California promissory notes are created for the purpose of adding security and format between two parties when lending money is involved. There are two types of promissory notes: secured and unsecured. The method used should be agreed upon by the lender and borrower prior to signing the documents.

The promissory notes address several necessary areas. Sections addressing interest rates, details on parties involved, late fees, and other important information are included in the documents. Signing of a completed document ensures the promissory note is now legal. The lender can begin the collection process from the borrower after the agreement has been completed and signed by both parties.

Writing a California Promissory Note

  1. Download and submit the following:
    • Start date of the document in dd/m/yy format
    • Borrower's name and mailing address
    • Lender's name and mailing address
    • Principal amount
    • Annual percentage
  2. Payments should be submitted by including the balance plus any applicable late fees in the mm/dd/yyyy format. For installments, check a box next to the repayment method that applies. Be sure to include the amount, installment method, and the owed late fees.
  3. If the note is "secured," check the security level being used. Be sure to enter all information about the property being used as collateral. This section is required to be reviewed by the borrower.
  4. The following titled sections should be reviewed:
    • Default Interest Due
    • Payments
    • Prior Payments
    • Acceleration
    • Attorney's Costs
    • Presentments Waiver
    • Non-Waiver
    • Severability
    • Integration
    • Terms that Conflict
    • Notice
    • Co-Signer (applicable box needs to be checked)
    • State of Governing Law
  5. A witness must be present to witness the signatures. The following should be provided:
    • Signature of Lender
    • Date of signature in mm/dd/yyyy format
    • Name in print form
    • Borrower's signature
    • Signature date in mm/dd/yyyy format
    • Borrower's printed name
    • Co-signer's signature if applicable
    • Co-signer's signature date in mm/dd/yyyy format
    • Co-signer's printed name
    • Witness' signature
    • Date of witness' signature (mm/dd/yyyy format),
    • Witness' printed name.

How to Write a Secured California Promissory Note

A secured promissory note in California is used when money is loaned between two parties. The steps below outline how to write a secured promissory note.

  1. Begin by entering the lender's complete information, the current date, the borrower's complete information, the amount of the loan, and the amount of the interest involved in the loan.
  2. Choose the method you would like the borrower to repay the balance.
    • There are several repayment options. No installments requires the entire balance to be paid by the borrower in one payment. Installments consist of multiple payments at scheduled intervals. Interest only payments consist of the borrower paying only the interest until the balance is paid in full.
  3. If an installment option is chosen, enter the repayment method on the lower portion of section 1.
  4. Enter the entire balance due date and the interest percentage in the event of default in sections 2 and 3.
  5. In section 6, identify the amount of time that can pass beyond the due date before a late fee is required to be paid.
  6. In section 8, note the amount of time until acceleration takes place.
  7. Finally, names of the lender, borrower, and a witness must be printed and signed followed by the date at the bottom of the document.

How to Write an Unsecured California Promissory Note

The unsecured promissory note used in California outlines payback for a loan between two parties. Unsecured notes provide more risk than a secured note. There is more risk for the lender in this scenario. If the borrower fails to pay back the loan, there is no guarantee the lender will receive his money he loaned.

  1. Begin by completing the top section of the page. This will require the complete information of both parties and the amount of the balance owed including interest.
  2. Decide how you would like the borrower to pay back the balance.
    • You can choose from no installments, installments, and interest-only payments.
    • To use installments, choose the time length interval between payments.
  3. In section 2, enter the final date for the entire balance to be paid.
  4. In sections 6 and 7, the amount of the late fees will be entered. The grace period before the late fee takes effect should also be noted. Next, enter the number of days before acceleration takes place.
  5. Finally, the document needs to be dated along with the signatures of the borrower, lender, and witness.

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