Pennsylvania Promissory Note Template [PDF + Download]

A promissory note in Pennsylvania is a legally binding document in which a borrower formally promises to repay a loan under agreed terms. It is a key element of loan agreements in Pennsylvania, as they outline repayment conditions and enforcement rights.

Since promissory notes are legally binding, they can be enforced in courts, providing protection for both lenders and borrowers.

This article explores the promissory note meaning, its types, essential requirements, and key considerations for its enforceability in the state of Pennsylvania.

Types of Promissory Notes in Pennsylvania

Promissory notes in Pennsylvania are primarily classified into two types—secured and unsecured. The key difference lies in whether the borrower provides collateral to guarantee repayment or not.

Types of Promissory Notes

#1. Secured Promissory Notes

A secured promissory note requires the borrower to pledge an asset—such as real estate, a vehicle, or other valuable property—as collateral. This type of promissory note ensures the lender has a form of security in case the borrower violates the repayment agreement in Pennsylvania.

If the borrower fails to repay, the lender can seize and sell the collateral to recover the owed amount. Secured notes are typically used for larger loans, such as those issued by financial institutions or private lenders for significant purchases.

#2. Unsecured Promissory Notes

An unsecured promissory note, on the other hand, does not require collateral. Instead, the lender relies solely on the borrower's promise to repay. If the borrower defaults, the lender must take legal action to enforce payment, which depends on the borrower's financial situation.

These notes are commonly used for smaller, informal loans based on trust.

Signing Requirements for Promissory Notes in Pennsylvania

A promissory note in Pennsylvania is legally enforceable only if it meets specific requirements. Here are the key elements it must include:

Signing Requirements

It must be in written form.
The note must include the full legal names of the lender and the borrower.
The note must specify the terms of the Pennsylvania debt agreement, including loan amount, applicable interest rate, repayment terms, and the due date for repayment.
The lender and the borrower must sign the document to confirm their agreement to the terms.

Although Pennsylvania law does not require witnesses or notarization, adding notarization can provide extra security by verifying signatures and reducing the risk of disputes. For additional protection, consider using a promissory note template to ensure all necessary terms are included.

Statutory Considerations for Pennsylvania Promissory Notes

In Pennsylvania, there are specific laws governing the terms of promissory notes, particularly regarding interest rates and usury laws. It’s important to ensure that the promissory note complies with them to maintain its validity. Below is a summary of the key statutory considerations:

Type of Loan or Contract	Interest Rate	Relevant Law
Contract	No limit specified	41 PA. Stat. Section 201
Loans of $50,000 or less	6% or as specified in the agreement	41 PA. Stat. Section 201
Monetary Judgments	6% from verdict date, unless agreed otherwise	42 PA. C.S. Section 8101

When creating an enforceable promissory note in Pennsylvania for personal or business loans, it must adhere to appropriate usury laws to avoid legal complications. Promissory notes can be used for both personal and business loans, but the terms, especially regarding interest rates, should be carefully considered to comply with promissory note Pennsylvania requirements.

How to Enforce a Promissory Note in Pennsylvania

To enforce a promissory note in Pennsylvania, if the borrower defaults, the lender should first attempt to resolve the issue by contacting the borrower and discussing a possible solution or renegotiating the terms.

If these attempts fail, the next step is to send a formal demand letter specifying the default and providing a deadline for payment. If the debt remains unpaid, the lender can file a claim in Pennsylvania’s Magisterial District Court, which handles small claims cases, for amounts up to $12,000.

Once the court issues a judgment in favor of the lender, they can take steps to enforce the payment. This might include actions like garnishing wages, levying bank accounts, or placing a lien on the borrower’s property.

It’s important to be aware of Pennsylvania’s statute of limitations, which is four years for written contracts. This means the lender must file the claim within four years of the default. Following these steps can help ensure the enforcement of a promissory note in Pennsylvania.

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

A promissory note in Pennsylvania can be changed or revoked if both the lender and borrower agree to the changes. Any amendments should be clearly documented in writing to avoid disputes and ensure enforceability. Additionally, the revised terms must be signed by both parties, confirming their consent to the modifications.

If the parties agree to cancel the note, a written agreement, often called a release of debt,should be signed to discharge the borrower from their obligation formally. Simply verbally agreeing is not enough, as it may lead to legal complications.

Using a promissory note sample can help structure amendments correctly and ensure all necessary details are included.