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Two parties involved in a promissory note: . The Maker or Drawer the person who prepares the note and promises to pay the amount mentioned therein.

Promissory Note: A written promise made and signed by a borrower that it will repay loan money it received. Also called a note. Secured Promissory Note: A note in which the borrower's promise to pay a certain amount is backed up by certain specified property (called collateral).

Collateralized promissory notes are secured by a piece of property or other tangible asset that can be repossessed if the borrower defaults on the terms of the promissory note. Many times the collateral that is being placed for consideration is the same item that the borrowed money was used to purchase.

Promissory Notes Are Legal ContractsContracts indicate the type and amount of payment for services or goods rendered. In the case of a legal promissory note, the contract will be shaped around the amount of money or capital loaned and the terms of repayment of the promissory note.

Collateral. A secured promissory note should clearly identify the collateral backing the loan. Terms. Lien Filings. State Law.

The promise to pay a certain amount of money must be unconditional in all cases. Hence, a conditional promise cannot form the basis of such notes. For example, one cannot promise to pay money only if he has it, as that amounts to a condition.

The property that secures a note is called collateral, which can be either real estate or personal property. A promissory note secured by collateral will need a second document. If the collateral is real property, there will be either a mortgage or a deed of trust.