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 with real property collateral is 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.
By Type
Usury Laws and Interest Rates
Promissory notes must comply with the state’s usury laws as detailed in Chapter 687.
- With a Contract (§ 687.03(1)): 18%.
- For Loans Over $500,000 (§ 687.03(1) and § 687.071(2)&(3)): Over 25% constitutes a second-degree misdemeanor; over 45% 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.
- For Consumer Finance Loan (Up to $25,000) (§ 516.02(2)(a)): 18%.
