Promissory Note Maryland: Is it Worth It and Do You Need a Notary?
If you give out a substantial amount of money to a colleague, you may expect it back at some point.
Signing a promissory note enables you to determine a specific time frame to receive the money from the debtor. Moreover, it is legal proof to present in the court if the debtor refuses or fails to pay the loan.
You should know the basic requirements of a promissory note in Maryland as under-
What Is a Promissory Note, Maryland?
It is an official loan agreement in which the debtor promises to settle the debt according to specified terms. Usually, the contract is between the lender and the borrower but may sometimes include a co-signer.
According to the Maryland statutes, a promissory agreement is a legal instrument and must comply with the Contract and Securities Laws.
Each consolidated promissory note in Maryland should disclose specific information among them:
The payment schedules
The sum to pay
The interest rates
Contact information of the creditor and debtor
Types of Promissory Note
In Maryland, residents may sign any of the following promissory note
Secured Promissory Note
A secured agreement is a promissory note with collateral. The agreement gives the lending institution a security item if the debtor defaults on the loan balance. When signing, parties may agree on a specified object to adopt as collateral, such as a vehicle or an apartment or other real estate.
Unsecured Promissory Note
An unsecured promissory note doesn’t include security for the loan. Since the lender is at a higher risk of losing the money, screening the debtor before issuing the loan is advisable. A good credit history means the borrower has a lower chance of defaulting on the loan.
When Do You Need a Promissory Contract?
A promissory note is critical in many situations.
For instance, if you pay substantial rent on your apartment, your landlord may require a rent payment guarantee. Therefore, the landlord may assign a contingent promissory note with some collateral alongside it. If you can’t pay the rent, you may give ownership of the collateral.
An individual promissory note is also essential when lending money to a friend. Not that you don’t trust your friend, but you need an assurance that you’ll recover the money to prevent a financial drain. The note comes in handy, especially when you lend a substantial amount of money.
A promissory note is also ideal when you take a student loan. The financier will require a guarantee of payment after finishing your studies. Even if you don’t complete your education for whatever reason, the contract still obliges you to repay the loan.
Do You Need a Notary?
Different states have varying regulations for notarizing promissory contracts. In Maryland, notarizing a promissory agreement is not a legal requirement. It is, however, necessary if you wish to add authenticity to your contract. Only mortgages qualify for notarization and witnessing of promissory note in Maryland.
Can You Modify a Maryland Promissory Note?
Yes. The law allows parties to modify a promissory agreement after signing. An all-inclusive promissory note has a clause enabling modification of conflicting terms in the contract. A party can initiate change if all the parties consent.
The best approach to changing the content is to write a second promissory note, including the amendments. Afterward, you can prompt the contract parties to sign and retain a copy of the amended version. That way, the document remains valid before a Maryland court.
Writing a promissory note in Maryland can be tedious, especially if you’ve never done it. However, you can now get a copy, thanks to the readily available online downloads. If you need a promissory note for your next loan, download a free PDF version from our website.