Breach of Promissory Note Agreement
A promissory note is a written document that evidences a loan and sets forth the terms and conditions under which a borrower agrees to repay the money to the lender. Although anyone can draft a binding and legally enforceable promissory note, it is important to keep in mind the following issues when drafting such instrument.
A promissory note that does not attach real or personal property as collateral to the loan is called an “unsecured” loan. If the borrower declares bankruptcy, the lender cannot be repaid until the debts of other “secured” lenders is paid. That is why, in situations where the loan is large, have the borrow pledge security that could be used to satisfy the debt in the event the borrower defaults on the loan.
Although financial institutions such as banks and credit card companies can charge a high interest rate, private loans made by individuals must not violate state usury laws. Thus, if the interest rate is determined to be excessive, the note will be unenforceable and the lender may face civil and/or criminal action for violating usury laws.
Securing Necessary Signatures
If the note is made to an entity such as a corporation, it is generally a good idea to have the owner of the corporation sign the note in his or her individual capacity and on behalf of the corporation. This way the owner of the corporation is personally liable to repay the debt.
Attorney’s Fee Provision
As a lender, always include an attorney’s fee provision that allows the prevailing party to recover his or her attorney’s fees and costs incurred in enforcing the terms of the promissory note.
Contact Our Experienced Breach of Promissory Note Attorneys
Contact us online or call (213) 891-0777 to meet with out experienced breach of promissory note agreement attorneys, to discuss your claim. We are available to meet with you between 8:30 a.m. and 6:00 Monday through Friday. Evening and weekend consultations are available by appointment.