Rhode Island Promissory Note Template [PDF + Download]

A Rhode Island promissory note is an agreement between a lender and a borrower that states the loan terms. This contract can include real estate transactions and personal and business loans.

Promissory notes legally bind borrowers to an agreed-upon reimbursement with or without interest as they validate and formalize loan agreements in Rhode Island.

There are multiple promissory note variants and ways to generate them. You may hire a professional to create this document for you, or you can explore the meaning of promissory notes and use our templates to make things simpler and more manageable.

Types of Promissory Notes in Rhode Island

In general, parties can use two types of promissory notes to accompany their loan agreements: secured and unsecured promissory notes. They serve the same purpose but differ in terms of legal enforcement.

Let’s explore both of them in detail:

Types of Promissory Notes

#1. Secured Promissory Note

Secured promissory notes are easier to enforce because they have collateral as the main stipulation. This means that a lender can legally claim a portion or all of an asset or property from a borrower in case of default. Before signing this note, a borrower must prove they own all or part of the asset or property.

Recovering a debt this way typically involves legal action. Still, secured promissory notes are the best guarantees for lenders that borrowers will abide by the Rhode Island debt agreement, including interest rates if stipulated.

#2. Unsecured Promissory Note

An unsecured promissory note also binds a borrower to pay off the debt. However, the recovery process is more complex to pursue with this note as it does not contain collateral. In other words, a lender cannot seize any borrower’s property in case of a default.

Instead, the lender may file a claim in small claims court or pursue other legal action. Generally, repayment of the loan agreement through legal action with unsecured promissory notes takes longer compared to secured ones.

Signing Requirements for Promissory Notes in Rhode Island

Promissory notes in this region must fulfill all the Rhode Island promissory note requirements, as they provide legal force to this document.

These are the criteria Rhode Island promissory notes should meet:

Signing Requirements

Notes must be in written form.
They should include both parties’ names and addresses.
The amount, loan terms, and conditions must be stated.
Note issuers should specify the information on interest rates and collaterals.

In Rhode Island, having witnesses when signing promissory notes is not obligatory, but it is highly recommended. Parties must not sign promissory notes before a notary public, but we suggest doing so for loans of $10,000 or more.

Statutory Considerations for Rhode Island Promissory Notes

Interest rate limitations in this state are governed by Chapter 6-26 of the General Laws of Rhode Island.

These limitations regulate personal, business, monetary judgment, and small loans, as shown below:

Statutory Considerations

General loans: 21% or the domestic prime rate plus 9% (whichever is greater).
Monetary judgments: 12% a year unless another rate is stated.
Small loans: 2% for loans exceeding $800, 2.5% for loans between $300 and $800, and 3% for loans up to $300.

It is important to note that exceeding the interest rate limits can result in penalties or legal charges.

How To Enforce a Promissory Note in Rhode Island

To enforce a promissory note in Rhode Island, a lender has to take legal action based on the note type in question. Specifically, an enforceable promissory note in Rhode Island can take both forms (secured and unsecured).

First, a lender can enforce a secured promissory note by selling a borrower’s property to cover the debt and even return the remaining balance to a borrower if possible.

On the other hand, a lender with an unsecured note must take legal action that does not involve collateral. Instead, lenders can file a small claim case in court and require compensation. This option applies to loans not exceeding $5,000.

Before choosing this option, lenders can send a demand letter to a borrower, which is an official, legal, and nonjudicial way for lenders to request compensation defined in a Rhode Island repayment agreement.

How Can a Promissory Note in Rhode Island Be Changed or Revoked?

A promissory note in Rhode Island can be changed or revoked if both parties consent to it. In both cases, the lender and borrower must sign the new note stating all the new revocation or amending terms.

For instance, a promissory note for a balloon payment can be revoked if the borrower pays off the entire debt early instead of paying it in installments over a long period of time.

Finally, making changes to or revoking a promissory note is easier with promissory note samples available on our website and with the help of a professional, such as a trained and qualified lawyer or loan specialist.