Virginia Promissory Note Template [PDF + Download]

A Virginia promissory note is an official document outlining a borrower’s promise to pay off the debt to a lender. It specifies terms and conditions for repayment and other details, such as issuing and maturity dates.

Lenders and borrowers can use promissory notes to formalize Virginia loan agreements. Parties can issue promissory notes themselves or with the help of a professional.

Read on to find out more about the meaning of promissory notes and how to use promissory note templates to make enforceable, adjustable, and revocable documents.

Types of Promissory Notes in Virginia

In Virginia, there are two types of promissory notes you can choose from—secured and unsecured. These two mostly differ in terms of security levels.

Let’s explore these differences further:

Types of Promissory Notes

#1. Secured Promissory Note

A secured promissory note is used for loans backed by collateral. Specifically, the borrower agrees to include a piece of property or asset of value, which the lender can acquire if the borrower defaults on payment.

For instance, the lender can seize the borrower’s car if their Virginia repayment agreement lists such an asset as collateral. When stating collateral, the borrower must also include proof of ownership and necessary information, such as the collateral registered number.

#2. Unsecured Promissory Note

An unsecured promissory note is a legal contract stipulating the loan amount, repayment deadlines and terms, and other important loan information. Still, unsecured promissory notes rely solely on the borrower’s promise to repay the debt.

In other words, there is no guarantee, such as collateral, that the lender can take in case of a default. Instead, the lender can send a demand letter and request the loan repayment as stated in their Virginia debt agreement. If the borrower does not respond to this letter, the lender has to file a claim in small claims court to seek restitution.

Signing Requirements for Promissory Notes in Virginia

Both parties must agree to, include, and adhere to the set of the promissory note Virginia requirements to ensure that it is legal and enforceable.

Let’s take a closer look at them:

Signing Requirements

The note must be in written form.
It should state the parties’ names, dates, and the loan amount.
Notes have to specify the repayment terms and collateral (for secured promissory notes).
Both parties must sign the Virginia promissory note.

In this state, a witness is not required to sign promissory notes, but it is highly recommended, as this action adds an additional layer of protection. The lender and the borrower can also have a notary public identify and verify the people signing the agreement and the legitimacy of the signatures.

Statutory Considerations for Virginia Promissory Notes

Providing loans in Virginia is legal as long as parties adhere to the usury rates, which are the maximum interest rates stated in Title 6.2, Chapter 3 of the Virginia Code.

Let’s examine them in detail:

Loan Type	Maximum Interest Rate
With a contract	12%, with short-term loans, consumer finance loans, Housing Development Authority loans, loans issued by pawnbrokers and motor vehicle title holders, and finance company loans listed as exceptions (§ 6.2-303(B))
Without a contract (general)	6%
With a bankruptcy proceeding	6%
Third-party tax payments	The annual rate approved by the local treasurer not exceeding 16% per year
Insurance premiums	1.5% a month
Pawnbrokers	5% a month for loans higher than $100, 7% per month for loans of $100 or lower, 10% a month for loans of $25 or less.

Regardless of the type of loan (business, personal, real estate, etc.), lenders should always include interest rates no higher than those specified in the most recent usury law propositions. This is especially important to avoid penalties such as interest rate annulments.

How To Enforce a Promissory Note in Virginia

To enforce a promissory note in Virginia, the lender can take the collateral as compensation with a secured promissory note or file a claim in small claims court with an unsecured one.

If the borrower fails to pay off the debt by the maturity date, a secure, enforceable promissory note holder in Virginia can seize and sell the collateral to cover the debt. The collateral’s value may exceed the debt amount, in which case the borrower may have the right to receive the remainder.

If the loan amount is under $5,000, an unsecured promissory note holder can file a small claims court case. The lender must take legal action to enforce the obligation of the borrowing party to repay the debt up to six years after the maturity date. Sending a demand letter prior to filing the claim is advisable because this type of enforcement is shorter and more lenient compared to court cases.

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

To change or revoke a promissory note in Virginia, both parties must agree to all the changes or revocation terms. When modifying or revoking a promissory note in Virginia, parties must create a new document with specific relations to the original one.

A new agreement must be in writing, stipulate all alterations or cancellation terms, and be signed by both parties. Consulting an attorney may also be a good idea if parties wish to avoid potential mistakes that may make their documents void.

Lastly, issuers can thoroughly examine promissory note samples and learn more about the essential elements, like the use of proper language and the inclusion of specific terms, which make the notes legally binding.