Florida Promissory Note Forms Explained: Your Complete Guide

What is a Promissory Note in Florida

The Florida promissory note is a basic financing instrument. Lender and borrower sign Florida promissory notes in exchange for a loan of money. In its essence, a promissory note is nothing more than a promise by the borrower to pay money to the lender at a future time, or in installments over time.
The Florida promissory note is signed by the borrower who must abide by its requirements. The lender, by signing the Florida promissory note, also makes an important agreement. The lender promises not to call for payment until payment is due under the terms of the Florida promissory note.
Florida promissory notes vary in complexity. Some are very short, others much longer. In spite of this, at least the most basic Florida promissory notes contain very similar terms . A Florida promissory note will typically consist of these common provisions:
Ordinarily the Florida promissory note will involve the transfer of money to the borrower from the lender. But sometimes it can happen that the lender will make an agreement with the borrower to confer other benefits in lieu of cash.
An example of this may be the conveyance of a house from the borrower to the lender. The essential terms and requirements are otherwise the same as those for a typical borrowing transaction, but the borrower obtains the property without payment.
The Florida promissory note may also be made in lieu of cash where the borrower provides a service, which is kept track of in the Florida promissory note. Such a Florida promissory note will typically include the number of hours of service, the hourly rate or other agreed upon compensation, and a time for the borrower to come back and pay the obligation.

Florida Promissory Note Essentials

A Florida promissory note must include all the basic components which indicate the lender and borrower, the date, the principal amount, and the terms of repayment, including the interest rate. The note may call for monthly payments, quarterly payments, bi-annual payments, annual payments, or a final payment upon maturity. For multi-year loans, there are usually several years during which only interest payment is required. On certain notes, payments are deferred until the end of the repayment period, so that the borrower only pays interest during the term. In some cases, the entire principal is convertible to equity upon certain events. Some common terms that can be used in addition to the basic components in Florida promissory notes are call provisions, prepayment penalties, amortization schedules, interest only payments during the term, and the like. For commercial promissory notes, a lengthy list of representations and warranties, covenants and agreements are sometimes listed. The alternative would be to sign a loan agreement and attach the promissory note. In any event, it is important to the lender that all the terms and conditions of the loan are stated on the face of the promissory note, so as to avoid parol evidence arguments and testimony at trial.

Different Types of Promissory Notes in Florida

Types of Florida Promissory Note Forms
There are two general types of promissory notes used in Florida. The most common of which are secured promissory notes which are often secured by real property. A less frequently used but also common type of promissory note is one that is unsecured. Unsecured promissory notes come in many different types depending on the parties abilities and desires.
Demand promissory notes and installment promissory notes are the two most common subtypes of promissory notes. The principal difference between a demand promissory note and an installment promissory note is when the holder may demand payment of the underlying debt. Holders of an installment promissory note must wait until the installment due dates pass before they can demand payment of the entire principal and/or interest in order to accelerate performance under the promissory note. Holders of a demand promissory note usually prefer to have the ability to demand payment of the entire amount due immediately after a default occurs or at any time thereafter.
Closed ended promissory notes like installment notes generally require a monthly payment of principal and interest. The cost of the monthly payment does not change during the life of the promissory note and is typically calculated based on the time value of money including the appropriate interest rate.
Open ended promissory notes like demand notes may allow borrowers to go further into debt without prior approval. From a lender’s perspective, open ended promissory notes are much better than closed ended promissory notes for those holders who routinely write checks to borrowers because the lender does not have to get approval from a credit department to lend additional money to the borrower.
Because open ended promissory notes are designed to allow borrowers to borrow more money than is allowed under a closed ended promissory note, they are normally subject to a credit limit or credit line which is agreed to by both the lender and the borrower. From a debtor’s perspective, open ended promissory notes are beneficial because the debtor can avoid the cost of "reapplying" for periodic advances of additional credit. Also, the debtor can make lower periodic payments because the debtor is given the ability to regularly borrow funds to pay off the minimum payment. Lastly, the debtor is allowed to go further into debt so long as the outstanding balance stays below the credit limit.

Legal Aspects and Requirements

When creating a promissory note in Florida, there are certain legal requirements and considerations that must be followed for the document to be binding and enforceable. First and foremost, as with any legal contract, the parties involved must have the legal capacity to enter into the agreement. This generally means that the parties must be of sound mind, must be of legal age to contract (18 years or older), and must not be under any undue influence or duress to sign the contract.
A promissory note must also contain certain elements to be considered valid. It must include an unconditional promise to pay, a specific sum of money, with a clear and definite date for payment or a provision for determining the date of payment. It must also be signed by the person making the promise (the "maker") and must be supported by sufficient consideration for the promise to be binding. Generally, simply the fact that one party is receiving money under the other party’s promise to repay the loan is enough to establish sufficient consideration. However, if the note includes any added provisions such as security interest or collateral, there may be additional considerations or requirements to meet.
It is also important to note that, even though it is not legally required, having a notary public sign off on a promissory note is recommended as this will verify the signing party’s identity, validate that the signing party was not under duress at the time of signing, and present a record of the document. In addition, Florida has statutory requirements regarding interest rates, which govern the maximum amount of interest that can be charged on a promissory note. These rates vary depending on the type of note. In Florida, the maximum combined rate chargeable on a judgment note is 12 percent. For a construction loan, the rate is 18 percent, while for a consumer loan, the rate is 25 percent. For a secured loan, the rate is 12 percent, and for an unsecured loan, the rate is 18 percent.
Like any contract, there are ways that promissory notes can turn into a source of litigation, despite the intent of both parties to eventually move forward from the transaction. Ambiguity in the terms of the agreement, a lack of clarity as to what is expected of both parties, and the inclusion of terms that fail to comply with Florida’s usury laws may all create significant challenges down the road. A promissory note must also be executed correctly, as failure to sign the document in front of a notary or witnesses, or not retaining the original signed document can all create problems down the road. Recognizing and avoiding common pitfalls when drafting a promissory note is critical to protecting oneself as the lender and ensuring that the money owed is paid back according to the terms of the agreement.

