Promissory Note Example for Mortgage

PROMISSORY NOTE (SECURED BY MORTGAGE/DEED OF TRUST)

Document ID: PN-MTG-[YYYYMMDD]-001
Effective Date: [Date]
Version: 1.0
Governing Jurisdiction: State of [State Name]

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LEGAL DISCLAIMER AND NOTICE

This document constitutes a template for a Promissory Note secured by a Mortgage or Deed of Trust. This is not legal advice. Real estate and lending laws (including usury laws, homestead exemptions, and foreclosure procedures) vary significantly by jurisdiction. The user is strongly advised to consult with local counsel to ensure compliance with the specific statutes of the jurisdiction where the real property is located. Use of this document does not create an attorney-client relationship.

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1. PARTIES

BORROWER: [Borrower Full Legal Name], an individual/entity having its principal address at [Borrower Address] (“Borrower”).

LENDER: [Lender Full Legal Name], an individual/entity having its principal address at [Lender Address] (“Lender”).

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2. PROMISE TO PAY

FOR VALUE RECEIVED, Borrower unconditionally promises to pay to the order of Lender the principal sum of [Amount in USD] (the “Principal Amount”), together with interest on the unpaid principal balance at the rate of [Interest Rate]% per annum (the “Interest Rate”), calculated on the basis of a 365-day year.

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3. REPAYMENT TERMS

The Principal Amount and all accrued interest shall be due and payable as follows: (a) Installment Payments: Borrower shall pay [Amount in USD] in consecutive monthly installments, beginning on [Date] and continuing on the same day of each month thereafter until [Date] (the “Maturity Date”). (b) Application of Payments: Each payment shall be applied first to accrued interest, then to the reduction of the Principal Amount. (c) Prepayment: Borrower reserves the right to prepay the Principal Amount in whole or in part at any time without penalty.

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4. SECURITY

This Note is secured by a Mortgage / Deed of Trust dated [Date] (the “Security Instrument”) executed by Borrower in favor of Lender, encumbering the real property located at [Full Property Address] (the “Property”). The terms, covenants, and conditions of the Security Instrument are incorporated herein by reference.

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5. DEFAULT AND ACCELERATION

The occurrence of any of the following shall constitute an “Event of Default”: (a) Borrower fails to make any payment when due and such failure continues for [Number, e.g., 15] days; (b) Borrower breaches any covenant contained in this Note or the Security Instrument; or (c) Borrower files for bankruptcy or becomes insolvent. Upon an Event of Default, Lender may, at its option, declare the entire unpaid Principal Amount and all accrued interest immediately due and payable without further notice or demand.

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6. LATE CHARGES

If any installment payment is not received by Lender within [Number] days of its due date, Borrower shall pay a late charge of [Percentage]% of the overdue amount to compensate for the additional administrative costs incurred by Lender.

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7. GOVERNING LAW AND JURISDICTION

This Note shall be governed by and construed in accordance with the laws of the State of [State Name]. Any legal action arising hereunder shall be brought exclusively in the state or federal courts located in [County Name], [State Name], and the parties hereby waive any objection to personal jurisdiction or venue.

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8. WAIVER

Borrower and all endorsers waive presentment, demand for payment, notice of dishonor, and notice of acceleration. No failure or delay by Lender in exercising any right or remedy shall operate as a waiver thereof.

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9. SEVERABILITY

If any provision of this Note is held to be invalid or unenforceable, the remaining provisions shall continue to be valid and enforceable to the fullest extent permitted by law.

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10. ENTIRE AGREEMENT

This Note and the Security Instrument constitute the entire agreement between the parties regarding the subject matter hereof and supersede all prior discussions or understandings. This Note may only be amended by a written instrument signed by both parties.

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11. EXECUTION

FOR LENDER: Signature: _____________________________________ Printed Name: [Authorized Signatory Name] Title: [Title / Role] Date: [Date]

FOR BORROWER: Signature: _____________________________________ Printed Name: [Authorized Signatory Name] Title: [Title / Role] Date: [Date]

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STEP-BY-STEP EXECUTION AND FILING GUIDE

1. Drafting: Populate all bracketed fields ([...]) using professional document processing software. Ensure the "Amount" matches the commitment letter.
2. Verification of Authority: If the Borrower or Lender is an entity (LLC, Corp), obtain a Resolution of the Board or Operating Agreement excerpt confirming the signatory’s authority to bind the entity.
3. Notarization: Promissory notes secured by real estate often require notarization to be recorded alongside the Mortgage/Deed of Trust. Consult your local Clerk of Court/Recorder of Deeds.
4. Digital Signature: If using DocuSign or Adobe Sign, ensure the "Audit Trail" feature is enabled to capture IP addresses and timestamps for each signer.
5. Recording: The Security Instrument (Mortgage/Deed of Trust) must be recorded in the Land Records office of the county where the property is located to perfect the Lender's lien. The Promissory Note is usually held by the Lender and not recorded (to protect the Borrower’s financial privacy), unless local custom dictates otherwise.
6. Retention: Maintain the original "wet ink" Note in a fireproof, secure safe or a bonded vault. If the Note is sold or assigned, a formal "Allonge" must be attached to the original document.