How to make a proper promissory note?
Asked by: Tamara Kub | Last update: February 2, 2026Score: 4.2/5 (38 votes)
A proper promissory note is a legally binding written agreement that acts as evidence of debt, outlining the terms for repayment between a lender and a borrower. To be enforceable, it must be clear, detailed, and signed by the borrower.
How do I write a simple promissory note?
What to include in a promissory note
- Amount of money borrowed (principal amount)
- Amount to be repaid (principal and interest)
- When and how often payments will be made (payment schedule, or “due dates”)
- Interest rate and repayment specifics.
- Time frame and maturity date (date the loan will be fully repaid)
Can I create my own promissory note?
Yes, you can make your own promissory note, and it can be handwritten or typed, but using a legally sound template or getting legal advice is highly recommended to ensure it's enforceable and includes crucial details like parties' names, loan amount, interest, repayment terms, and default consequences, protecting both lender and borrower. While simple handwritten notes are possible, typed or online templates (like those from LegalZoom, Dropbox, or LawDepot) offer better clarity and prevent easy alterations.
How to make a promissory note legally binding?
Both parties must sign the promissory note to make it legally binding. However, even a signed document can face a legal challenge. Consider having the signatures notarized or witnessed to add an extra layer of legality.
Do promissory notes need to be notarized?
Signatures: A promissory note isn't valid unless both parties sign. You don't necessarily need to get it notarized, but it also doesn't hurt and can provide additional legal protection.
How to create your own Promissory Notes - Michael Tellinger
What makes a promissory note illegal?
What Makes a Promissory Note Invalid: Missing essential elements, fraud, lack of consideration, forgery, and violations of public policy can invalidate a note. Common Mistakes That Invalidate a Promissory Note: Errors in drafting, missing signatures, ambiguity, and illegal terms can lead to an unenforceable note.
What is the most common mistake made by a notary?
The most common and serious mistake a notary makes is failing to ensure the signer personally appears before them, which is a legal violation and can lead to fraud and major penalties, but other frequent errors involve incomplete or incorrect notarial certificates, such as missing dates, improper seal placement, illegible stamps, mismatched names, or attaching the wrong certificate type, all of which can invalidate the document.
What are common promissory note mistakes?
Unclear clauses, missing signatures, unfair terms (e.g., excessive interest rates), or losing the original document can render a promissory note invalid and unenforceable. Be aware of these common mistakes.
Will a promissory note stand up in court?
A valid note in California must include the borrower's signature. The better the evidence, the better the chances the promissory note will hold up in court.
What are the risks of using a promissory note?
If you invest with a promissory note, there is a chance that the issuing company will not be able to make principal and interest payments. Risk and reward are intrinsically related, and there is no such thing as a low-risk, high-reward investment.
Where can I find a free promissory note template?
Free promissory note template
With Docusign, you can create a free, editable promissory note using our online template. Easily customize the loan agreement to include the loan amount, repayment schedule, add clauses and any other important details. Get started with Docusign today to make the process quick and secure.
Should a lawyer draft my promissory note?
A lawyer can also help you draft a legally binding promissory note. Working with an attorney is one of the best ways to ensure that your promissory note contains all the necessary elements and provides the greatest level of legal security.
How to write a legal agreement for money owed?
Key elements of a repayment agreement
- Parties involved. Clearly define the lender and borrower, including their contact information.
- Loan amount and interest. Specify the principal amount and any interest to be charged.
- Repayment schedule. ...
- Late fees: Outline any penalties for late payments.
- Default terms. ...
- Governing law.
Is a handwritten promissory note legal?
Whether a promissory note is hand written or typed and signed, it is a legally, binding contract.
What is the maximum amount limit for promissory note?
Validity Period: Promissory notes are valid for 3 years from the date of execution. No Maximum Limit: There is no cap on the amount that can be specified in the note. Witness Signature: A witness signature is not mandatory but is recommended for added security.
Do notes need to be notarized?
While notarization can enhance the legal standing of a promissory note, it is not an absolute requirement in many cases, as outlined by state law.
Do you need a lawyer for a promissory note?
Contact a promissory note lawyer
A promissory note crafted by an experienced promissory note lawyer has full legal authority. Moreover, it is both legally binding and enforceable.
Can I sue someone with a promissory note?
If the debtor fails to pay the debt specified in the promissory note, no other evidence of a breach of contract is necessary to enforce that debt. To enforce a promissory note, you will likely need to: sue the debtor of the note. get a judgment from the court.
Is a notarized promissory note binding?
Including a notary can improve confidence and security for both parties in the event of default or legal action. Promissory notes are binding as long as they include essential elements like a clear repayment schedule, amount, and signatures.
What is the 3 7 3 rule in mortgage?
The "3-7-3 Rule" in mortgages refers to federal disclosure timing under the TILA-RESPA Integrated Disclosure (TRID) rule, ensuring borrower protection: lenders must provide the initial Loan Estimate within 3 business days of application, require a 7-day waiting period before closing from that delivery, and trigger another 3-day waiting period if the Annual Percentage Rate (APR) changes significantly (over 1/8% for fixed loans) before closing. This rule, stemming from the Mortgage Disclosure Improvement Act (MDIA), provides crucial time for borrowers to review and compare loan terms, preventing rushed decisions.
What salary do you need for a $400,000 mortgage?
To afford a $400k mortgage, you generally need an annual income between $100,000 and $125,000, though this varies significantly with interest rates, down payment size, property taxes, and your existing debts, with lenders typically looking for a < Debt-to-Income Ratio (DTI) below 43% and housing costs under 28% of gross income. A higher income makes it easier to meet these guidelines, especially with a smaller down payment or higher interest rates.
How long is a promissory note valid?
Written promissory notes and guarantees: The statute of limitations for written contracts, including promissory notes and personal guarantees, is four years (California Code of Civil Procedure section 337(a)).
What invalidates a notarized document?
A notarized document can be invalidated by fundamental flaws like improper identification, lack of signer presence, blank spaces, missing signatures, or an expired notary commission, as well as fraudulent acts, unauthorized alterations, backdating, or the notary acting with a conflict of interest, all undermining the document's authenticity and the integrity of the notarization process.
How to tell if someone is a legit notary?
Make sure the notary is authorized to notarize your document by asking to see the actual stamp imprint and the validity year. Once your document has been stamped, make sure the notary's name and commission number and the date when the commission expires are visible.
Does a notarized will hold up in court?
Benefits of having a notarized Will
Reduces contestability: A notarized Will is much harder to challenge in court because the notary serves as an additional witness to your mental capacity and the authenticity of your signature.