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.
Title: North Carolina Checklist — Items to Consider for Drafting a Promissory Note Introduction: When creating a legal promissory note in North Carolina, it is crucial to ensure that all necessary elements are included to protect the interests of both the lender and the borrower. This detailed checklist will guide you through the essential factors to consider when drafting a promissory note specific to North Carolina. 1. Parties Involved: Include the names and addresses of the lender (also known as the payee) and borrower (also known as the maker), ensuring accurate identification of both parties. Additionally, consider including any co-signers or guarantors involved. 2. Loan Amount and Repayment Terms: Clearly state the loan amount and specify if it includes interest or any additional costs. Define the repayment timeline, including the due date, frequency of payments (monthly, quarterly, etc.), and any grace periods or late payment penalties. 3. Interest Rate & Method of Calculation: Determine the interest rate applicable to the loan and specify how it will be calculated (e.g., simple interest or compound interest). Ensure compliance with North Carolina usury laws, which limit the maximum amount of interest that can be charged. 4. Security/Collateral: If applicable, identify any collateral that secures the loan. Describe the collateral in detail, including its estimated value, location, and any insurance requirements. Consider using a separate Security Agreement if collateral is involved. 5. Default Provisions: Include default clauses detailing the circumstances under which the borrower would be considered in default, such as missed payments or breaching other terms. Specify the remedies available to the lender in case of default, such as acceleration of the loan or repossession of collateral. Ensure compliance with North Carolina's specific foreclosure and repossession laws. 6. Governing Law: State that the promissory note is governed by North Carolina law and specify the county where any disputes would be resolved through legal processes. 7. Signatures and Witnesses: Require the borrower's and lender's signatures, as well as their dates of signing. Depending on the amount involved, notarization may be necessary. Consider including spaces for witnesses to sign, although North Carolina law does not require it. Types of North Carolina Checklists for Drafting a Promissory Note: 1. Simple Promissory Note Checklist: This checklist covers the essential elements required for a basic promissory note, ensuring compliance with North Carolina laws while maintaining simplicity. 2. Secured Promissory Note Checklist: Tailored for loans involving collateral, this checklist includes additional considerations about describing and protecting the security interest in the collateral. 3. Promissory Note with Co-Signer/Guarantor Checklist: When a third party is guaranteeing or co-signing the loan, this checklist provides necessary guidance on including the relevant details of the guarantor or co-signer. Conclusion: Drafting a promissory note in accordance with North Carolina law is a vital step to ensure the enforceability and legal protection of a loan agreement. By diligently considering the components listed in this comprehensive checklist relevant to North Carolina, lenders and borrowers can create a clear and steadfast promissory note tailored to their specific needs.
