sample assignment of promissory note

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• Assignment of Promissory Note

An Assignment of a Promissory note is a bilateral document that transfers the rights and obligations associated with a promissory note from one party (the assignor) to another party (the assignee). Jotform Sign ’s Assignment of Promissory Note shows the date the document was created, assignor information, assignee details, start and end dates of the promissory note, total amount due, interest rate percentage, and chosen payment method.

You can easily make changes to this Assignment of Promissory Note using our intuitive online builder. No coding or design experience is required — just drag and drop to add or edit form fields, update the wording of the document, include additional signature fields, change fonts and colors, and more. You can also set up an automated signing order to ensure signatures are received in a timely manner and in the correct order. Once signed, you’ll automatically receive a finalized version of the document for your records.

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If you need to draft polished, official letters, our customizable Letter E-Sign templates can help you generate them — for free! To get started, customize any of our free templates for confirmation letters, consent letters, cover letters, letters of recommendation, and more. Submissions made through your online letter form will automatically be converted into designed, professional PDFs that are easy to download, print, and email.

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• Email: The email of the person sending the letter
• Phone number : The contact phone number of the person sending the letter
• Sender and recipient addresses : The full addresses of both the person sending the letter and the person receiving the letter
• Greeting : A formal salutation to the person receiving the letter
• Body text : The bulk text of the letter stating its purpose, whether that be for a resignation, a promotion, an appraisal, etc.
• Signature and signoff : The signature of the person sending the letter, followed by an optional field for their printed name and the date of signing

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5) What can I use a letter for?

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Legal Templates

Home Personal & Family Promissory Note

Promissory Note Template

Use our Promissory Note template to detail the terms of loan repayment.

Updated July 3, 2023 Written by Sara Hostelley | Reviewed by Susan Chai, Esq.

A Promissory Note records all the terms and conditions of a loan transaction between a borrower and a lender before any money changes hands.

Key Provisions

• Parties : Full name, type (individual/entity), and addresses of the borrower and the lender.
• Principal Amount : The total amount of money being loaned.
• Payment Terms : When and how payments should be made.
• Interest Rate : The rate of interest charged on the principal.
• Borrower’s Signature : Essential for validity (lender’s signature is optional).
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By Type (2)

What is a promissory note, when should i use a promissory note, how to write a promissory note, why use a promissory note, usury limits by state, promissory note sample, frequently asked questions.

A document used to include collateral in a high-stakes loan.

A document used for quick loans with trustworthy borrowers.

A promissory note is a written promise by a borrower to repay a loan to a lender according to predetermined terms and conditions.

Before the requested fund is provided, the lender and the borrower document terms mutually agreed upon on a promissory note, such as the repayment schedule, interest rates, and collaterals.

After the note is signed, the borrower receives the amount promised by the lender and pays back the loan according to the terms. Eventually, the lender will release the borrower from the promissory note once the loan is completely paid off.

Common scenarios in which you may use a promissory note can include:

• Informal loans: lending money to friends or family members;
• Real estate loans: providing private mortgage to a home buyer;
• Business loans: financing a business for start-up or expansion;
• Vehicle loans: funding for the purchase of a car, boat, or other motor vehicle

Promissory notes are typically used for less complex loans or when there is a prior acquaintance between the lender and the borrower. By using promissory notes, lenders ensure legal protection for themselves in the event of a borrower’s failure to return the borrowed money.

Step 1: State the parties

Start by identifying the borrower (the party receiving the loan) and the lender (the party who will be paid back).

The parties can be individuals or business entities, such as corporations or LLCs. If either party to the promissory note is a business entity, a representative must sign on its behalf.

All lenders or borrowers should include their names on the note if there is more than one lender or borrower.

If the borrower’s financial stability is questionable, the lender may demand a cosigner with good credit as a safety net for the promissory note. By jointly signing the note, the cosigner undertakes to settle the loan if the borrower does not pay it back.

How should I verify a borrower's financial status?

It is recommended that you request your borrowers to supply their credit reports for loans.

Borrowers can access these free yearly reports online , via websites , or through credit card company perks. Some online agencies also offer paid financial status checks.

Step 2: Outline repayment terms

Next, you should clearly outline the following details about the loan and how it will be paid back:

• Principal amount: The total amount of money borrowed;
• Payment schedule: If the borrower plans to pay in installments, in a lump sum, or on demand;
• Collateral: If the borrower needs to guarantee the loan with their asset(s) and secure the note;
• Late fee: Whether there will be an additional fee if the payment is not made on time;
• Interest: If there will be any interest added to the loan and at what rate;
• Acceleration: If the lender can ask for the whole loan to be paid back at once, regardless of the original payment plan;
• Prepayment: If the borrower can pay back the loan early without any extra charges;
• Consequence: What happens if the borrower cannot repay the loan?

When determining repayment terms, the lender should consider carefully the borrower’s financial condition and the risks associated with the loan.

For example, if your borrower has low credit, you may opt for a secured promissory note if the borrower defaults. If your borrower expects a large sum of money in the future, one lump sum payment may be more appropriate than installment payments.

What kind of interest rate should I be charging?

Most states have laws that restrict the maximum interest rate you can charge. See our Usury Limits by State Table for complete interest rate information.

