When family members or non-banking stakeholders enter into financial agreements with each other, there may not be any specified legally binding documents involved, but the borrower makes a promise to pay back the loan. So, what is a promissory note? A promissory note is an enforced promise to pay back a debt or loan to the lender. The borrower can decide the payment terms with his lender – whether he pays a lump sum at the end or specifies a regular payment amount that goes towards the principal and interest.
The governing law for a promissory note is usually the law of jurisdiction where the promissory note has been entered into. In most cases, it will be where the lender is based. If the promissory note is based on the acquisition of certain assets, then the location of those assets will also be specified in the promissory note. While families or individuals may be hesitant to get into binding legal contracts with each other, it can be resolved through a promissory note. Canada is well versed with promissory notes, with many borrowers and lenders entering into agreements with each other.
In most cases, there is no specific requirement for a witness or a notary to witness the signing of the promissory note. However, if the governing law of the jurisdiction and the nature of the note require it, then you may need to have a witness or a notary public to preside over the promissory note. Sometimes, even if it is not specified or required, it may be a good idea to have a third-party to witness the note signing, especially to repay, according to the terms and conditions stipulated in the note. A borrower usually always signs the note. Dependent on how many parties are involved, you may wish to get multiple signatures to ensure that all stakeholders are privy to the terms and conditions. Subject to the jurisdiction, this note will be legally enforceable, should the situation come to that.
You can create your own promissory note template, or choose from one of the several options that are available at your disposal. If you choose to write your own promissory note, you will want to know how to write a promissory note. You should keep in mind a couple of important factors when writing a promissory note – list down the loan amount, loan repayment terms and dates, default terms and conditions of the loan, any assets and services that may be used as a guarantee for the debt, rate of interest on the loan, maturity date and penalties for late and missed loan payments. You can also decide on a secured or unsecured promissory note for the repayment process. A secured promissory note may also be used in the case of a mortgage. If you are looking to understand more details of your mortgage, you can refer to a Canadian mortgage calculator.
If you need any further information regarding loans and promissory notes, you should log on to the website www.mymortgagebroker.com and choose from multiple options are available to you. If you need any further help with the process or have any additional questions, you can contact their customer service representatives between Monday and Friday at 403-870-2669.