Promissory Note/More Info

Promissory Note
Additional Information
There are countless varieties of promissory notes and many ways to structure the repayment of a debt.  This Promissory Note provides for some common structures.  For example, you may want a note calling for payment of interest only, followed by a single payment of the entire principal (the borrowed amount).  You may also use this note to create the obligation to repay amortized installments (installments including both principal and interest).  Most home mortgage loans are repaid this way.   

In many cases, a lender will grant in the promissory note the right to repay the remaining principal balance at any time.  This is a valuable right for the borrower- if the borrower can afford to repay the principal early, he or she will enjoy a great savings in interest expense.  On the other hand, a lender may not be willing to forego all of the interest income originally provided by the note.  To address this issue, Home and Business Attorney allows the parties to establish a date that is the earliest date the Borrower may repay the entire balance.  This allows the lender to require that it receives some significant portion of the interest income before the Borrower may completely pay off the debt. 

Important Tip 
While it is customary for each party in an agreement to take an original copy, promissory notes are different.  There should be only one original note (only one copy should be generated with the borrower's original signature). Signing only one note is appropriate, as the Lender may transfer or sell the note to someone else.  If there are two originals, and one is transferred to an innocent buyer, the borrower may be asked to make payments to two different parties. 

The Lender should keep the original note until the obligations in the Note are satisfied.   After the Note is paid off, it is customary for the lender to write "canceled" on the face of the Note, sign and date it, and return it to the borrower.  The Borrower may, of course, want to keep a photocopy for his or her records.