A Florida promissory note is a written document designed to provide structure and formality to a loan agreement between two parties.
For a promissory note to be valid, it must contain certain information. The names and addresses of the borrower and lender, the date of creation, the principal loan amount, payment information, and the amount of interest charged on the loan have to be clearly stated.
Additionally, other clauses detailing the conditions of the agreement should be included. Some standard terms that lenders and borrowers add to promissory notes are:
- Payment allocation
- Interest owed in case of default
- Attorney fees and costs
As they are considered contracts, promissory notes are subject to Florida law. There are some restrictions to be aware of, which can be consulted in the Title XXXIX Chapter 679 of the Florida Statutes.
Promissory notes in Florida may be secured or unsecured.
Florida Secured Promissory Note
With a secured promissory note, the borrower must pledge some of their assets to back the loan. Should they fail to pay it, the lender can legally take possession of the collateral. This type of loan offers the lender the most legal guarantees of recovering their money. Borrowers generally pledge items of high value, such as cars, boats, or homes.
Secured promissory notes should include all the information mentioned above. They should also clearly detail the specifics of the collateral. If not correctly identified, a court may find that the note is unsecured.
Click here to download our free secured promissory note template Florida.
Florida Unsecured Promissory Note
An unsecured promissory note does not provide the lender any protection in the way of collateral if the borrower defaults on the balance. This type of loan is typically reserved for individuals who are considered trustworthy based on their net worth or credit history.
An unsecured promissory note includes all the same information as the secured version. However, it will not contain any mention of collateral.
Click here to download our free Florida promissory note template.