Louisiana Promissory Note Template [PDF + Download]

A Louisiana promissory note is the official document by which a borrower is bound to repay the loan to a lender. It specifies the terms of a loan agreement in Louisiana and is only valid in written form.

This legally binding document provides transparency and reinforcement for both loan agreement parties. Promissory notes encompass numerous loan types, such as business loans, real estate transactions, and personal loans.

As you don’t need a lawyer to prepare such a document, we can now explore how you can create it on your own. We’ll go over the meaning of promissory notes in more detail and teach you how to use the Contracts.net promissory note template to streamline this process efficiently.

Types of Promissory Notes in Louisiana

You can authenticate loan agreements on different levels with two primary promissory note types in Louisiana—secured and unsecured.

This is how each one works:

#1. Secured Promissory Note

A secured promissory note boasts the highest recovery success in cases of a borrower’s default. In other words, a secured note implies collateral, a type of borrower’s property or asset that a lender can sell to recover the debt.

The worth of the property or asset can be equal to the debt, but it can also be higher. In the latter case, the lender can send collateral, use the funds to cover the loan and interest rate, and return any remaining funds to the borrower.

This type of recovery often requires legal action, especially if the borrower contests the default.

#2. Unsecured Promissory Note

An unsecured promissory note features all the necessary elements (party names and addresses, dates, etc.) but lacks one optional element: collateral. This means that the lender can use such a letter as proof in court but cannot seize or sell any collateral to recover the loan.

Nevertheless, the lender can file a lawsuit or take similar legal action based on a Louisiana debt agreement, which usually takes longer and has a lower success rate than an action taken under secured promissory notes jurisdiction.

Signing Requirements for Promissory Notes in Louisiana

The promissory note Louisiana requirements for signing are necessary parts that make it legally binding and official.

Let’s explore them further:

Signing Requirements

The promissory note must be in written form.
The note must contain both parties' full names and contact information.
Both parties must sign the note.
Dates, interest rates, and collateral (for secured promissory notes) are mandatory.

Witnesses and notaries are not required when signing Louisiana promissory notes. However, having a witness and notarizing the document is recommended to enhance its validity and enforceability.

Statutory Considerations for Louisiana Promissory Notes

As stated in the (RS 9:3500(C)), Louisiana's general maximum interest rate is 12% for personal loans. The Louisiana Revised Statutes RS 9:3504 outlines business, commercial, or agricultural loans as exceptions. Obligations secured by mortgage and assessments for public improvements are also exempt.

Moreover, the jurisdictional interest rate must not exceed 3.25% above the federal court rate. Finally, the maximum interest rate for personal injury or wrongful death is 6% until the court’s final decision. After that, the rate can be up to 12% per year.

How to Enforce a Promissory Note in Louisiana?

To enforce a promissory note in Louisiana, you can use the secured note stipulation to seize collateral, issue a demand or installment notice, or file a claim in small claims court.

Secured promissory note holders can recover the debt by taking legal action and using the collateral stipulated in the note.

Promissory Note Enforcement

To be legally binding, the note has to meet specific criteria:

The collateral has to be valuable.
The debtor must have rights to it.

Also, the Louisiana repayment agreement must:

Be in written form.
Describe the collateral.
Confirm the debtor’s possession or control over its entirety.

On the other hand, unsecured promissory note holders can first send a demand or installment letter to the borrower. If the borrower does not take action regarding any of the letters, the lender must use the letter as evidence of a breach of contract in cases of default.

With it, the lender can sue the borrower and enforce the debt. For debts not exceeding $5,000, a lender can file a case in small claims court. After a lender gets a judgment from the court, they can collect on the judgment through wage or asset garnishments, etc.

The enforcement of a promissory note in Louisiana for debts exceeding $5,000 is similar. The only difference is that the lender will opt for the large claims court.

How Can a Promissory Note in Louisiana Be Changed or Revoked?

A promissory note in Louisiana can be changed or revoked through a “novation,” a formal written agreement that supersedes the initial promissory note. This is a new repayment agreement both parties must sign. Additionally, all parties involved must agree to the new terms and conditions for the document to be legally binding.

A note can also be revoked if the borrower pays the full amount to the lender. The same applies to debt forgiveness, which must be specifically stipulated in the agreement.

Last, we suggest checking promissory note samples and getting acquainted with them before taking legal action. For more complex cases, we recommend consulting an attorney.