What constitutes a borrower's legal obligation in terms of loan repayment?

A borrower's legal obligation to repay a loan is encapsulated in a promissory note. This document serves as a written promise in which the borrower agrees to repay the borrowed amount, typically including the terms of repayment such as the interest rate, payment schedule, and any other conditions. The promissory note is a binding legal contract, making it enforceable in a court of law, which provides security to lenders that they will receive their money back under the agreed-upon conditions.

In contrast, other options do not represent a borrower's commitment to repayment. A compromise settlement refers to an agreement to resolve disputes typically related to debts but does not establish a direct borrowing obligation. A certificate of occupancy pertains to local building regulations and guarantees that a property is suitable for occupancy, which is unrelated to loan repayment. A payment history report details a borrower’s past mortgage payments but does not constitute a binding obligation to repay future loans. Thus, the promissory note is the essential document that outlines the specific legal duty of the borrower to repay the loan.