By:  Amanda Vann, Esq.

6 Tips to Write Your Promissory Note

When crafting a promissory note, there are several things you need to address to protect yourself and secure repayment. 

#1. Provide for the possibility of future attorney fees.

In the event of a default, you will want the promissory note to allow you to obtain an award for the attorney fees you incur to go after the person who didn’t pay. This protection will help you to recoup some of the costs you incur, but it also is a deterrent to people and gives them an additional incentive to pay back the note. They will be on the hook for the repayment and other legal fees incurred if you have to pursue the matter in court.

#2. Specify the jurisdiction in case of a dispute.

Ensure your note contains a clause stating the venue and jurisdiction you will be in if there is a dispute. You want to avoid incurring travel expenses to attend court or mediation, so having a favorable clause to your location can save you money later.

#3. Charge late fees.

Make sure that you are charging late fees in accordance with what the law allows. Some states have laws that address what late fee charges can be incurred depending on what the note is for. The law is constantly changing, and you want to avoid being in a situation where the law doesn’t allow you to collect late fees.

#4. Account for default and late payments.

If the repayment of the note extends over several years, make sure your note contains language addressing what will happen if a payment is missed. There are laws in place that can require you to provide notice to the borrower regarding missed or late payments, so ensure you have language in your note that coincides with your legal requirements as a lender.

#5. Assess the borrower.

Before offering the note, require the borrower to provide information on their assets and other debts. It is important to get a clear picture of how often the borrower has defaulted on additional notes and what assets the borrower has that you can go after if they default. You also should confirm if the borrower has any judgments already entered against them. If a borrower already has judgments, not only is that an indication that they are more likely to default on your note as well, but this can also mean that if the borrower does default, you may not be able to collect your money until those other judgments are paid first.

#6. Seek legal advice.

Most importantly, have an attorney review the promissory note before signing it. You want legal advice explaining the impact the note will have on you as a lender and the borrower. If you or someone you know has a question about a note or is looking for drafting assistance, please call my office at 301-563-6685 and schedule a consultation today.

About Andalman & Flynn Collections: For decades, businesses and professionals have been turning to the experienced collections attorneys at Andalman & Flynn for their debt recovery needs. A licensed collections agency, their experienced team successfully navigates the complex laws surrounding debt collection practices. The firm combines cutting-edge technology with savvy, effective debt resolution methods that result in high success rates and fast recovery times. For more information, please visit