South Dakota Promissory Note Template [PDF + Download]

A South Dakota promissory note is a written document in which a borrower agrees to a mandatory loan repayment to a lender. It is legally binding and more detailed than an IOU contract.

Even though it is less comprehensive than a standard South Dakota loan agreement, a promissory note can formalize one such contract. You can secure your loans with different types of promissory note templates needing a lawyer's appointment.

But before that, it’s essential to understand the meaning of the promissory note by checking its types, signing requirements, and other aspects it entails, such as enforcement and revocation.

Types of Promissory Notes in South Dakota

Depending on who you borrow money from and how much you trust the borrower, you may opt for a secured or unsecured promissory note.

Let’s examine both of them to see which one fits your needs better:

Types of Promissory Notes

#1. Secured Promissory Note

Among general specifications (due date, lender and borrower information, and similar.), secured promissory notes include collateral. This is the most important part of the note, stipulating that a lender can take the borrower’s property or asset, such as a vehicle, if the borrower defaults on the South Dakota debt agreement payment rules.

Because of this, it is easier for lenders to enforce secured promissory notes. Of course, the enforcement process requires legal action and may take longer than average if the borrower raises disputes about the default.

#2. Unsecured Promissory Note

Although they do not include collateral, well-written, unsecured promissory notes are still legally binding and enforceable in South Dakota. The key factor here is that the enforcement process is more challenging to pursue.

For instance, if the collateral isn’t available, a lender will have to file a claim in small claims courts or seek restitution through other legal processes, as stated in the South Dakota repayment agreement. This method of enforcement is generally more extended and has a lower success rate than the secured promissory note.

Signing Requirements for Promissory Notes in South Dakota

The following promissory note South Dakota requirements must be met to make this document legally binding and enforceable:

Signing Requirements

The promissory note must be in writing.
Information about lenders and borrowers, as well as their signatures, are mandatory.
Stating the loan amount, interest rates, and repayment terms is necessary.
Outlining collateral (in secured notes) is obligatory.

Witnesses are not required to sign a South Dakota promissory note, nor is a notary public. However, it is highly recommended to notarize this type of agreement for loans over $10,000 and have the witnesses sign promissory notes of any loan value to increase their security levels.

Statutory Considerations for South Dakota Promissory Notes

The highest interest rates for promissory notes must comply with the laws of South Dakota, where each type of loan and its limit are defined as follows:

Type of Loan	Interest Rate
With contract	No limit
Without contract	12%
For judgments and statutory liens	10% annually (as stated in Sec. 54-3-5.1 and Sec. 54-3-16(2))
For inverse condemnation actions	4.5%
For support debts or judgments	1% per month or lower
For past due money in general	15%
For past due money on bills, statements, and invoices	18% for invoices and an accumulated 15% rate in any other way

You can use a South Dakota promissory note for personal, business, real estate, student, and other loans. The main rule is not to exceed the allowed interest rate to avoid penalties or the total annulment of interest rates.

How To Enforce a Promissory Note in South Dakota

To enforce a promissory note in South Dakota, a lender can take judicial or nonjudicial action for secured promissory notes and file small or higher court claims for unsecured notes.

If a lender possesses a secured enforceable promissory note in South Dakota (a note meeting all legal requirements), they can file a lawsuit asking the court to allow a sale of a borrower’s property or asset.

If the borrower does not provide a written answer, the lender will automatically win the case. In case the borrower decides to dispute the lawsuit, the court will consider the available evidence and determine the winner.

For nonjudicial enforcement of a secured promissory note, the lender can send the borrower a sale notice at least 21 days before the sale and publish it in a newspaper once a week, four weeks in a row. This allows the lender to sell the property to recover the debt.

Enforcing an unsecured note implies filing a claim in small claims court for loans of $12,000 or less. Any loans exceeding this amount will be subject to higher courts.

If the court rules in favor of the lender and the borrower does not comply, the lender can hire a repossession agency, garnish the borrower’s wage, or even report the borrower to the credit agencies, thus lowering their credit score.

How Can a Promissory Note in South Dakota Be Changed or Revoked?

A promissory note in South Dakota can be changed or revoked if the lender and borrower mutually agree to it. In addition to agreeing to the changes or revocation, a promissory note may be canceled if the borrower becomes partially or totally disabled or passes.

The newly drafted promissory note must be in writing and signed by both parties, and the changes or revocation terms must be directly addressed.

In general, we recommend lending money to individuals with good credit scores whom lenders can trust. Lenders can also ensure the note's legitimacy by using promissory note samples on our website as guidelines when drafting it.