Structure
In Michigan, the Promissory Note serves as a crucial financial instrument that outlines the terms of a loan agreement between a borrower and a lender. This legally binding document specifies the amount borrowed, the interest rate, and the repayment schedule, ensuring that both parties understand their obligations. It typically includes essential details such as the due date for payments, any late fees that may apply, and the consequences of defaulting on the loan. The form can be customized to reflect the specific needs of the parties involved, allowing for flexibility in terms of repayment methods and timelines. Additionally, a well-drafted Promissory Note provides legal protections, making it easier to enforce the agreement if disputes arise. Understanding the components and significance of this form is vital for anyone engaging in lending or borrowing activities in Michigan.
Form Example
Michigan Promissory Note Template
This Promissory Note ("Note") is made and effective this ______ day of _______________, 20_____, in accordance with the laws of the State of Michigan, including but not limited to the Michigan Credit Reform Act, MCL §445.1851 et seq.
Borrower Information:
- Full Name: _______________________________________________
- Address: __________________________________________________
- City, State, Zip: ___________________________________________
- Contact Number: ___________________________________________
Lender Information:
- Full Name: _______________________________________________
- Address: __________________________________________________
- City, State, Zip: ___________________________________________
- Contact Number: ___________________________________________
Principal Amount: The principal amount of this loan is $____________________, which will be provided to the Borrower on the effective date noted above.
Interest Rate: An annual interest rate of _______% will be applied to the unpaid balance. In compliance with the Michigan Usury Laws (MCL §438.31), the rate will not exceed the maximum allowed by law.
Repayment Terms: The Borrower agrees to repay the amount owed in the following manner:
- Initial payment due on _______________, 20_____, with regular payments due each month on the ______ day of each succeeding month.
- Total amount to be repaid in ____ (number) of installments, each in the amount of $_________.
- The final payment, which may differ from the monthly installment amounts, is due on _______________, 20_____.
Late Fees: If any payment is more than ______ days late, a late fee of $________ will be applied immediately to the borrowed amount.
Prepayment: The Borrower has the right to prepay all or any part of the principal without penalty.
Default: In the event of a default, the entire balance of this Note, including all accrued interest and late fees, may become immediately due and payable at the Lender's discretion. Further, the Borrower will be responsible for all costs of collection to the extent permitted by Michigan law.
Governing Law: This Note shall be governed by and construed in accordance with the laws of the State of Michigan.
The undersigned Borrower and Lender hereby agree to the terms and conditions of this Promissory Note as outlined above.
_____________________________ _____________________________
Borrower's Signature Date
_____________________________ _____________________________
Lender's Signature Date
Document Properties
| Fact Name | Description |
|---|---|
| Definition | A Michigan Promissory Note is a written promise to pay a specified amount of money to a designated person or entity at a defined time or on demand. |
| Governing Law | The Michigan Promissory Note is governed by the Michigan Uniform Commercial Code (UCC), specifically Article 3, which deals with negotiable instruments. |
| Parties Involved | Typically, there are two parties involved: the borrower (maker) who promises to pay, and the lender (payee) who receives the payment. |
| Interest Rate | The note can specify an interest rate, which may be fixed or variable, depending on the agreement between the parties. |
| Repayment Terms | Repayment terms must be clearly stated, including the due date, installment amounts, and frequency of payments. |
| Signature Requirement | The promissory note must be signed by the borrower to be legally binding. A witness or notary is not required but can add an extra layer of validation. |
| Default Clause | A default clause may be included, outlining what constitutes a default and the consequences that follow, such as late fees or acceleration of the debt. |
| Transferability | Promissory notes can often be transferred to another party, allowing the lender to sell or assign the note to someone else. |
| Legal Enforceability | If properly executed, a Michigan Promissory Note is legally enforceable in court, providing the lender with recourse in case of non-payment. |
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