ThomasMoreAI Commercial Promissory Note
Drafts a UCC Article 3–compliant Commercial Promissory Note for U.S. commercial real estate finance, structured to protect Payee/lender at negotiation and closing.
Prerequisites
Collect before drafting:
- Parties — Full legal names, entity types, principal places of business for Maker (borrower) and Payee (lender)
- Loan economics — Principal amount, interest rate (fixed or variable index + margin), day-count convention, maturity date
- Payment structure — Installment amounts/frequency, interest-only period, balloon payment date
- Security — Recording county/state, property address, legal description or reference to deed of trust/mortgage of even date
- Governing law — Jurisdiction (required for usury and prepayment penalty compliance)
- Prepayment terms — Permitted/prohibited, penalty schedule, exceptions (casualty, condemnation)
Quick Start
- Gather all prerequisites above
- Draft header with title
PROMISSORY NOTE, principal in numerals and written form, execution date, city, state - Build sections per the template below
- Run the verification checklist before finalizing
Sections
| Section | Required Elements | Drafting Rules |
|---|---|---|
| Promise to Pay | Maker, Payee, "for value received," "to the order of" | Unconditional language only — conditions destroy UCC negotiability |
| Interest Rate | Rate (% p.a.), simple/compound, day-count (360 or actual/365), accrual start | Variable: SOFR index + margin, caps/floors, adjustment frequency; include usury savings clause |
| Payment Schedule | Payment count, amount/method, due date, commencement, maturity | Specify payment address/account; grace period before late charge |
| Application of Payments | Priority: (1) fees → (2) accrued interest → (3) principal | Address partial payments; flag negative-amortization risk if interest-only |
| Late Charges | Grace period (10–15 days typical), charge (4–5% of overdue or flat fee) | Must not exceed state maximum; acceptance ≠ waiver of default |
| Prepayment | Permitted/prohibited; partial/whole; penalty schedule; exceptions | Step-down if used (e.g., 3%/2%/1%); address casualty/condemnation proceeds |
| Events of Default | Monetary (payment failure + cure); non-monetary (covenant breach, bankruptcy, misrepresentation); cross-default | Monetary cure: 10 days written notice; non-monetary: 30 days; use objective triggers |
| Remedies / Acceleration | Optional acceleration of full balance + accrued interest; cumulative remedies | Non-exercise ≠ waiver; default interest rate if permitted; attorneys' fees as secured obligation |
| Security Reference | Deed of trust/mortgage of even date; property address + county/state; recourse or non-recourse | Non-recourse carve-outs: fraud, environmental, waste, misapplication of rents |
| Maker Waivers | Presentment, demand, notice of dishonor, protest, notice of default/acceleration | Bold or ALL CAPS per state conspicuousness rules; waive right to require Payee to proceed against collateral first |
| Attorneys' Fees | Prevailing party: reasonable fees + costs (trial, appeal, bankruptcy, collection) | Fees = secured obligation; check state mandatory-mutuality rules |
| General | Governing law, severability, successors/assigns, written amendment only, notice provisions, time-is-of-the-essence, integration | No Maker setoff/counterclaim unless negotiated |
| Signature Block | Entity: legal name + "By:" + signatory name/title + date; Individual: signature + name + date | Confirm signatory authority; joint Makers = joint and several; counterparts clause |
Verification Checklist
Run before finalizing:
- Promise is unconditional and payable "to the order of" (UCC Art. 3 negotiability)
- Interest rate ≤ governing state usury ceiling — [VERIFY state-specific limit]
- Usury savings clause included (excess interest → applied to principal or refunded)
- Day-count convention stated explicitly (360 or actual/365)
- Variable rate uses SOFR (not LIBOR) with publication source and fallback language
- Prepayment penalty complies with governing state rules — [VERIFY state restrictions]
- Non-recourse carve-outs (if applicable) are enumerated explicitly, not vague
- Terms align with related deed of trust/mortgage, loan agreement, and guaranty
- Cross-default provisions mirrored across all security documents
- If any Maker is an individual, confirmed TILA/Reg Z/state consumer statutes do not apply (skill targets commercial transactions only)