Maryland Promissory Note Template [PDF + Download]

A promissory note in Maryland is a legally binding document in which a borrower commits to repaying a specific loan amount to a lender under agreed terms. This document formalizes loan agreements in Maryland by outlining critical details, such as the loan amount, due date, interest rates, and repayment methods.

This article will define the meaning of promissory note, provide an overview of its common types, and discuss the essential elements required for enforceability. Additionally, it will highlight important considerations when using a promissory note sample to ensure you are drafting a legally sound document in Maryland.

Types of Promissory Notes in Maryland

There are two primary types of promissory notes in Maryland—secured and unsecured. Each type serves a distinct purpose based on the loan amount and the level of risk involved.

Types of Promissory Notes

#1. Secured Promissory Note

A secured promissory note involves a loan backed by collateral—such as property, a vehicle, or other assets—that the borrower pledges to guarantee repayment.

This type of note is typically used for larger loans, providing lenders with more security. If the borrower defaults, the lender can seize the collateral to recover the debt. Secured notes are preferred for lenders, as they reduce the risk of non-payment.

#2. Unsecured Promissory Note

An unsecured promissory note relies solely on the borrower's promise to repay the loan, with no collateral required. This type of note is more common for smaller loans or personal arrangements. However, since there is no asset backing the loan, lenders face a higher risk, and repayment depends entirely on the borrower's financial stability and integrity.

Signing Requirements for Promissory Notes in Maryland

The signing requirements for promissory notes in Maryland outline the essential elements for the documents to be legally recognized and used as valid proof of a debt agreement. Let's take a closer look at these requirements:

Signing Requirements

The document must be in written form.
It has to include the names and contact information of both the borrower and lender.
The note has to clearly outline the details of the Maryland debt agreement, including loan amount, due date, payment methods, and interest rate.
It needs to contain the signatures of both parties to confirm their agreement.

Additionally, while notarization or having witnesses are not mandatory, they provide extra validation, reducing the risk of disputes.

Parties can use adjustable promissory note templates tailored to Maryland laws to simplify drafting the document and ensure an agreement's essential elements are included.

Statutory Considerations for Maryland Promissory Notes

In Maryland, promissory notes must comply with specific usury laws to ensure the loan agreement is legally valid. The interest rate caps are outlined in the Maryland Constitution, Article III, Section 57, and in Commercial Law, Section 12-103.

Below is a summary of interest rates and regulations:

Loan Type	Interest Rate
With a Contract (Section 12-103(a)(1))	8%
Unsecured loans or installment loans not secured by real property (Section 12-103(a)(3))	24% (or 18% for loans before 1982)
Without a Contract (Section 12-102)	6% per annum
Loan Secured by Certificate of Deposit (Section 12-103(a)(2))	2% above the interest rate on the CD
Mortgage or Deed of Trust Loans (Section 12-103(d))	No maximum; must comply with federal law

Promissory notes can be used for both personal and business loans in Maryland, but they must adhere to the Maryland promissory note requirements, especially concerning the applicable interest rates and legal stipulations.

How To Enforce a Promissory Note in Maryland

To enforce a promissory note in Maryland, a lender must take specific steps if the borrower fails to repay the loan. First, the lender should carefully review the terms of the note to confirm that a default has occurred. Once confirmed, the lender should try to resolve the issue through direct communication with the borrower.

If these efforts fail, the next step is to send a formal demand letter requesting payment. This letter should clearly state the amount owed, the deadline for payment, and the consequences of continued non-payment.

When the borrower still doesn’t comply, the lender can file a claim in Maryland’s small claims court for unpaid amounts within the court’s limit, which is up to $5,000. Having a properly documented and signed enforceable promissory note in Maryland makes it easier for the lender to prove the debt and secure a judgment in court.

Additionally, it’s important to note that an action on a promissory note must be filed within 12 years after the cause of action accrues or within 12 years from the date of the death of the last surviving principal debtor or creditor, whichever occurs first. If any payment of principal or interest is made on the debt, the statute of limitations will be suspended for three years after the payment date.

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

A promissory note in Maryland can be changed or revoked if both the lender and the borrower mutually agree to the changes. This could involve adjusting payment terms and interest rates or even canceling the debt altogether. However, it’s essential to document any modifications in writing to avoid disputes later on.

To make changes legally binding, both parties must sign the updated document confirming their agreement. This new document becomes part of the repayment agreement in Maryland, ensuring that all terms remain clear and enforceable. Failing to document changes could make it difficult to prove what was agreed upon, which can lead to legal complications.