Release of promissory note
When the last payment clears, the lender signs a release saying nothing more is owed. It's the borrower's proof the loan is finished, and it closes out the note so no one can try to collect on it later.
Takes about five minutes. You'll need the date and amount of the original note.
What the release covers
- The lender and borrower, with the date and original amount of the note
- The date the note was paid in full, and the final payment if you want it recorded
- A release that discharges the borrower from everything owed under the note
- A release of any collateral, with the lender's promise to sign a title or lien release if one is needed
- What happened to the original signed note: returned marked paid, kept by the lender, or lost
- The lender's statement that the note was never sold or assigned to anyone else
- Signature lines for both sides, up to two witnesses, and an optional notary block
When you need one
Any time a personal loan backed by a promissory note is paid off. The borrower keeps it as proof of payment, which matters if the lender dies, the note ends up with a relative settling an estate, or the borrower needs to show a mortgage lender that an old debt is gone.
It matters most when the original note can't be handed back. A note that has been lost is still a promise to pay on paper, and the release is what says that promise has been kept.
If the loan was secured
A secured loan has two things to close out: the debt and the lien. This release handles the debt and releases the lender's claim to the collateral. If the lien is recorded somewhere, such as on a vehicle title or with a county recorder, that office has its own release form, and the lender still needs to file it. The release commits the lender to signing it.
Common questions
Does a release of promissory note need to be notarized?
Usually not for an unsecured personal loan. When the note was secured by property with a recorded lien, the office that records the release, such as a county recorder or motor vehicle agency, may ask for a notarized copy, so the form offers an optional notary block.
What if the original promissory note was lost?
The release can still be signed. It states that the original note was lost or destroyed, that the lender searched for it, and that the lender will hand it over marked paid if it turns up, so a stray copy cannot be used against the borrower later.
Who signs the release, the lender or the borrower?
The lender signs it, because the lender is the one giving up the right to collect. The borrower can sign as well to acknowledge receiving it, which leaves both sides holding the same record of the payoff.
Does this release remove a lien on a car title?
Not by itself. The release ends the debt under the note, and it obligates the lender to sign whatever else is needed. A lien shown on a vehicle title or recorded with a county is cleared with that office's own release form.