Determining the Payment Schedule

To help you make an informed decision, below is a glance at the pros and cons of the three typical payment schedules for promissory notes:

Lump Sum What it is: A one-time payment where the borrower pays the total amount at the end of the loan term. Suitable for: Individuals who anticipate having the total amount of the loan available by a specific date (i.e., from a tax refund, an inheritance, a bonus at work) Pros Quick, full payment No ongoing collection management Cons Higher default risk Lose potential interest income Due on Demand What it is: The lender can demand immediate payment anytime. Suitable for: Individuals or businesses lending to someone they trust deeply, like a close friend or family member, or in cases where the lender wants flexibility in requiring repayment. Pros Can request repayment at any time Useful when anticipating early repayment Cons Uncertain repayment timing Can strain borrower relationship Installments What it is: The loan is repaid in regular, set amounts over time. Suitable for: Most traditional loan scenarios, such as personal loans, auto loans, and home mortgages, where the borrower pays the loan over time in regular amounts. Pros Steady and predictable cash flow Potentially higher interest income Cons Extended default risk Requires ongoing collection management

Step 3: Consider additional terms

Before you complete the promissory note, consider including additional provisions to make your note more comprehensive, such as:

• Amendment: How the note could be altered;
• Governing law: Which state laws that will be applied for the note;
• Joint and several liability: How all co-borrowers share responsibility for the repayment of the note, collectively and individually;
• Right to transfer: If the lender has the right to transfer the promissory note to a different party, have them collect payment instead.

Should I make my promissory note transferable?

Promissory notes, as “negotiable instruments,” can substitute for money. If cash is needed urgently, you can sell the note, but consider the possible impact on your borrower relationship. Before making your note transferable, evaluate your goals and risks.

Step 4: Sign the note

Once the principal terms of the note are agreed upon, the borrower should sign the note. While it is optional, including the lender’s signature is also good practice.

Although not legally required, it is recommended that the promissory note be notarized if the loan involves a significant amount of money or when the terms are complex or could potentially be disputed.

Money should be exchanged only after the note is signed. In addition, every party to the note should receive a copy, and the lender should store the original securely.

What happens if I lose the original note?

A copy will suffice if the original is lost. If neither the original nor a copy is present, try and find other ways to prove the agreement (i.e., text exchange). The borrower could technically ghost when there is no proof that the loan happened.

Step 5: Enforce the note

Generally speaking, there are three potential outcomes once a promissory note is in effect:

• Timely repayment

Suppose the borrower repays the total amount per the note’s conditions. In that case, the lender should provide a loan release form to relieve the borrower of any further obligations related to the note.

• Delayed repayment

In case of late payment, the lender must issue a demand letter requesting the payment and any applicable late fees. If the borrower still fails to make up for the payment, the lender must evaluate the financial viability of initiating legal action.

• Non-repayment

If the borrower completely defaults on payment, the lender can pursue repayment (and collateral repossession, if applicable) via small claims court (a less expensive venue that doesn’t permit attorney representation, thereby eliminating attorney’s fees) for loans under the state limit . Litigation may be necessary if the loan exceeds the lender’s state limit.

Taking Legal Action

A comprehensive list of documents required when pursuing legal action for non-payment of a promissory note may include:

• The note itself. This is the original agreement that indicates the borrower’s promise to pay and contains your signatures. A copy will suffice if the original is lost.
• The demand letter. This serves as proof that you have formally demanded repayment.
• Correspondence. Any emails, letters, or other communications regarding the loan and repayment with the borrower.
• Other supporting documentation. This might include collateral agreements, personal guarantees, or other relevant contracts.
• Specific small claims court forms (if applicable) . Depending on your location and the claim amount, you may need to fill out specific forms for small claims court.

It’s important to consider that litigation costs may exceed the recoverable amount . Furthermore, even if a judgment favors the lender, recouping the funds can be challenging if the borrower lacks the financial means to settle the debt.

• Legal recourse: It provides a lender with legal recourse if a borrower fails to repay the loan;
• Evidence of debt: It acts as a record of the transaction that can be used for accounting and tax purposes;
• Additional flexibility: Its transferability offers lenders an effective risk management method.

Tax benefits of promissory notes

The IRS permits annual tax-free gifts of up to $17,000 per individual or $34,000 per couple, excluding direct payments for education or medical costs.

Upon reaching this limit, a family loan can be facilitated through a promissory note at IRS-specified low-interest rates , keeping the interest and principal within the family as a tax-efficient support mechanism.

Usury is the illegal practice of setting the interest rate on debt (including all extra charges like fees and discount points) higher than the maximum limit set by the relevant law or beyond what’s allowed in an exception to the law. Therefore, usury rates refer to illegally high-interest rates exceeding the maximum limit .

Each state has different legislation on usury. Find the maximum interest rate you can charge legally in your state in the Usury Limits table below.

Refer to the free sample or download a customizable promissory note template below.

PROMISSORY NOTE

State of ___________

Amount: $________ [Principal amount]

Dated: ___________, 20___

FOR VALUE RECEIVED, the undersigned _____________________________ [Name of borrower(s)], (collectively “Borrower”), hereby promises to pay to the order of _____________________________ [Name of lender(s)], (collectively “Lender”), the principal sum of $________ (the “Principal Amount”) including interest in accordance with the terms set forth below.

1. Payment. The Principal Amount together with any accrued and unpaid interest and all other charges, costs and expenses, is due and payable on: (Check one)

☐ ___________, 20___. ☐ demand of the Lender.

All payments under this Note are applied first to any accrued interest and then to the Principal Amount.

2. Payment Schedule. (Check one)

☐ This Note shall be payable in installments equal to $________. The first payment is due on ___________, 20___ and due thereafter in equal consecutive installments every: (Check one)

☐ Month ☐ Quarter ☐ Year ☐ Other: ______________

☐ This Note shall NOT be payable in installments.

3. Security. (Check one)

☐ This is a secured note. Borrower agrees that until the Principal Amount of this Note together with any interest is paid in full, this Note will be secured by _________________________________ [Collateral], and Borrower hereby grants to Lender a security interest in and to such property.

☐ This is an unsecured note.

