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How to Write a Promissory Note in Washington?
Washington is one of the many states that require borrowers to sign a promissory note before receiving a loan from the creditor. The promissory document makes the agreement formal and without it, the court may void the transaction during a dispute. However, if both parties sign the agreement, it remains a legal contract that can stand the court’s scrutiny.
With that in mind, how can you write a valid promissory note in Washington? It involves a series of legal steps starting from acquiring a promissory template.
Read on to understand what Washington's promissory note entails. Plus, we’ll walk you through the steps of writing a valid promissory note.
Understanding a Promissory Note
The Washington promissory note is a document signed by the lender and borrower spelling the terms and conditions of their lending agreement. The document spans broad aspects, including the borrowed amount, accruing interest rates, parties to the contract and payment details.
In Washington, promissory notes are of two types namely: secured and unsecured.
When you sign a secured promissory note, you promise the borrower some collateral to help repay the loan if you can’t pay. You’re free to select a valuable item of your choice if its value is equivalent to the loan you received. The lender reserves the right to take the property if a dispute for nonpayment occurs.
However, an unsecured promissory note doesn’t have a security promise for the lender. Essentially, the lending party is at a higher risk of losing the money if you don’t fulfill your legal obligations towards the loan.
Washington Usury Rates for Promissory Notes
The Washington Revised Code, Title 19, regulates the interest rates for promissory rates. As per the law, promissory note agreements are legitimate only if they have an established interest rate not exceeding the state’s specified rate.
According to Section 19.52.020 of the code, the maximum interest rate remains 12% per annum or 4% above the Federal reserve rate on 26-week treasury bills. Any rate above that may attract criminal charges against the lender.
Steps for Writing a Washington Promissory Note
You don’t need an attorney to write a Washington promissory letter. Simply download the relevant form and fill out the required information.
The following steps will guide you when writing the contract
Label Your Agreement
Write an appropriate title for the agreement specifying whether it is secured or unsecured.
Write the Date
Write the date for issuing the contract to the lender following the month-day-year format. Without the date, the lender may not establish critical deadlines such as the maturity period.
Identify the Parties
Write the full legal names of all parties in the contract. Note that parties may also include artificial entities such as corporations.
Mailing Addresses
Indicate the mailing addresses of all parties, listing their state of residence, city and zip codes. Additionally, secured Washington promissory notes require the borrower’s physical address to facilitate collateral collection.
Indicate the principal Amount
Your form should contain the principal loan amount you received from the lender.
Specify the Interest Rate
Before signing the form, you’ll have an agreed interest rate with the lender. Write the rate, ensuring it doesn’t exceed what the usury laws require.
Payment Information
Washington promissory notes should highlight the relevant payment information. These include how you’ll pay the loan and the number and amount of monthly installments. You should also include the due date for paying the monthly installments.
Sign the Contract
A promissory note in Washington remains invalid if it doesn’t include your signature (borrower) and that of the cosigner. You could also notarize the note to add to its credibility if you wish.
Are you looking forward to write a promissory note for your next transaction? You don’t need to walk into an attorney’s office anymore. Simply download a free Washington promissory note from our website!