Alaska Promissory Note
Alaska promissory note template within the state's usury cap and 3-year statute of limitations under state law. Free template. Attorney review available.
Introduction
Alaska never banned confession-of-judgment clauses. Under Alaska Statute Section 09.30.050, a payee can still have a judgment by confession entered against a maker, a court judgment entered without a lawsuit based on the maker's advance agreement, with no carve-out limiting it to business loans. Alaska's usury law is also unusual because the ceiling depends on loan size. The legal rate of interest is 10.5% per year if no rate is agreed in writing. If the maker and payee agree to a different rate in writing, it can't exceed the greater of 10% per annum or 5 percentage points above the rate the 12th Federal Reserve District charges member banks, unless the loan's principal exceeds $25,000, in which case this limit doesn't apply at all. Charge more than the lawful rate and the loan is usurious, meaning it charges more interest than the law allows, and the lender forfeits all of the interest on the debt. A promissory note is the written, signed promise that makes a loan enforceable, with the maker promising to pay a definite sum to the payee, on demand or by a set date. An Alaska note doesn't need to be notarized or witnessed to be valid, and you generally have 3 years from a missed payment or the note's due date to sue to collect.
Key Things to Know
- 1
A promissory note is a written, signed promise by one party (the maker) to pay a definite sum of money to another party (the payee), either on demand or by a set date.
- 2
Alaska's legal rate of interest is 10.5% per year on money after it's due if no rate is agreed in writing. If the parties agree to a rate in writing, it can't exceed the greater of 10% per annum or 5 percentage points above the rate the 12th Federal Reserve District charges member banks, except that a loan or loan commitment with a principal over $25,000 is exempt from this limit entirely. Charging more than the lawful rate is usurious and works a forfeiture of the entire interest on the debt. (AS 45.45.010; AS 45.45.040)
- 3
An Alaska promissory note does not need to be notarized or witnessed to be enforceable. Alaska Statute Section 45.03.104 lists what makes a note a valid negotiable instrument (an unconditional promise, a fixed amount, a signature, payable on demand or by a definite date), and notarization isn't one of the requirements.
- 4
Unlike states that have banned or voided confession-of-judgment clauses, Alaska law still permits a judgment by confession (a court judgment entered against the maker without a lawsuit, based on the maker's advance agreement), entered by the confessor in person or by an authorized attorney-in-fact, with no stated carve-out for consumer transactions. (AS 09.30.050)
- 5
You generally have 3 years from a missed payment or the note's stated due date to sue to collect on a written promissory note in Alaska, one of the shorter written-contract limitations periods nationally; a note that qualifies as a sealed instrument instead gets a 10-year window. (AS 09.10.053)
- 6
If an Alaska promissory note is secured by personal property rather than real property, the lender generally needs to file a UCC-1 financing statement to protect its priority against other creditors. Alaska has no Secretary of State, so this filing goes to the Department of Natural Resources' State Recorder's Office, not a Secretary of State as in most other states. (AS 45.29.310)
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Promissory notes are commonly used in Alaska for family loans, small business loans, and loans between friends. The same usury cap, notarization rule, and other requirements above apply regardless of who the parties are, though the $25,000 exemption threshold and the 12th Federal Reserve District index affect larger or floating-rate loans differently than small fixed-rate loans.
Key decisions before you file
Before you file a Promissory Note in Alaska, a few decisions shape the document: which option to choose and what each one means. The Promissory Note guide walks through them.
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Alaska Requirements for Promissory Note
If no rate is agreed in writing, the legal rate of interest is 10.5% per annum. If the parties agree to a rate in writing, it may not exceed the greater of 10% per annum or 5 percentage points above the annual rate the 12th Federal Reserve District charges member banks, except that a loan or loan commitment with a principal over $25,000 is exempt from this limitation entirely.
Generally 3 years from a missed payment or the note's stated due date to sue to collect on a written promissory note; a note that is a sealed instrument instead gets a 10-year period.
To be a valid negotiable instrument, a note must be an unconditional promise to pay a fixed amount, signed by the maker, and payable on demand or at a definite time. Notarization is not one of the requirements.
Unlike states that ban or void such clauses, Alaska law permits a judgment by confession to be entered against a person, made by the confessor in person or an authorized attorney-in-fact, with no carve-out limiting it to non-consumer transactions.
If a note is secured by personal property, the lender generally must file a UCC-1 financing statement with the Alaska Department of Natural Resources, State Recorder's Office, to perfect and prioritize its security interest against other creditors. Alaska has no Secretary of State.
Alaska Small Loans Act license requirements apply only to a person "engaged in the business of" making loans of $25,000 or less at a rate greater than otherwise permitted by law. An isolated private person-to-person promissory note does not trigger these requirements.
Charging more than the lawful rate is usurious and works a forfeiture of the entire interest on the debt; a court awards judgment for the principal only, with no interest.
Alaska does not require a promissory note to be notarized or witnessed to be enforceable. Statute Section 45.03.104's list of what makes a note a valid negotiable instrument does not include notarization or witnessing; notarization is optional and used only for evidentiary purposes.
Frequently Asked Questions
If no rate is agreed in writing, Alaska's legal rate of interest is 10.5% per year. If the maker and payee agree to a rate in writing, it cannot exceed the greater of 10% per annum or 5 percentage points above the rate the 12th Federal Reserve District charges member banks, unless the loan's principal exceeds $25,000, in which case this limit doesn't apply at all. Charging more than the lawful rate is usurious and forfeits all interest on the debt.
No. Alaska Statute Section 45.03.104 lists what makes a note a valid, enforceable negotiable instrument, and notarization isn't one of the requirements. Notarizing a note is optional and can help as evidence of who signed it, but it doesn't affect enforceability.
Include the principal amount, the interest rate (within Alaska's usury cap), the repayment schedule, what counts as default, and the signatures of the maker and payee. Alaska still permits confession-of-judgment clauses under AS 09.30.050, so unlike some states, including one is a legal option, but it should only be added with the maker's informed, separate written agreement since it lets the payee get a judgment without a lawsuit.
Yes, as long as it meets the basic requirements of a valid contract and, if it's meant to be a negotiable instrument, the elements in Alaska Statute Section 45.03.104: an unconditional promise to pay a fixed amount, a signature, and payment on demand or by a definite date. It doesn't need to be notarized to be enforceable.
An unsecured note relies only on the maker's promise to pay. A secured note is backed by collateral, and if it's secured by personal property rather than real estate, the lender generally needs to file a UCC-1 financing statement to protect its priority against other creditors. In Alaska, that filing goes to the Department of Natural Resources' State Recorder's Office, since Alaska has no Secretary of State.
The payee can declare the remaining balance immediately due (if the note includes an acceleration clause) and can sue to collect. If the note includes a confession-of-judgment clause, which Alaska still permits under AS 09.30.050, the payee may be able to have judgment entered without filing a full lawsuit; otherwise the payee has to sue like any other unpaid creditor.
Generally 3 years from a missed payment or the note's stated due date, under Alaska's statute of limitations for actions on a contract (AS 09.10.053). A note that qualifies as a sealed instrument instead gets a 10-year window. Waiting too long can mean losing the right to sue on the note.
Yes. Promissory notes are commonly used for both family loans and business or LLC loans in Alaska. The same usury cap and other rules generally apply, though the $25,000 principal exemption and the 12th Federal Reserve District index mean a larger loan or a loan with a floating agreed rate can be structured differently than a small fixed-rate loan.