Creating A Promissory Note To Protect Your Loans.™
Download Sample Forms
Sample
PROMISSORY NOTE
and
Article by
LawsOnline
Sample PROMISSORY NOTE LONG FORM
(SECURED)
May 01, 2024
Sample SECURITY AGREEMENT
Promissory Notes Secured and Unsecured
Download Sample Forms
Sample
PROMISSORY NOTE
and
Article by
LawsOnline
Sample PROMISSORY NOTE LONG FORM
(SECURED)
May 01, 2024
Sample SECURITY AGREEMENT
Promissory Notes Secured and Unsecured
When agreeing to loan money to an individual, a family member,
a friend, or a small business, it is highly recommended that
you document the financial loan with some kind of written
agreement. In many cases, individuals exchange money on a
daily basis and, it is generally handled as a quick loan with
a verbal agreement and a handshake. It is estimated, according
to Finder, that $184 billion dollars each year is exchanged
between family and friends as private loans. As stated by
LendingTree, the percentage of Americans involved in private
loans equals about 1/3 of the United States’ population.
These verbal types of agreements for financial loans are not
required to be put into writing if they can be paid back
within a year or less, and are no greater than $500.00,
depending on the individual state (see Statute of Frauds).
However, they become difficult to manage if the financial
exchange arrangement is later disputed on the terms of the
verbal arrangement. If you value your relationships, both
personal and professional, and you want to keep your sanity
intact, it is highly recommended that loans of any amount be
put into some form of a written agreement.
A written agreement or contract to borrow money, in exchange
for repayment plus interest at a later date, is usually called
a promissory note. A promissory note should include the
following:
1. Amount of Loan
2. Date of Loan
3. Name of Debtor
4. Name of Creditor
5. Rate of Interest
(if any)
6. Payment Amount and Frequency
7. Due Date of Loan
8. Type of Loan (i.e.,
secured or unsecured)
9. If Secured,
Collateral (i.e., a bike)
10. Signature of
Debtor
With an unsecured Promissory Note,
there is no property associated with the loan only a promise
to repay the debt. If the debt is not paid on the established
due date, the Creditor's only recourse is to take the Debtor
to court to fight for repayment of the loan. If a Promissory
Note is attached to the loan, it acts as an enforceable
document that allows the courts to take action against the
Debtor and require a repayment of the Promissory Note. To
view a sample of an unsecured Promissory Note, please see the
following: SHORT PROMISSORY NOTE
With a
secured Promissory Note, designated property as a form of
collateral is used to ensure the money is repaid to the
Creditor by a designated date. Therefore, if the Debtor does
not pay back the loan in a timely manner, the Creditor can
claim the designated property as repayment for the Promissory
Note. The secured Promissory Note will outline when the
Creditor can take possession of the collateral i.e., if
payment has not been received within 30 days after the due
date, the Debtor will relinquish to the Creditor ownership of
the collateral within 60 days after default of payment. To
view a sample of a secured Promissory Note, please see the
following: LONG PROMISSORY NOTE
In most
cases, an additional document called a Security Agreement,
with an attached Security Agreement Property List, is used to
describe the designated property. This would be a separate
agreement from the Promissory Note that is signed by both
parties providing greater detail of the collateral and the
legal conditions that may take place if the Debtor fails to
pay back the Promissory Note. To view a sample of a Security
Agreement and a Security Agreement Property List, please see
the following: SECURITY AGREEMENT
Once
the Creditor has a signed secured Promissory Note and the
accompanying Security Agreement, they need to file a UCC
document to establish collateral precedence over any other
party who may make a claim to the same property. A UCC filing
must be submitted to the state in which the property resides.
This is an important process for the holder of a secured
Promissory Note to locate the state office that handles UCC
fillings. A UCC filing on a secured Promissory Note provides
notice to the public and other lenders that the Creditor and
Debtor have a contractual relationship binding the property to
their specific agreement, making the Creditor 'first-in-line'
to assume ownership of the property. The UCC, which stands for
Uniform Commercial Code, is a collection of legal rules
related to commercial activities within the United States (see
https://www.uniformlaws.org/acts/ucc). Almost every state
within the United States has adopted the standards of the UCC
to create consistency for commercial transactions that are
conducted between states. Pennsylvania was the first state to
adopt the UCC in 1953
(see https://www.uniformlaws.org/acts/ucc).
Whether you are extending a loan for financial gain, i.e.,
interest/profit/stock, or helping a friend with debt, make
sure to put that private loan into writing as a Promissory
Note. For answers to your questions about Promissory Notes,
please search LawsOnline - the National Database of Legal
Professionals to find an attorney near you from one of the
largest databases of legal professionals.