4. Interest. (Check one)

☐ The Principal Amount shall bear interest at the rate of $________ per annum, accruing daily. Notwithstanding, the total interest charged on the Principal Amount shall not exceed the maximum amount allowed by law and Borrower shall not be obligated to pay any interest in excess of such amount.

☐ The Principal Amount shall NOT bear interest.

5. Late Fee . (Check one)

☐ If Borrower fails to make a payment due under this Note within _____ days after the due date, Borrower agrees to pay to Lender a late payment fee of: (Check one)

☐ $________. ☐ ________% of the amount then due.

☐ A late payment fee will NOT be charged.

6. Acceleration. (Check one)

☐ In the event Borrower is more than _____ days late with a payment, Lender in its sole discretion may demand that the entire balance of the unpaid principal amount of this Note and any accrued and unpaid interest be immediately due and payable in full.

☐ This note will NOT be accelerated if a payment is late.

7. Prepayment. (Check one)

☐ Borrower has the right to prepay all or any part of the Principal Amount of this Note at any time without prepayment penalty or premium of any kind. Borrower must provide _____ days prior written notice to Lender of the prepayment and the amount of the prepayment. ( ☐ If Borrower pays all of the Principal Amount, together with any accrued interest, on or before ___________, 20___, Lender will give a discount of $________ of the outstanding Principal Amount due.)

☐ Borrower may NOT prepay the note.

8. Costs and Fees. Upon the occurrence of a default by Borrower, Borrower shall pay to Lender all costs of collection, including reasonable attorney’s fees.

9. Waiver. Borrower and all sureties, guarantors and endorsers hereof, waive presentment, protest and demand, notice of protest, demand and dishonor and nonpayment of this Note.

10. Guaranty. ______________ located at __________, __________, __________ __________ (“Guarantor”) promises to unconditionally guarantee to Lender, the full payment and performance by Borrower of all duties and obligations arising under this Note. Guarantor agrees that this guaranty shall remain in full force and effect and be binding on Guarantor until this Note is satisfied.

11. Assignment. Borrower may not assign its rights or delegate its duties under this Note without Lender’s prior written consent.

12. Joint and Several Liability. The obligation of each Borrower under this Note shall be joint and several.

13. Amendment. This Note may be amended or modified only by a written agreement signed by Borrower and Lender.

14. Notifications. Any notice or communication under this Note must be in writing and either personally delivered, sent by overnight courier service, certified or registered mail, postage prepaid, return receipt requested or by facsimile or electronic email transmission.

15. Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of ____________.

16. Miscellaneous. This Note will inure to the benefit of and be binding on the respective successors and permitted assigns of Lender and Borrower. Lender shall not be deemed to have waived any provision of this Note or the exercise of any rights held under this Note unless such waiver is made expressly and in writing. Waiver by Lender of a breach or violation of any provision of this Note shall not constitute a waiver of any other subsequent breach or violation. In the event that any of the provisions of this Note are held to be invalid or unenforceable in whole or in part, the remaining provisions shall not be affected and shall continue to be valid and enforceable as though the invalid or unenforceable parts had not been included in this Note.

IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first stated above.

Borrower Signature: ________________________

Borrower Full Name: ________________________

Guarantor Signature: ________________________

Guarantor Full Name: ________________________

Lender Signature: ________________________

Lender Full Name: ________________________

What makes a promissory note invalid?

A promissory note may be invalid if:

• It lacks essential elements like the amount owed, the interest rate, and the repayment terms;
• It was signed under duress (i.e., someone was threatened or forced to sign it);
• It involves illegal activity (i.e., loan sharking or money laundering);
• It’s forged or fraudulently altered.

Does a promissory note need to be recorded?

Typically, promissory notes are not recorded with the county and are retained by the lender. Only those notes involving real estate are typically recorded.

Can a promissory note be signed electronically?

Yes , a promissory note can be signed electronically. The validity of electronic signatures is recognized under the E-Sign Act.

However, ensuring that the process follows all relevant laws and standards in your jurisdiction is important.

How long is a promissory note valid?

A promissory note can last 3-15 years , depending on the jurisdiction. As it is a legally binding contract, its statute of limitation is generally the same as that of other written agreements.

However, this period extends to 15-30 years for real estate-related notes.

Related Documents

• I Owe You (IOU) : Used to specify the details of a loan made between a borrower and a lender.
• Demand Letter for Payment : A formal, written document demanding payment of an outstanding debt.
• Sales Agreement : Outlines the terms of a sale where there is an exchange of goods.
• Loan Agreement : Enforce a promise between a lender and a borrower if one party does not hold up their end of the bargain.
• Promissory Note Release Form : Use our Promissory Note Release Form to release your borrower from the loan.
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Promissory Note

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A Promissory Note , also sometimes called an IOU , is essentially a one-sided document by which a borrower of money (most often just called the "Borrower") agrees to pay a lender (the "Lender"). A Promissory Note is different than a loan agreement because it only binds one party - the Borrower - to actions (such as payment) or consequences (such as if the Borrower doesn't pay), but it doesn't bind the Lender to anything. In fact, Lenders don't even sign Promissory Notes - only Borrowers do.

Often, Promissory Notes are used in place of more formal loan agreements when the loan is being made informally between friends or family members . Promissory Notes can even sometimes be used between very small businesses. When more formal loans are made between bigger businesses or banks, for example, that is when loan agreements are used.

How to use this Document

This document can be used in any situation where an individual or business is borrowing money from another individual or business but is best used in situations where money is being loaned somewhat informally, between family or friends. This is because the Promissory Note is only signed by one party , the Borrower, and it does not bind both parties to an agreement.

In this document, the basic details of the loan will be entered, such as the amount and when the total amount is due. It also includes, of course, the identifying details of both parties: the name and address of the individual borrower and lender, or the business name and business address of a company borrower or lender.

