Washington Promissory Note
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A Washington Promissory Note is kind of like an IOU's fancier cousin. Picture a deal between two pals—the borrower gets some cash from the lender and agrees to pay it back. They jot down all the nitty-gritty—repayment plans, interest, and so on.
What is the Usury Rate for Washington?
In a nutshell, a usury rate is the highest legal interest a loan can rack up. If a lender dares to charge beyond this, they're sailing in "usury" waters (a no-no), which is against the law. Now, these rates shuffle around from state to state, so be sure to get a handle on the rules in your neck of the woods. By having the usury rate on your brain's speed dial, you're showing you know how to borrow like a boss and sidestep any risky potholes. So, definitely keep this handy number on standby if you're toying with the idea of a business loan.
For Washington, the maximum rate of interest is 12% or 4% points above the average bill rate for 26-week treasury bills in the month before the loan was made. (Wash. Rev. Code § 19.52.020)
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Read on to learn more about Washington Promissory Notes, including:
What's included in a Washington Promissory Note?
Here are some key components that are typically included in a Washington 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" section shines a spotlight on the exact dollar amount you're handing off to the business. This chunk of the contract is a big deal because it laser-focuses the details and wraps a safety bubble around both you and the borrower. Just put your pen to the blank spot and write down the loan sum to seal this part. Also, keep a keen eye out for "Exhibit A"; this is where the promissory note comes in as the official IOU and verifies the loan.
In a nutshell, this cornerstone clause points to the cash you're pledging, laying a rock-solid base for your promissory note agreement.
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 section is like the final act of your promissory note play. During Closing, you pin down when the curtain falls on the transaction. This date—we're talking the finale, not necessarily the day your contract is born—can be hashed out between parties.
Delivery, on the other hand, sketches out the give-and-take scene: the borrower passes the loan dough to the company and voilà! They get a shiny promissory note in return, spelling out their promise to pay back. This fair-trade agreement helps everyone play open cards and stick to the script. It's all about clarity and being on the same page.
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 chunk is all about the company 'crossing its heart' and promising there's no phony baloney in the key info. The law holds them to their word here to keep legal headaches at bay. Chuck in all the pertinent bits about the company's finances, operations, or legal hullabaloo. It's the secret sauce for trustworthiness and openness in your deal.
a. Organization, Good Standing and Qualification
The Organization, Good Standing and Qualification part is like the company's ID card—it verifies the business's legal persona. Drop in the state where the company's roots are, as this helps the business run like clockwork and build a trust bridge between folks 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 chunk shines a light on the company's legal green light to carry out this pact and meet its commitments. In a nutshell, it's like saying, "Hey, our business can legitimately sign up for this gig." This crucial element bolsters trust and makes sure everything's above board. So, double-check that it's in there and clear as day.
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 bit double-checks the company's thumbs-ups from stakeholders and cements the note's legal status. This essential puzzle piece of your contract greenlights all the must-dos on the corporate side of things. Not only does this clause shield both chums in the deal, but it also lays a rock-solid groundwork 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 segment underlines that your enterprise isn't intentionally bending any rules that might throw a wrench in the works. Slipping in this clause gives everyone the peace of mind that your business is determined to follow the law to the letter.
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 slice of the pie earmarks the loan solely for business antics, not personal stints. It’s the magic ingredient for keeping things crystal clear and holding onto trust with the money folks.
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 fly solo, sans mortgage. Think of a promissory note like a friendly agreement that details the nitty-gritty of a loan. A mortgage, on the other hand, is the safety net—it anchors the loan to something valuable like a house. Promissory notes can cater to both secured and unsecured loans. So, it's totally doable to have a promissory note skipping the mortgage sidekick—that's called an unsecured loan. But you can't really have a mortgage without a promissory note—that's the promise-maker for paying back what's owed.
How do you collect from a promissory note?
When cashing in on a promissory note, tally up the whole shebang—interest, fees, and all. Drop the debtor a friendly letter. If they're ghosting your payments, mull over lawyering up. Gather your paperwork arsenal and check in with a legal guru, since rules run the gamut from place to place. Steer clear of hounding the debtor—no need to invite potential legal hiccups. Lean on a trusty attorney to keep things on the up-and-up.