Washington Promissory Note Template [PDF + Download]

A Washington promissory note is a legally binding document stating a borrower’s promise to repay a loan to a lender under agreed terms. This legal document outlines the repayment terms, maturity dates, loan amount, and interest rates (if there are any).

Promissory notes ensure clarity in personal, business, and other types of loans and can be used to secure Washington loan agreements. If you are confident enough, you can issue promissory notes by yourself, but hiring a lawyer is always advisable.

Let’s learn the meaning of promissory notes as we discuss the different types of this document and how to use promissory note templates to ensure their enforceability.

Types of Promissory Notes in Washington

In Washington, there are two kinds of promissory notes—secured and unsecured. Both notes feature standard elements (dates, repayment terms, interest rates, etc.). However, they differ in terms of security and enforceability.

Types of Promissory Notes

#1. Secured Promissory Note

A secured promissory note stipulates collateral, which is the borrower’s property or asset (home, car, boat, etc.). Collateral secures promissory notes because the lender can seize it if the borrower defaults on repayment.

A piece of the borrower’s property can have a different value based on the type of Washington debt agreement. Even if the collateral value exceeds the loan sum, the lender can sell it, recover the debt, and return the remainder to the borrower.

#2. Unsecured Promissory Note

An unsecured promissory note differs from a secured one because it does not feature collateral. Thus, a Washington repayment agreement is based only on the borrower’s promise to pay off the debt.

If the borrower is late on payment or cannot make payments at all, the lender has to seek restitution in small claims court. Enforcing an unsecured promissory note in Washington typically takes longer than enforcing a secured one.

Signing Requirements for Promissory Notes in Washington

To make this document legally enforceable, issuers must meet the following requirements for promissory notes in Washington:

Signing Requirements

Promissory notes must be in writing.
They should include information about both parties (full names, addresses, contact details, etc.).
Notes have to stipulate the loan amount, repayment terms, interest rates, and collateral (if the note is secured).
Both parties must sign the notes, and the document should be subject to Washington State law.

Creators can also add an additional layer of security to Washington promissory notes by including witnesses or notarizing the document. Although document notarization is not mandatory, it is highly recommended for loans over $10,000.

Statutory Considerations for Washington Promissory Notes

The Washington State usury laws (Title 19, Chapter 19.52) determine the maximum interest rates for promissory notes in this region. The interest rate limits differ according to the loan types.

Let’s find out more about them:

Type of Loan	Maximum Interest Rate
With a contract	4% above the 26-week treasury bill rate or 12% per year, whichever is greater
Without a contract	12%
Unpaid consumer debt judgments	9%
Unpaid student debt judgments	2% above the federal prime rate
Medical debt prejudgments	9%
Tortious conduct of an individual/entity judgments	2% above the federal prime rate
Tortious conduct of a public agency judgment	2% above the 26-week treasury bill rate
Judgments with contracts	Bearing the same interest rate as parties agree in the contract
Child support judgments	12%
Loan setup charges	The interest rate must not exceed 4% of the loan sum or $15, whichever is lower

No matter the loan type (business, real estate, personal, etc.), it is essential for lenders to respect the proposed Usury rates in Washington. Noncompliance with these rules can result in penalties (e.g., interest rate annulment).

How to Enforce a Promissory Note in Washington

To enforce a promissory note in Washington, lenders must take specific legal action based on the note type in question.

For instance, an enforceable promissory note in Washington must specify the collateral and provide the necessary information (e.g., the house registration number). If so, the note permits the lender to sell the collateral and use the funds to recollect the debt.

Before enforcing an unsecured promissory note, the lender can send the borrower a demand letter, which is an official and legal way to request debt repayment. If the borrower does not respond within the set timeframe, the lender must file a claim in small claims court.

The maximum amount of loans the lender can file a claim for in a small claims court is $10,000. In Washington, the Statute of Limitations for promissory notes is six years after the maturity date.

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

A promissory note in Washington can be changed or revoked only if both parties explicitly agree to this. In other words, parties must generate a new document and specify the new repayment or revocation terms.

It is also important to note that oral modifications or cancellations aren’t considered valid and that both the lender and the borrower must sign the new agreement. The newly signed note should refer to the original one in terms of main stipulations and should be written in a formal, unambiguous manner.

If any party is unsure about the Washington promissory note modification or revocation rules, they can check promissory note samples made for different loan types and scenarios. Moreover, parties can clarify doubts about changing or canceling promissory notes by seeking professional assistance.