This Promissory Note will also include a determination of the biggest issue with the loan - whether or not interest will be charged.

A Promissory Note is a short, succinct document for a loan. For a more detailed loan, an in-depth Loan Agreement can be used.

Applicable Law

Promissory Notes are governed by Article III of the Uniform Commercial Code (the "UCC").

How to modify the template

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.

Guides to help you

• How to Get your Debtor to Pay
• What is the Difference Between a Promissory Note and Loan Agreement?
• Should I Use a Promissory Note for a Friendly Loan?

Other names for the document:

Agreement to pay back money, Note for IOU, Note of hand, Note to pay back funds, Payable note

Country: United States

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Free promissory note templates

Demand for Full Payment on Installment Promissory Note

Secure your loan repayment with a demand for full payment (on installment promissory note). Help lenders to collect outstanding amounts efficiently.

Demand for Payment on Demand Promissory Note

Make sure your demand for payment is worded right when it's time for the borrower to pay you back. Ensure timely repayment of a loan with a demand promissory note.

Earnest Money Promissory Note

Show your commitment and good faith to buy a property with an earnest money promissory note.

Notice of Default on Installment Promissory Note

Facing a missed payment on a loan you extended? Send a notice of default on the installment promissory note. Prompt your borrowers to fulfill their commitment and get your finances back on track.

Release of Promissory Note

Acknowledge the loan repayment closure with a release of a promissory note. Conclude your agreement amicably, providing clarity and closure for all parties involved.

Secured Demand Promissory Note

Make sure your demand for payment for collateral-backed loans is worded right when it's time for the borrower to pay you back. Ensure timely repayment of a loan with a secured demand promissory note.

Secured Promissory Note (Fully Amortized)

Safeguard your financial arrangement with a secured promissory note. Define the installment payment terms of the loan clearly for the borrower and lender.

Secured Promissory Note (Installment with Balloon Final Payment)

Looking to secure a non-bank loan to be paid back in installments? A secured promissory note helps to protect your financial interests and officiate lending agreements.

Secured Promissory Note (Interest-Only with Balloon Final Payment)

Need a secure non-bank loan from a friend or family member? Use our template and get the funding you need.

Secured Promissory Note (Lump-Sum Payment)

Safeguard your financial arrangement with a secured promissory note. Define loan terms clearly for borrowers and lenders.

Unsecured Demand Promissory Note

Safeguard your financial arrangement with an unsecured demand promissory note. Define loan terms clearly for borrowers and lenders.

Unsecured Promissory Note (Fully Amortized)

Looking for a loan without collateral and in installment payments? Simplify the lending process with an unsecured promissory note (fully amortized).

Unsecured Promissory Note (Installment with Balloon Final Payment)

Make your loan official and maintain a healthy borrower-lender relationship with a promissory note. Establish clear loan terms, secure repayments, and ensure a secure financial arrangement.

Unsecured Promissory Note (Interest-Only with Balloon Final Payment)

Secure loans with a promissory note. Protect your investments by laying out transparent repayment terms.

Unsecured Promissory Note (Lump-Sum Payment)

Secure your finances with an unsecured promissory note (lump-sum payment). Clarify loan terms, interest rates, and payment details. Start building a successful financial arrangement today.

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Bills of Sale

Promissory Notes

Buying and Selling Real Estate Notes

Not as Simple as One Might Think by David J. Willis J.D., LL.M.

Introduction

Investors often buy and sell real estate lien notes, either singly or in a package, a transaction that is customarily effected by a Sale & Assignment of Notes and Liens . This transfer instrument is referred to in this article simply as an assignment.

The idea of buying or selling a note seems simple until one delves into it. Is the assignment to be made “as is” with all faults that may exist in the note and the lien instrument? Will there be representations and warranties made by the parties and, if so, how extensive? How long will they last? Will recourse provisions apply if the note goes into default, and if so what is the recourse mechanism? Will indemnities be included? The closer one looks the more questions arise.

Our focus in this article is on the final assignment instrument signed by the parties at closing of the transfer rather than preliminary agreements that may come before closing.

The Assignment Process

In the case of real estate lien notes, a completed assignment involves not just a transfer of a note but the liens securing payment as well, which is why the assignment instrument is referred to as an assignment of note and liens. Two liens may be involved: the vendor’s lien retained in the deed from the seller to the borrower and the lien granted by a deed of trust.

One must distinguish between an absolute assignment of a note (a permanent transfers to a new owner and holder) versus a collateral assignment (made to a lender as collateral for a loan). Notes may be assigned in either way.

This discussion addresses absolute assignments. Steps in the process are usually: (1) an initial letter of intent or preliminary contract phase when basic terms are agreed to—similar to an earnest money contract for real estate—with “outs” for the prospective buyer; (2) a due-diligence or inspection period when a prospective buyer studies and evaluates the note (or package of notes) along with the lien instrument(s) and supporting documentation; (3) a cure period for objections, if any, raised by the buyer; (4) a closing document negotiation phase in which the terms of the final assignment instrument are hammered out and agreed to; and (5) a closing where a final sale and assignment of note and liens is executed, the purchase price paid, and the original note and loan file are delivered to the buyer-assignee.

BUSINESS & COMMERCE CODE

Negotiable instruments.

A properly written and endorsed real estate lien note is a negotiable instrument for purposes of Business & Commerce Code Section 3.201 et seq. Specific requirements of negotiability are listed in Section 3.104:

Bus. & Com. Code Sec. 3.104(a). NEGOTIABLE INSTRUMENT. Except as provided in Subsections (c) and (d), “negotiable instrument” means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:

(1) is payable to bearer or to order at the time it is issued or first comes into possession of a holder;

(2) is payable on demand or at a definite time; and

(3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain: (A) an undertaking or power to give, maintain, or protect collateral to secure payment; (B) an authorization or power to the holder to confess judgment or realize on or dispose of collateral; or (C) a waiver of the benefit of any law intended for the advantage or protection of an obligor.

