Make a Mississippi Promissory Note

What Is the Maximum Amount of Interest That May Be Charged?

The maximum interest in Mississippi may not exceed 10% per year or 5% over the federal reserve discount rate, whichever is greater. If there is no written agreement on interest, the maximum amount that may be charged is 8%.

How to Write a Mississippi Promissory Note

When a Mississippi promissory note is necessary, the first consideration is whether it is secured or unsecured. If the note is secured, the title should show that. For example, Secured Mississippi Promissory Note. Without the proper title, a court may determine that the promissory note is unsecured if a legal problem arises from the agreement. Then, certain information is used to define the relationship between the parties and information about the loan itself:

• The creation date. Both the date of creation and the date that the document is signed play an important role in contract law and if collections activities are required in the future.
• The identity of each party and its role in the agreement. Identify each party by their legal name and their role in the agreement. For example, Susan Q. Jones, Co-signer, or Robert J. Doe, Borrower.
• The mailing addresses for each party. The mailing address for each party should be listed after their name and role. If the Mississippi promissory note is secured, it is advisable to list the physical address for the borrower and any co-signer. If the lender uses a separate address to process payments, that address should be identified and listed with the payment agreement.
• The initial amount loaned. This is the amount provided to the borrower without including the interest charged for the loan. It is important to make sure that the amount listed is accurate before the agreement is executed by the parties.
• The amount of yearly interest changed on the loan. This is the amount of interest charged yearly on the loan. It is expressed, usually, as per annum or annual percentage rate (APR).
• Payment agreement. To document the payment agreement, the promissory note should list the number of installments needed to fulfill the repayment agreement, when each payment is due, the amount that must be paid, and whether there is a late fee. The late fee amount should be documented as well as when the late fee will be charged.

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If the Mississippi promissory note is secured, it is important to define the collateral that the lender may collect if the borrower does not fulfill the contract.

Next, the promissory note will include specific clauses to outline additional terms and conditions of the loan. Here is a list of clauses commonly included in promissory notes:

• Interest Due in the Event of Default. The contract may start out with a lower interest rate and increase if the borrower defaults on the agreement in some way. This clause lists the interest amount due if the borrower defaults.
• Payment Allocation. A payment allocation clause explains how the payments apply to both the principal balance and the interest due.
• Prepayment. Prepayment is a term that means the borrower pays off the loan before the end of the stated term. This clause states whether the borrower will be subject to a financial penalty for prepayment.
• Acceleration. Acceleration is a term that means the lender has the legal right to demand immediate and full payment on the remaining balance if the borrower violates the agreement in some way.
• Attorney Fees and Costs. If the promissory note causes a legal disagreement, one or both parties may incur attorney fees and costs. This clause explains who is responsible for paying those fees.
• Waiver of Presentments. This clause explains to the borrower that they are still required to make payments even if the lender isn’t physically present.
• Severability. A severability clause keeps the rest of the agreement valid if one area is found to be unenforceable.
• Conflicting Terms. A conflicting terms clause states that if conflicting terms are found in the agreement, they will be resolved by creating an amendment that will continue to govern the agreement.
• Notice. A notice clause states whether the lender will notify the borrower if the lender plans to sue.
• Governing Law. A governing law clause lists the state whose laws will be relied upon for any legal disagreement resulting from the promissory note.

A Mississippi promissory note does not need to be notarized. However, it should be signed and dated by both the borrower and co-signer.

A Sample Mississippi Promissory Note with Examples for Each Step

A Mississippi promissory note can be unsecured or secured; promissory notes in Mississippi are regulated by contract law and, in some cases, securities law. A secured promissory note should be titled as such ("Secured Mississippi Promissory Note"); it must also be further identified with specific language and requires a detailed description of the security interest (the property that will serve as the collateral). A secured promissory note should include the following section:

• Security and Priority: In this section, the borrower and lender (payee) agree that all obligations under the note will be secured by the collateral defined in the security agreement entered into between the borrower and lender. This section contains a general description of the collateral explicitly defined in the security agreement.

A secured promissory note is generally accompanied by a security agreement that allows the lender to seize the collateral (specific property) in the event of default by the borrower.

The security interest in the specific property should be outlined in a UCC financing statement. When the financing statement is filed with the appropriate government agency, the lender's interest in the specific property is deemed "perfected," giving the lender top priority over future lenders seeking a security interest in the same property.

Both unsecured and secured promissory notes in Mississippi should include the following sections:

• Definition of Terms: This section includes a list of terms and their meanings used in the loan agreement  ("As used in this Agreement, the following terms shall have the meanings set forth below").
• Payments: These are provisions relating to the terms for repayment of the amount due, including principal and interest, overdue amounts, default/nonpayment rate, manner of payment, and extension. This section should specifically note the date the promissory note was devised, the name and mailing address of the borrower and lender, the amount of money loaned to the borrower, the amount/annual percentage rate of interest to be charged (as allowed by applicable Mississippi state law governing maximum interest/usury rates for written contracts), how repayment will be made (installments, interest-only, lump sum, or, in the case of a secured promissory note, a balloon payment), the number of payments, the amount of each payment, and due date of each payment, any late fee to be charged for late payment, and where and how payment is to be made.
• Allocation of Payments: This section describes how much of each payment is applied to the interest and principal.
• Guaranty/Co-Signer (optional): In this section, a third party (the guarantor) agrees to be directly or collaterally responsible for the obligation of the borrower to the lender in the event of default (the borrower fails to pay).
• Representations & Warranties: This clause provides the facts and protections in the event of default, respectively, if the statements made are not true.
• Covenants: A covenant in a loan agreement requires the borrower to fulfill certain conditions, such as punctual payment of principal, or prevents the borrower from taking certain actions.
• Defaults/Interest Due upon Default: This section defines the events that constitute a default and the interest due upon default (as allowed by applicable Mississippi state law).
• Acceleration: This section requires the borrower to repay the remaining balance in the event of a default.
• Prepayment: This section states whether there will be a prepayment penalty or if the borrower is allowed to pay a sum of money to the lender before it is due/demanded without a penalty for doing so.
• Attorney Fees and Costs: This section describes which party will be held responsible for attorney fees and court costs should a case be filed and adjudicated in court due to a default.
• Waiver of Presentments: This section allows the lender to receive payment without presenting the promissory note.
• Non-Waiver: This section states that the entire promissory note is not waived if either party waives a certain section of the document.
• Severability: This section states that the rest of the promissory note will still be valid should a particular section be found illegal or incapable of enforcement.
• Integration: This section states that the promissory note constitutes the entire agreement between the parties.
• Conflicting Terms: This section states that an amendment will resolve any issue(s) and be determinative should the promissory note include terms that conflict.
• Notices: This section states the required form of all notices, requests, demands, claims, and other communications under the note, including notice to the borrower that the lender may seek a judgment against the borrower without notice and the addresses to which all official or legal correspondence should be delivered.
• Governing Law: This section defines the state law that will govern the promissory note.
• Dated Signature: In Mississippi, both unsecured and secured promissory notes should be signed and dated by the borrower and any co-signer; the lender need not sign. There is no legal requirement for promissory notes to be witnessed or notarized in Mississippi. Still, the parties may decide to have the document certified by a notary public for protection in the event of a lawsuit.

Promissory Note Resources in Mississippi

National Consumer Law Center

Credit Union National Association Guide to State Usury Laws                                                          

Help Center/Federal Student Aid      

CollegeScholarships.org 

Mississippi Office of Student Financial Aid   

Mississippi Department of Education