Document background
The Promissory Note and Deed of Trust is essential in Pakistani secured lending transactions where lenders require robust security arrangements. This document type combines the features of a negotiable instrument under the Negotiable Instruments Act 1881 with a security mechanism under the Trust Act 1882. It is commonly used in property financing, business loans, and other scenarios where significant assets serve as collateral. The document establishes clear payment obligations, creates a trust structure for holding security, and provides enforcement mechanisms. It must comply with local registration requirements, stamp duty regulations, and other relevant Pakistani laws. This arrangement offers advantages over simple promissory notes by providing additional security through the trust mechanism, making it particularly suitable for high-value transactions or where multiple assets are involved as security.