Writing a Florida Promissory Note

A promissory note is a personal loan which can be enforced in court if it is not paid back.
The following is a step by step guide to drafting a legally compliant Florida promissory note:

  • PROMISOR – The Promisor of the promissory note is the person who makes the promise to pay back the money to the person who makes the loan. This person is also known as the "Borrower."
  • PROMISE – The promise of the promisor can be broken down into two parts. First, the promisor must promise to pay back the loan. Second, the promisor must promise to pay back the loan with interest at a specified rate. The promisor must also promise to pay back the loan at a specified period (on demand, over a term of years, or some other arrangement like specified dates of payment, or specified days since payment in each year).
  • PAYEE – A promissory note must designate who can collect on the promissory note. The promissory note can either be payable to a specific person , or it can be made payable to "bearer," which means that there is no one specifically named.
  • GOVERNING LAW – The promissory note must designate which state’s law will govern the promissory note. It is vital to make this specific. It is not a good assumption on behalf of the parties that the law of the state in which the transaction occurred will govern. If the transaction crosses state lines, then the governing law will not be clear.
  • DESCRIPTION OF LOAN – The promissory note must describe the purpose of the loan sufficiently so that a court of law would know that the party making the loan was making a loan, and not a gift.

There are templates available online to use for creating a promissory note.
It is crucial to leave no loose ends. A court will strike the entire promissory note if a clause is ambiguous. Leaving cured blanks in the promissory note is a good practice, and everyone signs the promissory note at the same time and place.

Common Pitfalls

The mistakes of improperly drafted and poorly executed promissory notes can have a dramatic impact on the enforceability of those notes. Common errors include failing to clearly identify the parties involved in the transaction, failing to specifically set forth the terms of the loan agreement, failing to correctly identify the interest rate, and failing to have the promissory note properly notarized.
Yet undue emphasis is sometimes placed on the form of the promissory note. Florida law has long provided that the parol evidence rule applies to promissory notes and that the words of a promissory note will control over any other written document purporting to express the intent of the parties. As long as the promissory note includes sufficient language to create an obligation for repayment, it should be sufficient.

Enforcing Promissory Notes in Florida

If a borrower defaults on a Florida promissory note, there are limited ways to enforce the note. They include foreclosure in certain cases, a deficiency judgment, and pursuing a breach of contract suit. These remedies depend on the type of instrument, the parties and other potential liens on the property.
First, if the promissory note is secured by a mortgage, then the lender may pursue a foreclosure action in the court. The lender must comply with the affidavit requirements as noted in Federal Rule of Civil Procedure 56(c). In some case, an affidavit that is unsworn will be found to be sufficient. Baker v. Green Tree Servicing, LLC, 168 So.3d 264 (Fla. 4th DCA 2015). However, the complaint must be verified and an affidavit must accompany the motion for summary judgment. Bould v. Bank of Am., N.A., 168 So.3d 512 (Fla. 4th DCA 2015). A party is considered to have standing to foreclose so long as they are the holder of a note, regardless of whether the note was indorsed in blank or whether the interest was previously transferred. U.S. Bank Nat. Ass’n v. Bartram, 211 So. 3d 1009, 1016 (Fla. 2016); see also Bartram v. U.S. Bank Nat’l Ass’n, 141 So. 3d 615, 619 (Fla. 5th DCA 2014) (noting that "once a mortgage is in default, the note holder may accelerate the debt and pursue its claim to judgment without an assignment or other indication of ownership," and that however "the holder of the note may only recover the amount due and owing prior to the acceleration and joint interest rate reset"). Once the lender gets a judgment, they can pursue a deficiency judgment too. The lender must comply with the statute "by carrying its burden of establishing the fair market value of the property as of the date of the foreclosure sale . . . " In re Hoch $2,250,000 Tie-Up Fund v. Derieux, 84 So.3d 1122, 1124 (Fla. 5th DCA 2012).
Even if it appears that a lender has lost aforementioned remedies, it is still possible to enforce a promissory note in a breach of contract suit. So long as the court can award more than zero in damages, the court may still award costs in the form of attorney’s fees. "As a matter of law, a trial court is authorized to grant leave to amend a judgment to conform to the record to award attorney’s fees if the prevailing party had a contractual basis for an award of attorney’s fees." La Fitte Co. v. Cornett, 986 So. 2d 1286, 1287 (Fla. 2008).

Promissory Note Resources and Templates

Reliable Resources and Templates for Florida Promissory Note
Florida Department of State – Division of Corporations
https://www.sunbiz.org/
The Secretary of State maintains a variety of information on state businesses, including distributing official forms which can be utilized in the drafting of promissory notes.
Florida Statutes
https://www.leg.state.fl.us/
The Florida Statutes are the official codification of Florida’s general laws . It is the source for the statutory authority of the promissory note.
RocketLawyer
https://www.rocketlawyer.com/
This is a legal service that helps users create legal documents, including promissory notes. A paid membership gives access to additional legal networks and resources including legal advice.
Legal Zoom
https://www.legalzoom.com/
Legal Zoom is a commercial service offering pro-se legal services for a fee. This includes the ability to draft promissory notes and other legal documents.