A Florida promissory note formalizes the loan arrangement between a lender and borrower, specifying the loan amount, repayment schedule, interest rate, and any applicable late fees. Additionally, clauses covering various conditions of the agreement, such as payment allocation, prepayment options, default interest rates, or acceleration, are typically established.
These documents can be secured or unsecured, with the former involving collateral to secure the loan repayment. While financial institutions may issue promissory notes, they are more frequently utilized for obtaining financing from non-bank lenders. They offer a less formal alternative to traditional loan agreements with fewer provisions and punitive measures for default.
Laws: Promissory notes are subject to state law. Enforcement where real property collateral is not at issue are subject to limitations outlined in Florida Statutes § 95.11. Further restrictions can also be identified in Title XXXIX Chapter 679.
Statute of Limitations: Five years (§ 95-11(2)(b)).
Usury Laws and Interest Rates
Promissory notes must comply with the state’s usury laws as detailed in Chapter 687 of the Florida Statutes.
- With a Contract (§ 687.03(1)): 18%.
- For Loans Over $500,000: Not to exceed 25% per annum (§ 687.03(1) and § 687.071(2)&(3)): Over 25% per annum constitutes a second-degree misdemeanor; over 45% per annum represents third-degree felony.
- For Judgments (§ 55.03(1)): 4% higher than the federal discount rate.
- For Life Insurance Policy Loans (§ 627.4585(2)): 10% or an adjustable legal maximum as established by the life insurer according to law.
- For Consumer Finance Loan (Up to $25,000) (§ 516.02(2)(a)): 18%.
