Promissory Note

Description

The Promissory Note is the fundamental loan document, i.e., it is the primary document that evidences the borrower’s legally enforceable promise to repay.  A Promissory Note is the legal document signed by a borrower that evidences a promise to repay and the payment terms and conditions.  The Note specifies the amount owed, if interest will be charged, the interest rate, when payments are due, the amount of payments and the maturity date.  It can also contain other important terms such as events that can cause a default and allow the holder of the Note to accelerate the entire balance due after a default.

If you are owed money and you do not have a Promissory Note signed by the borrower(s), you are at a great disadvantage if you have to sue to collect the debt.  Suing to collect a debt evidenced by a Promissory Note is one of the easiest types of lawsuits.  Suing to collect a debt evidenced by a Promissory Note is one of the easiest types of lawsuits because you only have to prove the borrower gave you a note and didn’t pay in full.  If you are a lender who made a loan without requiring the borrower to sign a Promissory Note and you must sue to collect you will have to prove you did not make a gift and the terms and conditions of the loan.  It will be a he said she said because you can be assured the borrower’s testimony will be the exact opposite of yours.  Don’t let yourself get in that position.  Purchase our Promissory Note in editable Word format and make your borrower sign it before you make the loan.

Related Documents:

Resolutions Authorizing the Loan:  If the borrower or signer on a Promissory Note is limited liability company or a corporation, the lender must obtain a borrowing resolution from: (i) the members of an limited liability company, or (ii) the Board of Directors of a corporation) to prevent the company from claiming that the person who signed the Promissory Note or other loan documents did not have the authority to sign for the company and therefore the company is not obligated. It is prudent business practice to obtain a borrowing resolution. Commercial lenders almost always require a borrowing resolution as a condition to making a loan.

A Promissory Note can be secured by a lien on personal property (use our Security Agreement for personal property in Arizona) and by a lien on real property (use our Deed of Trust for real property located in Arizona)

Security Agreement:  If the lender wants to get a lien on personal property to secure repayment of the loan, the borrower must sign a Security Agreement that specifies what property of the borrower will be encumbered by the lien.

Deed of Trust:  Use this document when the lender want to get a lien on Arizona real property to secure payment of the loan.  The Deed of Trust must be recorded in the County in Arizona in which the real property is located.

This form was prepared and used by Arizona contract attorney Richard Keyt in his business law practice. Since 1983 when Rick got his first office computer (a $3,000 Compaq portable with 256k of RAM, a 9 inch green monitor and two 5.25 floppy drives) Rick has created hundreds of Arizona compliant legal forms. See Richard Keyt’s education, background and experience.

Disclaimer:  If you purchase this form, you are buying a product from Richard Keyt and KEYTLaw, LLC. (collectively the “Firm”), and you are not hiring the Firm to provide any legal services or legal advice or represent you in any capacity.  If you modify the form in any way, you are solely responsible for the legal affect of the changes you make.  The form is drafted to comply only with Arizona law because Arizona is the only state where Richard Keyt is licensed to practice law.   Do not use this document in any state other than Arizona without first having it reviewed and modified as necessary by an experienced attorney in the state where you intend to use the form.  The Firm makes no representations or warranties of any kind with respect to this form.  The Firm disclaims all warranties for fitness for a particular purpose.