California Promissory Note

A California Promissory Note is a lawful document that explains the agreement between a lender and borrower and serves as a simplified alternative for loan agreements. With our free-to-download promissory note sample, you can create a legally enforceable lender-borrower contract in California detailing the loan amount and allowable interest of up to 10%. Use our template now and protect the money you loan people.

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California Promissory Note

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California Promissory Note

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Promissory notes are used in the state of California whenever it comes to lending and borrowing a significant amount of loans. This document establishes in writing a proposed structure for loan repayment.

Under California promissory note, the borrower is entitled to pay back the loan to the lender in full along with the interest rate (if any). Promissory note California acts as a first legal reference in case any issue arises with regards to the loan payment.

Read on to know what California promissory note template is. In this article, we will be discussing when this promissory note should be used and how to write a California promissory note.

What Is a California Promissory Note?

California promissory note refers to an agreement between two parties with regards to the loan. This written document is legally binding between the lender and the borrower. Precisely, it explains the total amount of money loaned, interest rate, loan repayment structure, late fees, etc.

Promissory note California is used to evidence the existence of money loaned to the borrower by the lender. California promissory notes can be secured and unsecured. Both parties, including lender and borrower, may specify whether the loan will be secured or unsecured.

California Secured Promissory Note

In case a borrower defaults on a loan payment, California secured promissory note enables the lender to take back any specific asset or property as collateral as a loan payment.

California Unsecured Promissory Note

Whereas in the California unsecured promissory note, the lender is unable to claim for collateral if the borrower fails to make a loan repayment. However, if the borrower does not satisfy the loan, the lender will need to seek restitution in a small claim court to acquire the money loaned.

Of note, considering the interest rate, under Article XV, Section 1 of the California constitution, the maximum interest rate that the lender may charge is 10% per year in both secured and unsecured notes.

Access a Free California Promissory Note Template Now

Loan agreements can be rigid and unsuitable for money lending instances between you and friends or people around you. In this case, use our simplified California Promissory Note template to create a legal document that serves as legal evidence if the borrower fails to repay as per agreed terms. Download the editable sample now and secure your lent money legally.

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When Should You Use a California Promissory Note?

Broadly speaking, promissory notes can be used in place of loan agreements between lenders and borrowers. However, the circumstances in which you use a California promissory note can vary based on the type of loan, relationship with the borrower, and loan repayment structure.

Promissory notes are used in replacement of the loan agreement because they are quite simple and easy to use. In contrast, loan agreements are more rigid in terms of loan payment. Also, it includes various stipulations in case the borrower fails to repay the loan.

To avoid complexity, you can use the California promissory note template which has simple terms outlining a simple payment plan. Furthermore, this promissory note is best to use whenever you have to give simple loans with a fixed monthly payment.

If both parties do not use a promissory note, the lender can be at an increased risk of losing his/her loaned money. This is because there will be no signed legal documentation to prove that the borrower had to repay the loan within the agreed-upon timeframe.

How to Write a California Promissory Note?

Before writing a California promissory note, you are advised to determine whether a promissory note is secured or unsecured. Make sure you give a proper title to your document either as ‘California Secured Promissory note’ or ‘California unsecured promissory note’.

Steps Involved:

Mainly, it involves 5 steps in writing a California promissory note.

In the first step, you will need to download this legal document and list the start date along with the legal names of both borrowers and lenders, their email address, the principal amount of the loan, and the interest rate.
In the second step, you are required to list the payment structure, whether the loan will be paid in weekly or monthly installments. Also, you should include the amount of payment that the borrower will be required to pay. Moreover, this section should include information about late fees.
Thirdly, you must provide information about the level of security such as whether or not the borrower is providing collateral to the lender. This section is specifically included in California secured promissory note template.
In step four, you need to review various sections including interest due in case the borrower defaults on loan, allocation of payment, prepayment, conflicting terms, waiver, non-waiver, notice, and so on.
Lastly, in the fifth step, both parties, including the lender and borrower, need to sign the agreement. This section must include signatures of both parties along with the date, month, and year.

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Conclusion

In brief, it is highly recommended to have legal documentation whenever lending money to another individual or business.

California promissory note ensures that both lender and borrower are on the same page, and both parties understand their rights regarding lending and borrowing of money. Besides, it acts as a reference point in case any payment-related issue arises in the future.

At CocoSign, we have a great template for California promissory note along with other different types of promissory note templates. So, stop waiting and download any template that best matches your needs.

DOCUMENT PREVIEW

CALIFORNIA STANDARD PROMISSORY NOTE

On the ___ day of _______________, 20___, hereinafter known as the "Start Date", ___________________________ [Borrower’s Name] of ___________________

____________________________________________________ [Borrower’s Mailing Address], hereinafter known as the “Borrower”, has received and promises to payback ___________________________ [Lender’s Name] of __________________________

______________________________________________________ [Lender’s Mailing Address], hereinafter known as the “Lender”, the principal sum of _____________________ US Dollars ($_______________) with interest accruing on the unpaid balance at a rate of ___ percent (%) per annum, hereinafter known as the "Borrowed Money", beginning as of the Start Date in the manner as follows:

1. PAYMENTS: The full balance of this Note, including all accrued interest and late fees, is due and payable on the ___ day of _______________, 20___, hereinafter known as the "Due Date".

