South Dakota Promissory Note
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A South Dakota Promissory Note is sort of like an IOU, just dressed up a bit. It's a pact between two folks, wherein one borrows some moolah from the other, and makes the pledge to return it. It sketches out all the important stuff, like when you have to pay it back, and what the interest looks like.
What is the Usury Rate for South Dakota?
In simple terms, a usury rate is the highest legal interest a lender can slap on a loan. If the rate charged goes beyond this, it's called "usury" and is a big no-no. Now, this rate can differ from state to state, so knowing the local rules is critical. Being aware of the usury rate means you're borrowing wisely and steering clear of potential pitfalls. So, if business borrowing is on your mind, keeping that number handy is a smart move.
For South Dakota, no limit if the written contract agreement is established; 12% if no written contract exists. (S.D. Codified Laws § 54-3-4 and S.D. Codified Laws § 54-3-16(3))
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Read on to learn more about South Dakota Promissory Notes, including:
What's included in a South Dakota Promissory Note?
Here are some key components that are typically included in a South Dakota Promissory Note:
- Amount and Terms of the Loan
- Closing and Delivery
- Representations, Warranties the Company
- Organization, Good Standing and Qualification
- Corporate Power
- Authorization
- Compliance with Laws
- Use of Proceeds
1. Amount and Terms of the Loan
"The Loan" zeroes in on the precise pile of cash you're offering up to the business. This part matters because it guarantees both clarity and safeguarding for everyone involved. To seal this stipulation, simply fill up the blank spot with the loan figures. Also, do remember to pay attention to "Exhibit A", personifying the promissory note that serves as the written pledge and proof of the loan.
In a nutshell—this essential bit spotlights the funds you're putting on the table, paving a crystal clear path for your promissory note understanding.
The Loan. Subject to the terms of this Agreement, Purchaser agrees to lend to the Company at the Closing $_________ (“Loan Amount”) against the issuance and delivery by the Company of a promissory note for such amount, attached as EXHIBIT A (“Note”).
2. Closing and Delivery
The CLOSING AND DELIVERY clause puts the final touches on your promissory note agreement. With 'Closing', you'll pinpoint the "done and dusted" date for the deal. This date can be a mutual pick, not compulsorily the day when the contract was born.
'Delivery' paints the picture of the swap over: the borrower slides the loan amount to the firm and, in exchange, the company hands over the wrapped-up promissory note, jotting down the borrower's 'pay back' commitment. This give-and-take dance ensures everyone's on the same page and devoted to the agreement.
CLOSING AND DELIVERY
Closing. The closing of the sale and purchase of the Notes (the “Closing”) will be held on the Effective Date, or at such other time as the Company and Purchasers may mutually agree (such date is referred to as the “Closing Date”).
Delivery. At the Closing (i) Purchaser will deliver to the Company a check or wire transfer funds in the amount of the Loan Amount; and (ii) the Company will issue and deliver to Purchaser a Note in favor of Purchaser payable in the principal amount of Purchaser’s Loan Amount.
3. Representation, Warranties The Company
This part is all about the business's affirmations on being honest with significant particulars. They're legally roped into keeping it straight here to sidestep legal pitfalls. Tuck in pertinent info about the business's money matters, how it runs the show, or any legal dealings. It's key to building trust and making your agreement clear as day.
a. Organization, Good Standing and Qualification
The 'Organization, Good Standing, and Qualification' area gives the thumbs up to the company's lawful standing. Tuck in the state where the business took root, guaranteeing it can function with ease and cultivate confidence between the parties involved.
Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of [State]. The Company has the requisite corporate power to own and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business.
b. Corporate Power
The 'Corporate Power' bit affirms the company's lawful capacity to carry out this agreement and meet commitments. Basically, it's saying, "Our business has the legal authority to nail this deal." It's essential for building trust and keeping on the right side of the law. So, make sure this part is added and crystal clear to all parties.
Corporate Power. The Company has all requisite corporate power to execute and deliver this Agreement, to issue the Note and to carry out and perform its obligations under the terms of the Note.
c. Authorization
The 'Authorization' section checks off the company's stakeholder green light and the note's legal status. It's a crucial chunk of your contract that confirms all necessary corporate moves have been made. This part shelters both parties and lays a strong base for your agreement.
Authorization. All corporate action has been taken on the part of the Company, its directors and its stockholders necessary for the authorization of the Note and the execution, delivery and performance of all obligations of the Company under the Note. The Note, when executed and delivered by the Company, will constitute valid and binding obligations of the Company enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency, the relief of debtors.
d. Compliance with Laws
The 'Compliance with Laws' portion clearly states that your business isn't willfully stepping on any legal landmines that could blow up its operations. Making room for this clause within your agreement provides peace of mind for everyone involved, showing your company's dedication to playing by the book.
Compliance with Laws. To its knowledge, the Company is not in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency in respect of the conduct of its business or the ownership of its properties, which violation would materially and adversely affect the business, assets, liabilities, financial condition or operations of the Company.
e. Use of Proceeds
The 'Use of Proceeds' segment points out that the loan is solely for business-related endeavors, not personal ones. It's pivotal for keeping things open and upholding trust with those backing you financially.
Use of Proceeds. The Company will use the proceeds of the Note for the operations of its business, and not for any personal, family or household purpose.
Can a promissory note be used without a mortgage?
Absolutely, a promissory note can play solo without a mortgage. Think of a promissory note as a legally-backed piece of paper that sets down the rules for lending and borrowing, whereas a mortgage acts as the bodyguard for the loan, tying it securely against an asset like bricks and mortar. Promissory notes can swing both ways: they can go with beast-mode-secured loans and vibe with chilled-out unsecured loans too. So yes, you can certainly have a promissory note without a mortgage, in which case it falls into the unsecured loan category. But here's the twist: a mortgage usually needs a promissory note to work, as the note outlines how the money will make its journey back and holds the borrower's vow to repay the loan.
How do you collect from a promissory note?
To gather funds from a promissory note, tally up the full amount due, taking into account interest and any additional charges. Drop a line to the debtor in written form. If they don't cough up the cash, ponder about taking the legal route. Make sure you have all your paperwork in a row and look into getting a legal advisor as the rules of the game can vary from place to place. Steer clear of hounding the debtor - it might be against the law. Always have a chat with a lawyer to sidestep any potential legal stumbles.