Promissory Note Instructions

A promissory note is a promise to pay.

A promissory note is a promise to pay a debt. Promissory notes are used in cash transactions as well as extended credit such as the purchase of a vehicle or furniture. A promissory note is a legally binding document in which a signature provides evidence of a promise to pay. A promissory note does not have to be notarized, though having it signed in front of a witness can provide evidence of the note's validity in the future. Putting a promissory note together is a fairly straight-forward process.

Instructions

1. Date the note. The promissory note's date should be clearly labeled at the top of the note. The date should include the month, day and year that the note is being signed.

   This is important in the event the payments get behind and the time frame for the payments needs to be proven.

2. Prepare the body of the note. Making sure the note includes all necessary elements will secure its legality.

3. List the amount of the loan and when it must be repaid. The exact amount, including any interest, legally binds the signer to that amount. The note should also include an acceptable payment schedule or a date when the entire sum is due.

4. Name the parties. Every person that is a party to the note needs to be clearly identified within the body of the note. This provides the note holder with a list of who to contact in the event of non-payment. If the case ends up in court, everyone listed on the note as borrowers can be named in the suit and held jointly and individually liable for the total debt.

5. Obtain signatures. The person who lends the money is not obligated to sign the promissory note, but the borrower is obligated. The borrower signs and the lender holds the original, while providing a copy of the note to the borrower.

References

• Loan Mortgage Credit: How to Write a Promissory Notte
• Expert Law: The Promissory Note by Aaron Larson-Sept. 2003