Maryland Promissory Note
Maryland promissory note template with usury caps up to 24% and a 3-year statute of limitations (12 if sealed). Free template. Attorney review available.
Introduction
In Maryland, one word written next to a signature, "SEAL," can nearly quadruple how long a payee has to sue on a promissory note. An ordinary written note has to be enforced within 3 years of a missed payment, Maryland's general limitations period for a civil action, but a note executed under seal counts as a "specialty" under Maryland law and stretches that window to 12 years. 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, and the template below turns Maryland's rate and deadline rules into an actual fillable note. Maryland doesn't set one flat usury ceiling. Absent a written rate agreement, the default rate is 6% per year. With a signed written agreement, a lender may charge up to 8% simple interest, or, for a loan that's unsecured or secured by something other than a savings account, up to 24% per year (18% for loans made before July 1, 1982). Loans secured by a home mortgage, corporate loans, and commercial loans above $15,000 (or $75,000 if secured by residential property) are exempt and can carry any negotiated rate. Charging above the applicable cap lets the borrower recover the greater of triple the excess interest or $500. A Maryland note doesn't need to be notarized or witnessed to be enforceable, and a confession-of-judgment clause is banned in any loan for personal, family, or household purposes, though it remains usable in a business-purpose note.
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
Maryland doesn't use a single flat usury cap. Absent a written rate agreement, the default rate is 6% per year (Md. Code, Commercial Law Section 12-102). With a signed written agreement, a lender may charge up to 8% simple interest, or, for a loan unsecured or secured by collateral other than a savings account, up to 24% per year for loans made on or after July 1, 1982 (Section 12-103). Loans secured by a residential first mortgage or deed of trust, corporate loans, and commercial loans above $15,000 (or $75,000 secured by residential property) are exempt and may carry any agreed rate. A lender who overcharges forfeits to the borrower the greater of three times the excess interest and charges, or $500 (Section 12-114).
- 3
A Maryland promissory note does not need to be notarized or witnessed to be enforceable. Commercial Law Section 3-104 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
A confession-of-judgment clause (a clause letting the payee obtain a court judgment against the maker without filing a lawsuit) is banned in any contract tied to a consumer transaction, meaning a loan for personal, family, or household purposes; using one is a deceptive trade practice under the Maryland Consumer Protection Act (Commercial Law Section 13-301(12)). The clause remains legally available in a commercial or business-purpose note.
- 5
You generally have 3 years from a missed payment or the note's stated due date to sue to collect on an ordinary written promissory note in Maryland (Courts and Judicial Proceedings Section 5-101). If the note is signed "under seal," it becomes a "specialty" instead, extending the window to 12 years (Section 5-102).
- 6
If a Maryland promissory note is secured by personal property rather than real property, the lender generally needs to file a UCC-1 financing statement, typically with the Maryland State Department of Assessments and Taxation, to protect its priority against other creditors (Commercial Law Section 9-310).
- 7
Promissory notes are commonly used in Maryland for both family loans and business loans. A private, isolated loan between individuals doesn't trigger Maryland Consumer Loan Law licensing, which applies only to a person "engaged in the business of making loans" (Commercial Law Section 12-302).
Key decisions before you file
Before you file a Promissory Note in Maryland, 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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Maryland Requirements for Promissory Note
Maryland does not require a promissory note to be notarized or witnessed to be enforceable. Commercial Law Section 3-104's list of what makes a note a valid negotiable instrument does not include notarization or witnessing.
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.
Absent a written rate agreement, the default rate is 6% per annum. With a signed written agreement, up to 8% simple interest per annum, or, for a loan unsecured or secured by collateral other than a savings account, up to 24% per annum for loans made on or after July 1, 1982 (18% before that date). Loans secured by a residential first mortgage, corporate loans, and commercial loans above $15,000 (or $75,000 secured by residential property) are exempt and may carry any agreed rate.
A lender who charges interest above the applicable cap forfeits to the borrower the greater of three times the excess interest and charges collected, or $500. A usury claim is defeated if the lender corrects the rate within 30 days of the borrower's notice.
Generally 3 years from a missed payment or the note's stated due date to sue to collect on an ordinary written promissory note. A note signed "under seal" is a specialty instead, extending the window to 12 years.
A confession-of-judgment clause in a contract tied to a consumer transaction, meaning a loan for personal, family, or household purposes, is a deceptive trade practice under the Maryland Consumer Protection Act. The clause remains legally available in a commercial or business-purpose note, where Rule 2-611 governs the court procedure for entering it.
If a note is secured by personal property, the lender generally must file a UCC-1 financing statement, typically with the Maryland State Department of Assessments and Taxation, to perfect and prioritize its security interest against other creditors.
Maryland Consumer Loan Law licensing requirements, administered by the Commissioner of Financial Regulation, apply only to a person "engaged in the business of making loans." An isolated private person-to-person promissory note does not trigger these requirements.
Frequently Asked Questions
Maryland doesn't use a single flat cap. Absent a written rate agreement, the default rate is 6% per year. With a signed written agreement, a lender may charge up to 8% simple interest, or, for a loan unsecured or secured by collateral other than a savings account, up to 24% per year for loans made on or after July 1, 1982 (18% before that date). Loans secured by a residential first mortgage, corporate loans, and commercial loans above $15,000 (or $75,000 secured by residential property) are exempt and can carry any negotiated rate.
No. Maryland Commercial Law Section 3-104 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, an interest rate within Maryland's applicable usury limit, the repayment schedule, what counts as default, and the signatures of the maker and payee. Since confession-of-judgment clauses are banned in any personal, family, or household loan, leave one out of a family loan; the note relies on a regular lawsuit for enforcement if the maker defaults.
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 Commercial Code Section 3-104: 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, typically with the Maryland State Department of Assessments and Taxation, to protect its priority against other creditors.
The payee can declare the remaining balance immediately due (if the note includes an acceleration clause) and can sue to collect. A confession-of-judgment clause is banned in any note for personal, family, or household purposes under Maryland's Consumer Protection Act, so a payee holding a family-loan note cannot get a judgment without filing a lawsuit; the clause remains legally available only in a business-purpose note.
Generally 3 years from a missed payment or the note's stated due date, under Maryland's general statute of limitations for a civil action. If the note was signed "under seal," it becomes a specialty instead and the window extends to 12 years. 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 Maryland. A private, isolated loan between individuals doesn't trigger Maryland Consumer Loan Law licensing, which applies only to a person "engaged in the business of making loans," though the applicable interest-rate limit and confession-of-judgment rules can differ depending on whether the loan is for personal use or a business purpose.