A promissory note is a written promise to pay a debt. An unconditional promise to pay on demand or at a fixed or determined future time a particular sum of money to or to the order of a specified person or to the bearer.
Hawaii Checklist — Items to Consider for Drafting a Promissory Note Promissory notes are legally binding documents that outline the terms and conditions of a loan agreement between two parties. When drafting a promissory note in Hawaii, there are several key elements to consider ensuring its validity and enforceability. This checklist will guide you through the essential items to include in a promissory note specific to Hawaii. 1. Parties involved: Begin by identifying the names, addresses, and contact information of both the lender (also known as the payee) and the borrower (also known as the maker). Ensure accurate and complete information to avoid subsequent disputes. 2. Loan amount: Clearly state the total loan amount in both numeric and written form. For example, if the loan amount is $10,000, write "Ten A Thousand Dollars ($10,000)" to prevent any ambiguity. 3. Interest rate: Specify the interest rate that will be charged on the loan. In Hawaii, the interest rate should adhere to the state's usury laws, which cap the maximum interest rate allowed. As of 2021, the maximum legal interest rate in Hawaii is 10% per annum, unless otherwise agreed upon in writing. 4. Repayment terms: Outline the repayment terms, including the frequency of payments (monthly, quarterly, etc.), the due date for each payment, and the method of repayment (check, electronic transfer, etc.). It is crucial to be explicit about due dates to avoid confusion or any potential default. 5. Late payment penalties: Indicate the consequences for late or missed payments. While Hawaii law does not specify a default interest rate, it is advisable to include a late payment penalty, such as a flat fee or a percentage of the outstanding balance, to encourage timely payments. 6. Security or collateral: If the loan is secured with collateral, describe the specific assets involved (real estate, vehicles, etc.) and include any relevant details, such as their location, condition, and estimated value. Note that certain laws might apply when dealing with collateral, so consulting with an attorney is highly recommended. 7. Governing law and jurisdiction: State that the promissory note is subject to the laws of Hawaii and identify the appropriate jurisdiction for resolving any disputes, typically the courts in the county where the lender resides. 8. Additional provisions: Depending on the unique circumstances of the loan, consider including additional provisions that protect the rights and interests of both parties. These may include clauses regarding loan acceleration, prepayment penalties, and the inclusion of a co-signer or guarantor. Types of Hawaii Checklist — Items to Consider for Drafting a Promissory Note: 1. Hawaii Real Estate Promissory Note Checklist: This checklist emphasizes the specific requirements for loan transactions involving real estate in Hawaii. It includes additional considerations such as recording the mortgage or deed of trust and complying with state regulations governing real property transfers. 2. Hawaii Student Loan Promissory Note Checklist: Geared towards educational lending, this checklist highlights the particular provisions that should be included in a promissory note for student loans in Hawaii. It covers aspects like deferment options, grace periods after graduation, and potential loan forgiveness programs. 3. Hawaii Business Loan Promissory Note Checklist: This checklist focuses on the unique elements necessary for loans made for business purposes in Hawaii. It includes provisions relating to business structures, personal guarantees, and the legal requirements specific to commercial transactions. By following these checklists and seeking legal advice, you can create a comprehensive promissory note that adheres to Hawaii's laws and protects the rights and interests of all parties involved. Keep in mind that this is only a general guide, and consulting with an attorney is always recommended ensuring compliance with Hawaii's specific regulations and to address any unique circumstances.
