be variable. However, it must also be considered reasonable by the court.
But what exactly do you need to write a promissory note? Include their full legal names, addresses, and contact numbers—include any co-signers if applicable. The terms of this note should specify the amount borrowed, repayment terms (including interest rate, if applicable), and the due date or schedule of payments.