Promissory Note Template Maryland

PROMISSORY NOTE (SECURED/UNSECURED)

Document ID: PN-MD-2024-001
Effective Date: [Date of Execution]
Version: 1.0
Governing Jurisdiction: State of Maryland

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STATUTORY & LEGAL COMPLIANCE NOTICE

DISCLAIMER: This template is provided for informational purposes by a legal operations professional and does not constitute formal legal advice or the creation of an attorney-client relationship. Maryland law, specifically the Maryland Uniform Commercial Code (Commercial Law Article) and the Maryland Consumer Loan Law, imposes specific requirements on interest rate caps (usury laws) and disclosure. Users are advised to review Md. Code Ann., Com. Law § 12-101 et seq. prior to execution. Independent local counsel review is strongly recommended to ensure compliance with current state and federal lending regulations.

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1. PARTIES & RECITALS

This Promissory Note (the "Note") is made and entered into as of the Effective Date by and between:

BORROWER: [Borrower Full Legal Name], having a principal address at [Borrower Address] (“Borrower”); and

LENDER: [Lender Full Legal Name], having a principal address at [Lender Address] (“Lender”).

RECITALS: WHEREAS, Borrower desires to borrow from Lender, and Lender desires to lend to Borrower, the principal sum of [Amount in USD] (the “Principal Amount”), under the terms and conditions set forth herein.

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2. OPERATIVE CLAUSES

2.1 Promise to Pay

For value received, Borrower hereby unconditionally promises to pay to the order of Lender the Principal Amount, together with interest on the unpaid principal balance at a rate of [Percentage]% per annum, calculated on the basis of a 365-day year.

2.2 Payment Terms

The entire outstanding Principal Amount, together with all accrued and unpaid interest, shall be due and payable in full on [Maturity Date] (the “Maturity Date”). Payments shall be made in lawful money of the United States via [Method of Payment] to the address specified in Section 8 (Notices).

2.3 Late Charges & Default Interest

If any payment is not received by Lender within [Number] days of the scheduled due date, a late fee of [Amount or Percentage]% of the overdue payment shall be assessed. Upon the occurrence of an Event of Default, the interest rate shall increase to [Percentage]% per annum (the “Default Rate”) until such default is cured.

2.4 Prepayment

Borrower reserves the right to prepay the Principal Amount, in whole or in part, at any time without penalty or premium. Any partial prepayment shall be applied first to accrued interest and then to the principal balance.

2.5 Event of Default

An “Event of Default” shall occur if Borrower: (a) fails to make any payment when due; (b) files for bankruptcy, insolvency, or seeks relief under any debtor protection laws; or (c) fails to perform any other obligation under this Note and such failure continues for [Number] days after written notice from Lender.

2.6 Acceleration

Upon the occurrence of an Event of Default, and at the option of the Lender, the entire unpaid Principal Amount and all accrued interest shall become immediately due and payable without further demand or notice.

2.7 Governing Law & Jurisdiction

This Note shall be governed by, construed, and enforced in accordance with the laws of the State of Maryland, without regard to conflict of law principles. Any dispute arising hereunder shall be subject to the exclusive jurisdiction of the state or federal courts located in [County Name], Maryland.

2.8 Costs of Collection

If this Note is placed in the hands of an attorney for collection, or if it is collected through any legal proceeding, Borrower agrees to pay all reasonable attorney’s fees and court costs incurred by Lender in connection therewith.

2.9 Entire Agreement; Amendments

This Note constitutes the entire agreement between the parties regarding the subject matter hereof. No amendment or modification of this Note shall be valid unless in writing and signed by both parties.

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3. EXECUTION & SIGNATURE BLOCKS

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

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

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4. STEP-BY-STEP EXECUTION & FILING GUIDE

1. Drafting: Replace all bracketed text [ ] with precise information. Ensure the Principal Amount is written in both numerals and words to prevent ambiguity.
2. Usury Check: Prior to finalizing the interest rate, verify the current Maryland statutory interest rate caps (typically 6% absent a written contract, but variable based on commercial vs. consumer lending status).
3. Signatory Authority: If the Borrower or Lender is an entity (LLC, Corp), confirm the signatory has documented "Authority to Bind" via an Operating Agreement or Board Resolution.
4. Digital Execution: Utilize a compliant e-signature platform (e.g., DocuSign, Adobe Sign) that provides an Audit Trail Certificate. Ensure the final PDF is saved with a non-editable format.
5. Record Retention:
   • Lender: Retain the original signed Note in a secure, fire-proof location or encrypted digital vault.
   • Borrower: Retain a fully executed copy for financial statement preparation and tax purposes.
6. Filing: If the Note is secured by real or personal property (e.g., a Deed of Trust or UCC-1 Financing Statement), ensure the security instrument is recorded in the land records of the appropriate Maryland County or the Secretary of State as required.