Casa Academy

Reviewed by Casa Academy and updated July 29, 2026 using the current DBPR checklist and Pearson VUE scheduling guidance.

Promissory Note

A promissory note is the borrower's written promise to repay a specified principal amount with interest according to stated terms, forming the primary evidence of debt while a separate mortgage or deed of trust secures the promise against real property.

Exam context

Promissory note is personal promise to repay. Mortgage secures note with property. Note follows person; mortgage follows land. Acceleration clause demands full balance on default.

Note contents

The note identifies parties, principal, interest rate, payment schedule, late fees, prepayment terms, and default remedies including acceleration. It may be negotiable if payable to bearer or order, allowing assignment to investors. The mortgage follows the note when assigned unless a due-on-sale clause prevents assumption.

Closing and default

Borrowers sign the note at closing alongside the security instrument. Payoff statements quote remaining principal and interest through a date. Foreclosure enforces the note through the security instrument. Owner-financed sales use notes between seller and buyer with purchase money mortgages recorded behind or as first lien.

Examples

  • Standard FRM closing

    A buyer signs a 30-year fixed note at 6.5% for $320,000 and grants a purchase money mortgage to the lender securing the same amount.

  • Seller carryback

    The seller holds a $50,000 second note at 7% with a five-year balloon while the buyer's bank holds the first mortgage, both documented at closing.

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