REFERENCES:
Finder.com
https://www.finder.com/americans-borrow-friends-and-family-household-debt
LendingTree.com
https://www.lendingtree.com/personal/friend-or-family-owes-money-survey/
Statute of Frauds
https://www.law.cornell.edu/wex/statute_of_frauds
Less than a Year
https://www.law.cornell.edu/wex/statute_of_frauds
https://www.law.cornell.edu/ucc/2/2-201
https://www.uniformlaws.org/acts/ucc
Individual State LEGAL INTEREST RATES INFORMATION:
DebtAdvisorsus.com
https://debtadvisorsus.com/credit-reports/state-usury-laws-maximum-legal-interest-rates/
UpCounsel.com
https://www.upcounsel.com/lectl-state-interest-rates-and-usury-limits
Individual State UCC FORMS AND FILING INFORMATION:
https://www.hudexchange.info/programs/multifamily-housing/ucc/
Alabama
https://www.sos.alabama.gov/business-services
Alaska
http://dnr.alaska.gov/ssd/recoff/ucc
Arizona
https://azsos.gov/business/uniform-commercial-code-ucc
Arkansas
https://www.sos.arkansas.gov/business-commercial-services-bcs/uniform-commercial-code-ucc/
California
https://bizfileonline.sos.ca.gov/
Colorado
https://www.sos.state.co.us/ucc/pages/home.xhtml
Connecticut
https://business.ct.gov/manage/all-business-filings/file-ucc-liens?language=en_US
Delaware
https://corp.delaware.gov/uccform/
Florida
https://www.floridaucc.com/uccweb/forms.aspx
Georgia
https://www.gsccca.org/file/ucc-forms
Hawaii
https://dlnr.hawaii.gov/boc/forms/
Idaho
https://sos.idaho.gov/ucc/ucc_form.html
Illinois
https://www.ilsos.gov/departments/business_services/uniform_commercial_code/home.html
Indiana
https://inbiz.in.gov/business-filings/ucc
Iowa
https://sos.iowa.gov/business/FormsAndFees.html#UCC
Kansas
https://www.kssos.org/forms/forms_results.aspx?division=BS
Kentucky
https://www.sos.ky.gov/bus/UCC/Pages/UCC-Forms.aspx
Louisiana
Maine
https://www.maine.gov/sos/cec/ucc/national.html
Maryland
https://dat.maryland.gov/businesses/Pages/UCC-Filing-Statements.aspx
Massachusetts
Michigan
https://www.michigan.gov/sos/Industry-Services/ucc
Minnesota
https://www.sos.state.mn.us/business-liens/ucc-tax-cns-forms-fees/ucc-lien-filing-forms/
Mississippi
https://www.sos.ms.gov/index.php/business-services/uniform-commercial-code
Missouri
https://www.sos.mo.gov/ucc/forms.asp
Montana
https://biz.sosmt.gov/forms/ucc
Nebraska
https://sos.nebraska.gov/business-services/ucc-revised-article-9-forms
Nevada
https://www.nvsos.gov/sos/sos-information/forms-all-divisions/ucc-forms
New Hampshire
https://sos.nh.gov/corporation-ucc-securities/ucc/forms-and-search-requests/
New Jersey
New Mexico
https://www.sos.nm.gov/commercial-services/ucc-filings/ucc-forms-2/
New York
https://dos.ny.gov/uniform-commercial-code
North Carolina
https://www.sosnc.gov/divisions/uniform_commercial_code
North Dakota
https://sos.nd.gov/central-indexing-ucc/central-indexing-faqs.html
Ohio
https://ucc.ohiosos.gov/dashboard
Oklahoma
https://www.oklahomacounty.org/county-information/uniform-commercial-code-ucc
Oregon
https://sos.oregon.gov/business/pages/ucc-forms.aspx
Pennsylvania
https://www.dos.pa.gov/BusinessCharities/Business/RegistrationForms/Pages/default.aspx#.VIXs32exWBo
Rhode Island
https://www.sos.ri.gov/divisions/business-services/ucc
South Carolina
https://sos.sc.gov/online-filings/uniform-commercial-code
South Dakota
https://sosenterprise.sd.gov/UCC/Default.aspx
Tennessee
https://tnbear.tn.gov/UCC/ecommerce/default.aspx
Texas
https://www.sos.state.tx.us/ucc/uccforms.shtml
Utah
Vermont
https://sos.vermont.gov/corporations/ucc-lien-services/#ucc1
Virginia
https://www.scc.virginia.gov/pages/UCC-Forms-Fees
Washington
https://www.dol.wa.gov/business/UCC/uccforms.html
West Virginia
Wisconsin
Wyoming
https://ucc.wyo.gov/UCC/Default.aspx
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