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Promissory notes can be secured using a financing statement, deed of trust, or a mortgage. If a promissory note includes these terms, then it is a secured promissory note. So, the inclusion of collateral is the only real difference between secured promissory notes and unsecured promissory notes.

Recording a promissory note is not mandatory in most cases, but it is generally recommended as it can provide a public record of the obligation and protect the lender's interest in the property. Some states may require the recording of certain types of promissory notes, such as those secured by real estate.

Theoretically, a lender will only be willing to accept a promissory note as a form of collateral if you have satisfied at least part of the promise stated in the note. This means that you must have already paid back some money in ance with the terms of your promissory note.

A promissory note must be signed by the borrower to be valid. You may want the borrower to sign in front of a notary to ensure the signature is authentic. The lender keeps the original promissory note and the borrower should receive a copy.

If you are the borrower, issue the promissory note to the institution or individual that needs it to obtain a loan for you. This should be done with an addendum stating the assignment of your rights or the completion of the assignment paperwork required by the lender.

Maker or Drawer is the person who makes or draws the promissory note to pay a certain amount as specified in the promissory note. He is also called the promisor.

An unsecured promissory note payable to the settlor is transferred to the trust when the settlor executes an assignment of the note to the trustee and delivers the note and the assignment to the trustee.