Promissory Note Alaska: What Does It Contain?
Promissory notes are common financial tools in Alaska to enforce loan payments or the sale of assets. They carry an unconditional promise from the borrower or buyer to pay the money on an agreed date, failure to which legal implications may apply.
Learn more about a standard Alaska promissory note.
What Is a Promissory Note In Alaska?
It is a legal document that outlines the terms of a loan between a lender and borrower. Usually, the document is legally binding and shows a commitment that the borrower will pay the loan on the agreed date.
The Alaska Statutes of Trade and Commerce provide a legal framework for the drafting and enforcing promissory notes. According to Title 45, parties can enter the agreement, which becomes effective upon signing the document. Parties to a promissory note can be individuals or artificial entities.
Types of Promissory Notes
Like other states, The Alaska Statutes recognize two forms of promissory notes: secured and unsecured.
Secured Promissory Note for Lending Money
It is an official promise to pay the loan with the valuable property as collateral. The lender, therefore, reserves the right to take the property to repay part or whole of the loan if the borrower defaults.
A secured promissory note for lending money in Alaska should appear as "secured" and contain full information about the collateral. The Alaska statutes may consider the contract unsecured without fulfilling the two conditions if the borrower fails to pay.
Unsecured Promissory Note for Borrowing Money
It is a promise by the borrower to pay the loan without provision for collateral. Thus, if the borrower fails to pay the loan as agreed, the lender can only seek legal redress in court.
How Much Is the Interest?
Section 45.45.010 of Alaska Statutes outlines the usury rates for promissory notes.
For loans not exceeding $25,000, lenders can charge an interest rate upto 10.5% every year without extra cost after the due date. However, loans exceeding $25,000 do not have a limit for the annual interest rate.
How to Write a Promissory Note in Alaska?
A general promissory note in Alaska is legally binding if it meets the criteria set in the statutes. It should contain all the payment terms, identity information, and specific clauses.
Elements of a basic promissory note include:
Indicate the date of creation as the month, day, and year.
Legal Names and Mailing Addresses
If you include a valuable property as collateral, you should include your legal name and mailing address. Similarly, the lender’s names and mailing addresses should appear in the contract.
The formal promissory note clearly states the amount of money you borrow and the difference between your loan amount and the interest. Ensure the figures appear accurately without typo errors.
An Alaska promissory note to pay debt includes the annual interest rate for the loan. As a requirement, the interest shouldn’t exceed 10.5% per year.
Standard Promissory notes clearly define how the borrower will pay the loan. Typically, promissory notes allow weekly, biweekly, or monthly installments.
In addition to the essential elements, a promissory note in Alaska for loan payment outlines specific clauses which form part of the agreement.Specific clauses include:
The clause highlights the interest you’ll pay if you default on the loan payment.
The clause defines how the lender will allocate the loan payment to interest and the principal amount.
The prepayment clause specifies if the lender will charge a fee to the borrower for early loan payment. However, most general promissory notes in Alaska do not include a fine for prepayment.
An acceleration clause compels you to repay the balance if you breach any terms.
The lender may include a clause outlining who will pay for attorney fees if you have a lawsuit. If the lender sues you for breach of terms, you may pay the legal cost.
Other Specific Clauses:
- Conflicting terms
- Choice of law
- Waiver of presentments
Need help in creating a promissory note in Alaska for home loan payment or for a family loan? Here’s a free printable template for download online.