A real estate note that does not qualify as a negotiable instrument may still be valid and enforceable, and it may still be sold and assigned, but common law rules relating to the assignment of contracts will apply—the negotiable instrument rules of the Business & Commerce Code will not.

The resale value of a note that is non-negotiable is likely to be discounted.

Statutory Warranties

Business & Commerce Code Section 3.416 provides minimal warranties for notes that are negotiable instruments. These are automatically in place unless the assignment instrument disclaims them:

Bus. & Com. Code Sec. 3.416(a). TRANSFER WARRANTIES. A person who transfers an instrument for consideration warrants to the transferee and, if the transfer is by indorsement, to any subsequent transferee that:

(1) the warrantor is a person entitled to enforce the instrument;

(2) all signatures on the instrument are authentic and authorized;

(3) the instrument has not been altered;

(4) the instrument is not subject to a defense or claim in recoupment of any party that can be asserted against the warrantor;

(5) the warrantor has no knowledge of any insolvency proceeding commenced with respect to the maker. . . .

Unless contradicted or disclaimed in the assignment, these statutory warranties co-exist with contractual representations and warranties of the parties (discussed below).

DUE DILIGENCE BY BUYER-ASSIGNEE

Are the note and lien valid.

Determining the validity and enforceability of a real estate note and the lien(s) securing it is the core due-diligence task of any prospective buyer—who should obtain the whole loan file not just a copy of the note itself. A complete file will include (at least) the note; a copy of a recorded deed of trust; a copy of a recorded deed into the name of the property owner (the borrower); and a payment history. Even if only copies are being reviewed, the original note should exist and be available for inspection.

For a note to be valid, there must be consideration extended—money that is actually loaned. Hughes v. Belman , 239 S.W.2d 717, 720 (Tex.App.—Austin 1951, writ ref’d n.r.e.); and Bus. & Com. Code Sec. 3.303.

Generally, a note offered for sale should:

(1) be correct as to all material information including clearly identifying borrower and lender as well as the security property; (2) recite an unconditional promise to pay a sum-certain debt (and the numerical portion must match the written portion); (3) contain authentic signatures of all debtors and be dated; (4) provide clear terms of repayment; (5) be secured by a valid, recorded, and unreleased deed of trust; (6) contain the signature of both spouses if the property is homestead; (7) not contain any provisions that are illegal such as requiring usurious interest; (8) not be in default (monetary of technical) or the subject of any dispute with the borrower; (9) not be in litigation or bankruptcy whether existing, threatened, or anticipated; (10) not be the subject of any interest or claim by third parties; and (11) not have been previously sold or transferred in whole or in part.

This is a partial list. Sensible note purchasers will also want to perform minimal due diligence as to the value and condition of the security property since such factors may influence future note payment and performance. Does the property exist? Is it owner-occupied or occupied by renters? Is it in a state of good repair or is it underwater as a result of a recent flood?

If the parties to the note are registered entities (LLCs, corporations, or limited partnerships) it is important to verify that they are in good standing with the Secretary of State and the Texas Comptroller. If not, they do not have the legal capacity to do business, whether it is selling or buying notes or anything else.

All of the foregoing factors affect the quality of the note or notes being considered—and quality affects price.

The importance of thorough due diligence cannot be over-emphasized. A prospective buyer should engage an experienced attorney to assist in determining the validity and enforceability of the loan documents before substantial funds are committed.

Even when a note is being transferred entirely “as is” a prospective buyer-assignee should insist on an adequate due diligence/inspection period before closing.

REPRESENTATIONS AND WARRANTIES

Beyond statutory minimum warranties.

A well-drafted assignment may (and should) go beyond minimum statutory warranties to include contractual representations and warranties by the parties. It is possible for the assignment to include extensive reps and warranties, limited reps and warranties, or no reps and warranties at all—in which case the assignment is made “as is” and almost always without recourse. These terms should be expressly stated in the assignment instrument.

The goal of the seller-assignor is to minimize ongoing liability by limiting the number of reps and warranties. The buyer-assignee will instead prefer a longer list of assurances concerning note quality and completeness of the loan file.

Core representations and warranties of the seller-assignor include assurances that the note and lien(s) contain correct information and are legally valid and enforceable; that they are secured by a lawful vendor’s lien retained in a recorded general or special warranty deed plus a valid first-lien recorded deed of trust against the security property; that payments are current and there is no threat of monetary or technical default; that no adverse litigation is pending or threatened; and that the assignor is the sole owner and holder of the debt with power to transfer the note and liens.

There may be many more seller reps and warranties that a careful buyer will want to include. An example: if the seller-assignor was the original payee on a real estate note, and the note arose from seller financing, the buyer-assignee should want a specific warranty that the SAFE Act and Dodd Frank were fully complied with in the course of the original transaction.

There is the question of how long reps and warranties will survive closing (if at all)—30 days? 90 days? Forever?

Obtaining adequate reps and warranties from the seller-assignor does not substitute for thorough due diligence by a prospective buyer-assignee.

OTHER CLAUSES IN THE ASSIGNMENT

Assignments made “as is”.

What if the transaction is entirely “as is,” with no reps and warranties? There is certainly a market for this although the sales price of the note(s) will be discounted as a result. The key element in the assignment (for the seller-assignor) will be an effective “as is” clause similar to ones found in earnest money contracts and warranty deeds. Drafting these clauses can be tricky. Simplistic, one-liner “as is” clauses will not suffice since the seller-assignor needs not only to disclaim assurances regarding the note being transferred but also any reps or warranties concerning the condition and value of the security property.

