Promissory Note

A promissory note is a written promise by a borrower to repay a loan according to specified terms.

• Evidence of the debt
• Contains the borrower’s promise to pay
• Specifies loan terms (amount, interest, repayment schedule)
• Is negotiable in many cases
• Separate from the security instrument

• Maker – borrower (promises to pay)
• Payee – lender (receives payment)

• Promissory Note
  • Creates the personal obligation to repay
  • Unsecured by itself

• Mortgage / Deed of Trust
  • Secures the note with real property
  • Creates a lien

• Failure to pay as agreed
• Allows lender to enforce remedies under the security instrument

• The note is the debt
• The mortgage or deed of trust is the security