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Promissory Note Personal Guarantee Language for the United States

Promissory Note Personal Guarantee Language Template for United States

A Promissory Note Personal Guarantee is a legal document used in the United States that combines a promise to repay a specific sum of money with a personal guarantee of that repayment. The document creates two layers of security: the primary obligation under the promissory note and a secondary guarantee that can be enforced if the primary borrower defaults. This arrangement is commonly used in business and personal lending situations where additional security is required beyond the primary borrower's promise to pay.

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Promissory Note Personal Guarantee Language

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What is a Promissory Note Personal Guarantee Language?

The Promissory Note Personal Guarantee Language is essential in lending situations where additional security is required beyond a basic promissory note. This document is particularly relevant in the United States lending market where lenders seek to minimize risk by obtaining personal guarantees from individuals (often business owners or principals) who stand behind the primary borrower's obligations. The document typically includes specific repayment terms, interest rates, default provisions, and the scope of the guarantee, creating a legally binding commitment from both the primary borrower and the guarantor.

What sections should be included in a Promissory Note Personal Guarantee Language?

1. 1. Parties: Identification of lender, borrower, and guarantor including full legal names and addresses

2. 2. Background: Context of the loan and guarantee relationship between the parties

3. 3. Definitions: Key terms used throughout the document including 'Guaranteed Obligations', 'Event of Default', etc.

4. 4. Promise to Pay: Principal amount, interest rate, and specific payment terms

5. 5. Guarantee Provisions: Core guarantee language including scope, nature (absolute/unconditional), and extent of guarantee

6. 6. Default Provisions: Circumstances constituting default and consequences thereof

7. 7. Representations and Warranties: Guarantor's statements regarding their capacity and authority to provide the guarantee

8. 8. Enforcement: Rights and remedies of the lender upon default

9. 9. Governing Law: Jurisdiction and applicable law governing the agreement

What sections are optional to include in a Promissory Note Personal Guarantee Language?

1. Collateral Provisions: Details of any security or collateral securing the guarantee, used when the note is secured

2. Prepayment Terms: Conditions and penalties for early payment, included when early payment is permitted

3. Multiple Guarantors: Joint and several liability provisions, used when there are multiple guarantors

4. Subordination: Provisions regarding priority of the guarantee relative to other obligations, used when relevant

What schedules should be included in a Promissory Note Personal Guarantee Language?

1. Schedule A - Payment Schedule: Detailed schedule of payment dates, amounts, and allocation between principal and interest

2. Schedule B - Collateral Description: Detailed description of any assets securing the note and guarantee

3. Schedule C - Guarantor Financial Statement: Current financial position and statement of assets and liabilities of the guarantor

4. Schedule D - Permitted Encumbrances: List of any existing liens or encumbrances on collateral that are permitted

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

United States

Document Type

Promissory Note

Sector

Banking

Cost

Free to use
Clauses


















Industries

Uniform Commercial Code (UCC): Key federal legislation governing negotiable instruments (Article 3) and secured transactions (Article 9). Essential for structuring the promissory note and any associated security interests.

State-Specific Laws: Individual state legislation governing promissory notes, guarantees, statutes of limitations, and usury laws regarding maximum permissible interest rates.

Truth in Lending Act (TILA): Federal law requiring specific disclosures for consumer credit transactions, including clear disclosure of key loan terms and conditions.

Federal and State Securities Laws: Regulations that may apply if the promissory note could be classified as a security, requiring additional compliance measures and disclosures.

Statute of Frauds: Legal doctrine requiring certain contracts to be in writing, particularly relevant for guarantee agreements to be legally enforceable.

Fair Debt Collection Practices Act (FDCPA): Federal law governing debt collection practices, which becomes relevant if the note needs to be collected through third-party collectors.

Bankruptcy Code: Federal laws affecting the enforceability of promissory notes and guarantees in bankruptcy situations, including priority of claims.

Equal Credit Opportunity Act: Federal law prohibiting discrimination in credit transactions and establishing requirements for fair lending practices.

Teams

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