Promissory Note

What Is a Promissory Note?

A promissory note is the borrower's written promise to repay a loan. It is a separate document from the mortgage. The note establishes the debt; the mortgage secures that debt with the property. If the borrower defaults, the lender enforces the note to collect the money owed and enforces the mortgage to foreclose on the property.

In every Florida real estate closing that involves financing, the borrower signs both a promissory note and a mortgage. The note is not recorded in the public records; only the mortgage is recorded.

What a Promissory Note Contains

A standard residential promissory note includes:

• Principal amount — The total amount borrowed.
• Interest rate — Fixed or adjustable, and the method of calculation.
• Payment schedule — Monthly payment amount, due date, and the number of payments over the loan term.
• Maturity date — When the final payment is due.
• Late payment terms — Grace period and late fee amount.
• Prepayment terms — Whether the borrower can pay off the loan early without penalty.
• Default provisions — What constitutes a default and the lender's remedies, including acceleration (demanding the full balance immediately).

Florida Legal Context

Under Florida law, a promissory note is a negotiable instrument governed by Article 3 of the Uniform Commercial Code (Chapter 673, Florida Statutes). This means the note can be transferred (endorsed and delivered) from one lender to another. When your mortgage is sold to a different servicer, the promissory note is endorsed and transferred along with it.

The holder of the note is the party with the legal right to enforce it. In Florida foreclosure cases, the lender must prove they hold the original note or have the right to enforce it. Under Section 673.3091, Florida Statutes, a party can enforce a lost or destroyed note if they can prove they were entitled to enforce it when it was lost.

Note vs. Mortgage: Why the Distinction Matters

The note creates personal liability; the mortgage creates the property lien. If a lender forecloses and the sale does not cover the full debt, the lender can pursue a deficiency judgment against the borrower personally based on the note. The mortgage alone cannot create personal liability; only the note does.

Related Terms

• Mortgage — The security instrument that accompanies the note
• Foreclosure — The process to enforce the mortgage when the note is defaulted
• Closing Disclosure — Shows the note terms and closing costs
• Encumbrance — The mortgage lien securing the note

Barnes Walker Note Review

Barnes Walker's attorneys review promissory note terms on every closing, ensuring the terms match the Closing Disclosure and comply with Florida law. Submit a title inquiry for assistance.

Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC