A Massachusetts promissory note is a written agreement between a lender and a borrower that outlines the terms of a loan. It specifies the amount of money borrowed, the interest rate charged, the repayment schedule, and whether there are any penalties for late payment.
The document helps to ensure that both parties understand their obligations and can be used as evidence in court if there is a dispute. Parties are free to agree on an interest rate of up to 20% as long as it is in writing.
Laws: MA Gen L ch 9 § 9-408 governs the creation and implementation of promissory notes.
Statute of Limitations: Six years. (§ 3-118)
By Type
Usury Laws and Interest Rates
Promissory notes must comply with Massachusetts’ usury laws, which you can find in § 107.3 & § 271.49 of the Massachusetts General Laws:
- With a Contract (§ 107.3): No limit, subject to state law in some cases.
- Without a Contract (§ 107.3): 6%, unless there is an agreement or provision specifying a different rate, however, certain small loans under $1,000 may have exceptions (§ 140.90).
- Criminal Rate (§ 271.49): Any loan exceeding 20% per annum is punishable by a fine of up to $10,000, up to ten years in jail, or both.
- For Mortgages (§ 140.90A): Loans over $1500, backed by property assessed under $40,000, are charged 1.5% per month for six months before default and 1% per month after that.
- For Pawnbrokers (Mass. Gov): 12-36% APR depending on the city/town.
