When you’re thinking of buying or selling manufactured-mobile homes, a promissory note will be something that will likely come up at some point or another. Essentially, it is a promise, in writing, that says that you will repay a form of debt (such as a loan) within certain terms. These terms usually dictate when the payments will come in, how much the minimum payment must be, when the whole debt must be paid off, and if there is any way for the lender to demand all of the money.
It should also state how much the debt is and who is involved in its lending and payments. The promissory note lays out exactly how much will be received and how much will be paid back in return (as well as when). It will state the penalties if a payment is missed, and what will happen if the full amount is not repaid on time. Often, a promissory note will include what is called an “acceleration clause”, which stipulates that if a payment is missed, the entire note’s final amount becomes due.
It is important to be cautious in the drafting of promissory notes as each state has their own “usury” laws which will dictate certain regulations such as the largest amount of interest which may be charged to the borrower. If these laws are violated, the results can be significant, such as civil or even criminal penalties.
When you are assembling a promissory note, it is important to understand the terms that will be standard within the document. To fully comprehend the agreement that is being made, it is vital to understand the words. The following is some of the standard jargon you will typically see within the wording of a promissory note:
• The person who actually receives the money from the loan and must pay it back is called the promisor. Another word for the promisor is the obligor.
• The person who lends the money to the promisor is the promisee. That is the person who receives the payments for the loan. Another word for the promisee is the obligee.
• The amount that is lent by the promisee to the promisor is called the consideration. It is the value of the promissory note contract. It outlines the amount that is leant out as well as the amount that will be repaid.
By learning these words and assuring that you understand the terms of the agreement, you will be better able to decide if it is right for you.
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