Do I Really Need a Promissory Note?



Anytime there is a transaction where money is lent between individuals or entities, a promissory note should always be executed by the lender and borrower.

A promissory note is a written contract between individuals or entities that governs the loan transaction and sets forth, in detail, the payments terms, interest charges, if any, and what the parties’ rights are if there is a default by the borrower.

The main advantage of a promissory note is that when the borrower defaults in making payments in accordance with that note, instead of commencing the traditional lawsuit by a summons and complaint, we can immediately make a motion from the outset requesting that a judgment be granted and entered against the defaulting borrower.

This is called a motion for summary judgment in lieu of a complaint and is governed by New York’s Civil Practice Law and Rules (“CPLR”) §3213.  The ability to make such a motion in the beginning of the case avoids years of protracted and expensive litigation and affords immediate relief to a lender should the motion be granted.

We recently collected a significant sum of money for a client utilizing this strategy.  Our client lent a sum of money to a borrower and was wise enough to have executed a promissory note at the time of the loan.

The borrower never made any payments in accordance with the note and was in default when the client came to us.  We immediately commenced a lawsuit and made the motion for summary judgment in lieu of a complaint pursuant to CPLR §3213.

Within six months of making this motion, we obtained a judgment against the defaulting borrower and collected the full amount of the loan, plus interest, for our client.

If there was not a note, or had a traditional lawsuit been commenced, it would have taken at least two or more years to get the same result, which would have also caused our client to incur much higher legal fees.

We can assist our clients in drafting a promissory note when there is a loan transaction and help enforce our clients’ rights under that promissory note should there be a default by the borrower.


“Do I Really Need a Promissory Note?” was written by Michael S. Mosscrop