Installment(s). (check the applicable box)

☐ - LUMP SUM – Borrower shall pay a lump sum to be made in-full, principal and interest included, of ________________________ Dollars ($__________________) by the Due Date.

☐ - INSTALLMENTS – Borrower shall pay principal and interest in the amount of ________________________ Dollars ($__________________) on

☐ a weekly basis with any remaining balance payable on the Due Date.

☐ a monthly basis with any remaining balance payable on the Due Date.

☐ a quarterly basis with any remaining balance payable on the Due Date.

LATE FEE - There shall be a late payment fee of _____________ Dollars ($_____) if an installment is not paid on-time along with the default interest due, as described in Section 3, if the Lender does not receive the installment on the due date.

2. SECURITY: (check the applicable box)

☐ - UNSECURE – There shall be NO SECURITY provided in this Note.

☐ - SECURE – There shall be Property described as ___________________________

________________________________ hereinafter known as the “Security”, which shall transfer to the possession and ownership of the Lender IMMEDIATELY pursuant to Section 6A of this Note. The Security may not be sold or transferred without the Lender’s consent until the Due Date. If Borrower breaches this provision, Lender may declare all sums due under this Note immediately due and payable, unless prohibited by applicable law. The Lender shall have the sole-option to accept the Security as full-payment for the Borrowed Money without further liabilities or obligations. If the market value of the Security does not exceed the Borrowed Money, the Borrower shall remain liable for the balance due while accruing interest at the maximum rate allowed by law.

3. INTEREST DUE IN THE EVENT OF DEFAULT: In the event the Borrower fails to pay the note in-full on the Due Date, unpaid principal shall accrue interest at the maximum rate allowed by law, until the Borrower is no longer in default.

4. ALLOCATION OF PAYMENTS: Payments shall be first credited any late fees due, then to interest due and any remainder will be credited to principal.

5. PREPAYMENT: Borrower may pre-pay this Note without penalty.

6. ACCELERATION: If the Borrower is in default under this Note or is in default under another provision of this Note, and such default is not cured within the minimum allotted time by law after written notice of such default, then Lender may, at its option, declare all outstanding sums owed on this Note to be immediately due and payable.

6A. SECURITY - This includes any rights of possession in relation to the Security described in Section 2.

7. ATTORNEYS’ FEES AND COSTS: Borrower shall pay all costs incurred by Lender in collecting sums due under this Note after a default, including reasonable attorneys’ fees. If Lender or Borrower sues to enforce this Note or obtain a declaration of its rights hereunder, the prevailing party in any such proceeding shall be entitled to recover its reasonable attorneys’ fees and costs incurred in the proceeding (including those incurred in any bankruptcy proceeding or appeal) from the non-prevailing party.

8. WAIVER OF PRESENTMENTS: Borrower waives presentment for payment, notice of dishonor, protest and notice of protest.

9. NON-WAIVER: No failure or delay by Lender in exercising Lender’s rights under this Note shall be considered a waiver of such rights.

10. SEVERABILITY: In the event that any provision herein is determined to be void or unenforceable for any reason, such determination shall not affect the validity or enforceability of any other provision, all of which shall remain in full force and effect.

11. INTEGRATION: There are no verbal or other agreements which modify or affect the terms of this Note. This Note may not be modified or amended except by written agreement signed by Borrower and Lender.

12. CONFLICTING TERMS: The terms of this Note shall control over any conflicting terms in any referenced agreement or document.

13. NOTICE: Any notices required or permitted to be given hereunder shall be given in writing and shall be delivered (a) in person, (b) by certified mail, postage prepaid, return receipt requested, (c) by facsimile, or (d) by a commercial overnight courier that guarantees next day delivery and provides a receipt, and such notices shall be made to the parties at the addresses listed below.

14. CO-SIGNER: (check the appropriate box)

☐ - NO COSIGNER – This Note shall not have a Co-Signer.

☐ - CO-SIGNER – This Note shall have a Co-Signer known as ___________________ [Name of Co-Signer] hereinafter known as the "Co-Signer", and agrees to the liabilities and obligations on behalf of the Borrower under the terms of this Note. If the Borrower does not make payment, the Co-Signer shall be personally responsible and is guaranteeing the payment of the principal, late fees, and all accrued interest under the terms of this Note.

15. EXECUTION: The Borrower executes this Note as a principal and not as a surety. If there is a Co-Signer, the Borrower and Co-Signer shall be jointly and severally liable under this Note.

16. GOVERNING LAW: This note shall be governed under the laws in the State of California.

17. SIGNATURE AREA

Lender’s Signature ______________________ Date ___________________

Print Name ___________________

Borrower’s Signature ______________________ Date ___________________

Print Name ___________________

Co-Signer Signature ______________________ Date ___________________

Print Name ___________________

Witness Signature ______________________ Date ___________________

Print Name ___________________

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