Promissory Notes (Construction Loan)

Summary

This practice note discusses promissory notes in a construction loan transaction. A promissory note is an instrument that evidences the indebtedness of a borrower to the lender under the loan. Unless otherwise stated to the contrary in the note, a promissory note may be transferred by one holder (e.g., the lender) to another holder by endorsement (typically, in the form of an allonge). A promissory note will typically set forth the name of the maker (i.e., the borrower), the name of the payee (i.e., the lender), the amount of the loan, and the date on which the loan is originally made and when the loan matures (i.e., when the loan is scheduled to be due and payable in full).