Disclosure by the Seller-Assignor

Notwithstanding that an assignment is being made and accepted “as is,” a buyer should seek to obtain an agreement by the seller to make full disclosure of material facts. A sample clause might be: Assignor covenants and agrees to fully disclose to Assignee, prior to expiration of the inspection period, any and all material facts, conditions, and circumstances pertaining to the note(s), the lien(s), and the security property that could reasonably be expected to affect the Assignee’s decision to buy or not buy, even if this assignment is agreed to be “as is,”in present condition with all faults and without recourse.

Recourse by the Buyer-Assignee

Notes are sold with or without recourse by the buyer-assignee against the seller-assignor. Recourse comes in three varieties: none, full, or limited.

No recourse means what it says: if the borrower defaults then the buyer-assignee is stuck with a non-performing note (a near-worthless asset) and is solely responsible for pursuing the debtor and foreclosing on the security property.

Full recourse means that the buyer-assignee gets to give the note back to the seller-assignor if the debtor defaults. One of two things generally happen: (1) the buyer-assignee gets a credit or refund or (2) the buyer-assignee can substitute another note that is current and performing. There are other variations.

Limited recourse is, contractually speaking, all over the place. There are as many different provisions for limited recourse as there are creative attorneys to write them. Limited recourse provisions may state that there will be some sharing of effort and expense in collection or foreclosure, possibly with a reckoning after foreclosure sale of the security property. Remedies may be different when a batch of notes is involved: for example, if 100 notes are sold, the assignment might provide that the first 10 problematic notes will be full recourse, but the remaining 90 will not. In either case, there may be a hard limit on the total monetary amount of recourse available against the seller-assignor.

The availability of recourse—whether none, full, or limited—may also be contained within a specific time period. The availability of recourse is seldom indefinite.

Indemnity Provisions

If possible, the seller-assignor will want an indemnity clause holding him harmless against issues that may later arise in connection with the legality, enforceability, or collectability of the note. As with sellers of anything, the goal is no comebacks after closing.

Note buyers, on the other hand, resist not only taking the heat for defects in what they are purchasing but also paying the cost of defending against lawsuits arising from those defects. As with so many issues in real estate it comes down to quality and price. A seller-assignor may be able to get an indemnity provision included but it may be costly when it comes to the assignment sales price.

Indemnity provisions, although important, may be overrated since they are not self-executing. After all, the terms of an assignment can do nothing to prevent a borrower from suing both the seller-assignor and the buyer-assignee at some later time, resulting in inescapable up-front defense costs. One party to the assignment is left with a claim against the other based on the indemnity provision, often resulting in a second lawsuit.

As is the case with many other types of contracts, it is often beneficial to include a mandatory mediation clause in the assignment.

Drafting Considerations Generally

An assignment of note and lien(s) should be a comprehensive document. (If it is one page or less, something is amiss.) All obligations should be express. Nothing should be implied. No one should be allowed to assume anything or rely on anything unless expressly stated in writing. Oral statements should be disclaimed. A poorly-written assignment that involves unwritten assumptions and reliance on oral statements can easily form the basis for future litigation.

The foregoing discussion is by no means intended to be an exhaustive list of possible provisions that can be included in an assignment of note and liens. (Such documents can easily run 10 to 20 pages.) It merely hits the highlights.

CLOSING OF THE ASSIGNMENT

Endorsement and delivery of the note.

The note itself should be marked or stamped appropriately and the endorsement (or indorsement as it is referred to in the Business & Commerce Code) signed by the seller-assignor. The endorsement should include wording appropriate to the circumstances such as “payable to assignee without representations, warranties, or recourse” and would include the effective date.

Where does one place the endorsement? “For an instrument to be negotiable, indorsements must be written on the instrument or on a paper so firmly affixed thereto as to become a part thereof [sometimes called an allonge ]. An allonge is a piece of paper annexed to a negotiable instrument or promissory note, on which to write endorsements for which there is no room on the instrument itself.” Failure to properly endorse a note when it is transferred may impair its negotiability, resulting in the recipient being a mere transferee rather than having the superior status of a holder in due course [see Bus. & Com. Code Sec. 3.302].” Federal Fin. Co. v. Delgado, 1 S.W.3d 181, 185-86 (Tex.App.—Corpus Christi 1999, no pet.).

The original note(s) should be delivered to the buyer-assignee at closing.

Execution and Recording of the Assignment

Both the seller-assignor and the buyer-assignee should sign the assignment in order to indicate mutual assent to its terms and conditions. A properly-drafted assignment is not merely a unilateral transfer but represents a complex contract between the parties. The assigning party’s signature is not enough.

It is usually advisable for the buyer-assignee to record the assignment in the real property records of the county where the security property is located, so the assignment should be prepared in recordable form.

INVESTOR STRATEGIES

Notes are financial assets and their acquisition can be a part of an investor’s long-term buy-and-hold strategy. Like rents, a portfolio of mixed-age performing notes can produce a stream of income; however, unlike real property, there is no underlying equity that appreciates over time. In fact, the value of note assets depreciates so a stable portfolio requires continual replenishment. As notes age and mature new notes must be acquired in their stead if the income stream is to be maintained.

It is, of course, possible to acquire notes for other reasons. One aggressive strategy is to buy a secured note in default with the specific intention of foreclosing on the security property. A long-term hold is not the objective; acquiring the property is the objective. This scenario contemplates more of an “as is” approach to the note since its price is likely to be heavily discounted. In such cases, thorough due diligence is necessary in order to ensure that both the note and deed of trust are valid and enforceable with no obvious defenses available to the debtor.

