PROMISSORY NOTE GUARANTY

Any time you borrow or lend money, and any time you buy or sell real estate or any other item on time payments, you need to execute a Promissory Note–Guaranty.

This document clearly outlines the terms of repayment so that no misunderstanding can exist.

Even if your agreement is with a close friend or family member, put it in writing. The Promissory Note-Guaranty is a free download from this site, it takes only a few minutes to fill out, and it can save you from lawsuits ... not to mention fractured relationships.

The form outlines the amount of money involved, the interest rate to apply, and the schedule of payments. They may be monthly, quarterly, or annually. You may even agree to make the entire sum, along with interest, due at a set time with no payments in the interim. Whatever the agreement, it needs to be spelled out precisely. If interim payments are called for, be sure to include the date due. This could be a specific day each month, the first day of each quarter, or any other mutually agreeable time.

This document is often held by an escrow company or attorney. In exchange for a small fee they collect the payments, calculate the interest and principal allocations of each payment, and send both parties a receipt. The receipt will also show the balance due. At year end the escrow company will calculate all the interest and principal paid during the year and send you a report. This is information that your tax preparer will need.

In the absence of a third party to attend to accounting duties, both parties should be sure to keep accurate records. The person receiving the money should calculate interest, principle, and remaining balance and provide a receipt to the payor. The payor should keep cancelled checks, money order receipts, and dated receipts for cash payments. These records will document all payments and prevent disagreements in the future.

PROMISSORY NOTE GUARANTY