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Promissory Note

Ocala Lawyers for Real Estate Closings

Many people need a home loan or mortgage to buy a home in South Florida. After buyers locate a property they want to buy, they generally obtain a loan from a bank or a lender in order to reach the price they negotiated with the seller. Part of the documentation for the home loan is a promissory note. In a promissory note, a buyer agrees to pay back any money borrowed to finance a transaction. If you have questions about a promissory note in connection with a property transaction, you can consult the skilled Ocala real estate attorneys of the Dean Firm.

Promissory Note

Under federal law, several documents need to be given to a borrower at closing. One of these is a promissory note, which is a written agreement between borrower and lender in which the borrower assents to payment of a particular sum to the lender according to specific terms. In the promissory note, a buyer agrees to repay a lender money that’s been borrowed to finance the transaction. The parties are known as the maker, who is a borrower promising to repay the loan, and the payee, who is the lender being paid. When closing proceeds as planned, the buyer will pay the seller the sale price using the loan, and then sign the loan documents, which will include the promissory note.

Because the promissory note is negotiable, a lender may be able to sell it to a different party. Sometimes these notes are sold immediately after a real estate closing, so that as a buyer, you’ll need to pay a totally unrelated lender. A promissory note will identify the parties within the first few sentences of the document. The amount of the loan is stated within the note as well. Generally, the promissory note specifies that the money is to be repaid in lawful money according to certain terms and a particular rate.

A promissory note describes details about the interest the borrower needs to pay the lender to borrow money. Interest an agreed upon amount that will be paid by the borrower for using the lender’s money. Federal and state law determine how much interest may be charged. When an interest rate exceeds the legal limits, it is considered usurious and unlawful. When there is a fixed rate note, the promissory note’s interest rate doesn’t change. Sometimes the note includes the specification that if you default on the note, the lender can charge late fees and increase the interest rate to a maximum or default. A dedicated real estate lawyer can review the terms of your transaction to help you determine whether they are sufficiently favorable to you.


A prepayment may be allowed by a promissory note. A prepayment provision would allow you, as a borrower, to pay a debt early without paying an extra premium payment or penalty. It can consist of the unpaid accrued interest and the unpaid principal sum as of the date of prepayment. Partial payments are different from prepayments, which are payments made by a borrower for an amount that’s less than what’s owed.

Promissory notes may be backed by security. The land you bought with the loan serves as collateral for the loan repayment.

If you don’t abide by the contract, there will be repercussions as set forth in the promissory note. A borrower that doesn’t pay under terms of the deal will be found to be in default. Usually, however, there is a grace period during which the lender can’t exercise remedies. Once the grace period passes for an installment payment, however, a lender can take the steps described in the note. Often this involves accelerating the note so that it becomes immediately due and payable in full. Remedies for a lender could also include late fees and reimbursement for collection costs.

Retain a Seasoned Real Estate Closing Attorney in Ocala

If you are concerned about a promissory note in connection with buying property in Ocala, you can discuss your situation with a real estate lawyer. Michael E. Dean and Timothy S. Dean of the Dean Law Firm possess decades of experience representing clients. Call us at (352) 387-8700 to set up a free consultation or contact us online.