Information in this article is provided for general informational and educational purposes only and is not offered as legal advice upon which anyone may rely. The law changes. No attorney-client relationship is created by the offering of this article. This firm does not represent you unless and until it is expressly retained in writing to do so. Legal counsel relating to your individual needs and circumstances is advisable before taking any action that has legal consequences. Consult your tax advisor as well.

Copyright © 2023 by David J. Willis. All rights reserved. Mr. Willis is board certified in both residential and commercial real estate law by the Texas Board of Legal Specialization. More information is available at his website, www.LoneStarLandLaw.com .

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Assignment of Promissory Note dated effective as of April 16, 2020

Exhibit 10.2

ASSIGNMENT OF PROMISSORY NOTE

THIS ASSIGNMENT OF PROMISSORY NOTE (this “ Assignment ”) is effective as of April 16, 2020, and is by and among RIVULET FILMS LLC, an Arizona limited liability company (“ Assignor ”), and RIVULET MEDIA, INC., a Delaware corporation (“ Assignee ” and together with Assignor, the “ Parties ”).

A.       Blue Scout Enterprises LLC, an Arizona limited liability company (“ Maker ”), executed that certain Promissory Note dated February 11, 2020 in the original principal amount of Five Hundred Fifty Thousand Dollars ($550,000.00) and payable to Assignor (the “ Note ”).

B.       Assignor desires to assign to Assignee, and Assignee desires to assume, all of Assignor’s rights and obligations under the Note, including the right to receive payment thereunder.

C.       Consent by Maker is not required to effect the assignment contemplated herein.

Now, therefore, the Parties agree as follows:

1.        Assignment and Assumption . Effective as of the date written above, Assignor hereby assigns, and Assignee hereby assumes, all of Assignor’s rights and obligations under the Note.

2.        Representations and Warranties . Assignor represents and warrants to Assignee that (a) concurrently with this Assignment, it will deliver to Assignee the original, executed Note, including any modifications and amendments thereto; (b) the Note is in full force and effect and that no Event of Default has occurred thereunder; and (c) it has not assigned the Note to any third parties.

3.        Further Assurances . The Parties will take such additional actions as each may reasonably request to effect, consummate, confirm, or evidence the assignment contemplated herein.

4.        Binding Effect; Parties . This Assignment shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

5.        Governing Law . This Agreement is governed by the laws of the State of Arizona without regard to principles of conflicts of laws.

6.        Counterparts . This Agreement may be executed in two or more counterparts, each of which will be deemed an original, and all of which together will constitute one and the same instrument. This Agreement may be executed and delivered by facsimile or other electronic signature (including .pdf).

(Signature page follows)

IN WITNESS WHEREOF, the Parties have caused this Assignment Agreement to be duly executed as of date first above written.

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Note Templates

8+ assignment of promissory note – free sample, example, format download.

Want to know about assignment of promissory note ! Once signed by the issuer, loan promissory notes act more or less as currencies do, especially in their immediate jurisdiction. The bearer can transfer all rights over the note to another person or institution. As long as the note is labeled as unconditional, all the terms and conditions applicable at the time of issue will also apply with the new owner.

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Allonge To Promissory Note

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What is an allonge to promissory note.

An allonge to promissory note is an actual sheet of paper or document firmly affixed to a promissory note or negotiable instrument that may contain additional endorsements. The written endorsements on the allonge are considered a part of the bill itself and are treated as such in loan proceedings.

An allonge to promissory note is different from an assignment. An assignment in this context is what gives a party the legal designation and right to move forward with legal action on a property, whereas an allonge is an endorsement that allows you to collect on the promissory note.

Common Sections in Allonge To Promissory Notes

Below is a list of common sections included in Allonge To Promissory Notes. These sections are linked to the below sample agreement for you to explore.

Allonge To Promissory Note Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.48 5 d330786dex1048.htm ALLONGE TO PROMISSORY NOTE , Viewed October 13, 2021, View Source on SEC .

Who Helps With Allonge To Promissory Notes?

Lawyers with backgrounds working on allonge to promissory notes work with clients to help. Do you need help with an allonge to promissory note?

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Seasoned transactional attorney with extensive experience in the life sciences / medical device / pharmaceutical industries. Skilled at providing actionable legal advice that balances risk and reward.

Attorney licensed and in good standing in the State of Ohio. Worked in the corporate division of a large law firm (Squire, Sanders & Dempsey), and as inside counsel for a technology company (America Online). Lived in 6 different states in a 12 year period. Took some time off of legal work to raise 4 kids. During that time kept active as a volunteer - Houston Volunteer Lawyers Program, Legislative chair of school board for 3 years, President of school PTA, PADS and local food pantry. Currently working as a Consultant for a health care company (Fast Pace Health). Looking to get back to transaction legal work. Can work remotely and travel to Ohio when necessary. Thank you.

I am a solo legal practitioner in Tucson, Arizona who focuses on Estate Planning, Probate, Business Formation and Mediation. I have expertise and experience in not only law but as a Registered Nurse and teacher. I use this background and knowledge to provide compassionate and individualized service for my clients.

Commercial Litigation attorney providing advice and counsel to management regarding employment related matters and risk management issues

Christopher L.

I have worked in banking, financial technology and technology as a legal and compliance executive who negotiates and drafts contracts, ensures products and services comply with applicable regulations, implements policies and procedures, oversees litigation, and manages corporate governance programs.

Attorney and mediator with extensive experience in negotiating, drafting, and managing contracts in the private, public, and nonprofit sectors.

