Montana Promissory Note Template [PDF + Download]

A Montana promissory note is a legal document that outlines a borrower's promise to repay a loan under agreed terms. It formalizes loan agreements in Montana by specifying key details such as the repayment schedule, interest rates, and other essential conditions.

While a lawyer is not required to draft a promissory note, seeking legal advice or using promissory note templates can help ensure your document meets all state requirements.

In this article, we will explore the meaning of promissory notes, their various types, and their enforceability requirements, so keep reading to simplify the creation of your document.

Types of Promissory Notes in Montana

Promissory notes contain basic terms that are typically included in all agreements, but the specific conditions can vary depending on the type of note. The two main types of promissory notes in Montana are secured and unsecured.

Types of Promissory Notes

#1. Secured Promissory Notes

A secured promissory note includes the obligation for the borrower to provide collateral—an asset or property—to guarantee repayment, which offers more security for the lender.

So, if the borrower defaults on the repayment agreement in Montana, the lender has the legal right to sell the collateral and use the proceeds to settle the debt. This way, the lender ensures repayment by the agreed-upon terms.

#2. Unsecured Promissory Notes

Unsecured promissory notes are the most common, typically used to formalize loan agreements between individuals who trust each other. There is no collateral involved, so the lender cannot claim assets if the borrower defaults.

However, the borrower's promise to repay is documented, and the lender can use the note as evidence in legal proceedings if necessary.

Signing Requirements for Promissory Notes in Montana

Signing requirements must be fulfilled when drafting a promissory note to ensure its validity and protect the interests of both the borrower and lender in case of a dispute or breach of agreement.

Here are the necessary elements:

Signing Requirements

The note must be in writing.
The names of both the borrower and the lender must be identified.
The document should include a clear statement of the Montana debt agreement, specifying the amount, repayment schedule, and any applicable interest rates.
Both the borrower and lender must sign the note to make it valid.

Including these elements makes the promissory note a legally enforceable document that can be used in legal proceedings if either party breaches the agreement.

For added legal protection—especially for larger loans or non-trust-based transactions—it is recommended to have the note witnessed or notarized before a notary public to provide extra validation.

Also, a promissory note sample must be reviewed to ensure the inserted data is accurate and all necessary information is included.

Statutory Considerations for Montana Promissory Notes

Understanding promissory note Montana requirements guarantees that the document complies with state laws and remains legally valid. Montana has specific usury laws that cap interest rates to prevent excessive charges.

Here’s a breakdown of applicable interest rate limits:

Loan Types	Interest Rate Cap	Statute
With a Contract	15% or 6% + federal funds rate (3 days before the agreement)	Section 31-1-107
Without a Contract	10% (legal interest rate)	Section 31-1-106
For Judgments	Prime loan rate + 3%	Section 25-9-205
Unlicensed Pawnbrokers	10%	Section 31-1-401

A promissory note in Montana can be used for both personal and business loans as long as their terms are clearly defined and compliant with these laws.

How to Enforce a Promissory Note in Montana?

To enforce a promissory note in Montana, when a borrower defaults, the lender should first send a written demand for payment, preferably through certified mail, to create a record of their collection intentions.

If the borrower refuses to pay, the lender can take legal action. For unpaid amounts up to $7,000, filing a claim in Montana’s small claims court is a straightforward option. Small claims court is faster and more affordable, with a typical filing fee of $30. If the debt exceeds the small claims limit, the lender may need to file a lawsuit in district court.

When the enforceable promissory note in Montana is secured by collateral, the lender has the right to seize or sell the collateral as permitted under Montana law. Additionally, according to Section 30-3-122 of the Montana Code Annotated, an action to enforce the party’s obligation to pay a note payable at a definite time must be commenced within six years after the payment date or dates stated in the note.

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

A promissory note in Montana can be changed or revoked if the lender and the borrower decide to modify the terms of their repayment agreement. Both parties must mutually agree to the changes, such as adjusting payment amounts, deadlines, or interest rates.

It’s crucial to document any changes in writing to ensure the revised terms are legally valid. The updated document should clearly outline the agreed-upon changes and be signed by both the lender and the borrower. Without a written agreement, verbal modifications may not hold up in court, leaving both parties at risk.