40+ years handling litigation matters for employers and employees, defense and prosecution of personal injury matters, CalOsha defense, prepare employment contracts, non-compete clauses, established drug policies and franchise agreements. represented banks in commercial litigation , asset retrieval matters. conducted audits of insurance company claims on behalf of employers, defended contractors in toxic tort cases, handled appeals to the insurance commissioner on workers compensation rate classification matters

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Promissory Note Sample Philippines (Free Downloadable Templates)

Are you planning to establish a lending business and want to create a template for a promissory note to be signed by the borrower? Are you loaning money to your co-worker? Do you want the loan details to be in writing?

If you answer yes, this guide is here to help you draft a promissory note.

DISCLAIMER : This article has been written for general informational purposes only and is not legal advice or a substitute for legal counsel. You should contact your attorney for advice on any particular issue or problem. Using the information herein does not create an attorney-client relationship between the author and the user/reader.

Table of Contents

Promissory note sample philippines (free download).

To save you the hassle of writing a promissory note from scratch, you may download the following samples and edit the contents based on your agreement with the other party.

1. Simple Promissory Note (With No Conditions)

2. notarized promissory note (with the condition to pay monthly interest), 3. notarized promissory note (with the condition to pay monthly interest, legal fees, and other requirements), what is a promissory note.

A promissory note is a genuine document acknowledging a loan duly received and promising to pay the same on the date indicated and under the agreed-upon conditions by the borrower and the lender. A person who signs a promissory note is bound to honor it as a legitimate obligation. 

Generally, there are two types of promissory notes – negotiable and non-negotiable.

1. Negotiable Promissory Note

Under the Negotiable Instruments Law 1 , a negotiable promissory note is defined as an “unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand, or at a fixed and determinable future time, a sum certain in money to order or to bearer. Where a note is drawn to a maker’s own order, it is not complete until indorsed by him.”

2. Non-Negotiable Promissory Note

On the other hand, a non-negotiable promissory note is simply a document containing a promise by one person to pay another on the date indicated in the note and under the agreed conditions, e.g., payment of interest. A non-negotiable promissory note is not transferable to another person/payee.

Both are essentially the same in their contents. The difference lies in its negotiability or transferability. A promissory note is negotiable if it can be transferred from one person to another and complies with the requirements under Sec. 1 of the Negotiable Instruments Law.  A negotiable promissory note is in the same vein as a check.

How To Get a Promissory Note in 3 Easy Steps

Preparing a promissory note is easy with these simple steps:

1. Prepare the document

The details of a promissory note will depend on the complexities of your agreement. However, a promissory note should contain at least the following parts:

• Title of the document .
• The statement “For value received” indicates the maker has received the amount borrowed. 
• The name of the maker . The maker is the person promising or signing the promissory note. You may include a statement indicating the maker’s legal age, civil status, citizenship, and residence address. 
• The statement of an unconditional promise to pay .
• The name of the payee . The payee is the person with whom the maker has promised to pay. 
• The amount to be paid .
• The date when the said amount has to be paid , either on-demand or at some future time.  
• Other conditions , if any. For example, you pay at a particular location or with a specific interest.
• Name and signature of the maker .
• Name and signature of witness/es (optional).
• Acknowledgment – is the act of the person signing the document before a Notary Public and declaring it to be his or her act or deed (optional).

Please note that a promissory note is valid even without the signature of a witness or an Acknowledgment.

2. Print copies of the promissory note

Print at least two copies of the document; three should you decide to have it notarized – one for the maker, one for the payee, and one copy for the notary.

3. Go to the notary if you opt to have the document notarized

Frequently asked questions, 1. should a promissory note be notarized.

No. Notarization is not mandatory. However, in long lines of cases decided by the Supreme Court, the notarization of a document has a substantial legal effect. It converts a private document to a public record and becomes admissible in court without further proof of its authenticity.

When a case is filed against the maker to honor the promissory note, the usual defense for non-payment is that his or her signature is forged; the maker did not understand the contents of the document he or she signed; the maker’s consent was vitiated, or was forced to sign the document.

If the promissory note is notarized, the maker cannot, later on, allege that he did not sign the document. As a notarized promissory note holder, you do not need to prove that the maker executed or signed the document. It is authentic on its face.

2. Someone obtained a loan from me and executed a promissory note promising to pay me on or before a specific date. However, the borrower failed despite my repeated request to settle the loan. How can I enforce the promissory note?

You can send a demand letter ordering the borrower to pay the loan. If the borrower fails to settle the obligation despite demand, you may file a collection case in the appropriate court.

If you live within the same Barangay, you may also bring the matter to your Barangay for an amicable settlement.

3. Can I still collect from the borrower even if I lose the promissory note? 

Yes. The obligation of the borrower to pay you the loan remains. The promissory note is only evidence of the existence of such an obligation. The debt is extinguished only after payment.

4. Do I need a lawyer to make a promissory note?

No need for a lawyer to draft a promissory note for you. This guide and the templates provided are sufficient to help you make one. However, visit a Notary Public near you if you want the promissory note notarized. 

• Act No. 2031 or The Negotiable Instruments Law of the Philippines (1911).

Written by Atty. Kareen Lucero

in Juander How , Legal Matters

Last Updated May 30, 2023 09:34 PM

Atty. Kareen Lucero

Kareen Lucero is a lawyer previously doing litigation before working for different agencies in the government and for a multinational corporation. She has traveled to 52+ countries including a 3-month solo backpacking in South East Asia and more than 1 year of solo traveling across four continents in the world. As part of giving back, she is passionate about sharing her knowledge of law and travel. She is currently doing consulting work for a government agency. For inquiries, you may reach her via Facebook Messenger (https://m.me/kareen.lucero.77) or email ( [email protected] ).

Browse all articles written by Atty. Kareen Lucero

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