Maine Promissory Note

Introduction

Key Things to Know

1. 1

   A promissory note is a written, signed promise by one party (the maker) to pay a definite sum of money to another party (the payee), either on demand or by a set date.

2. 2

   Maine has no general statutory interest-rate cap for an ordinary private loan. The state's general usury statute, Maine Revised Statutes Title 9, Sections 228 and 229, was repealed in 1975 and 1973 and never replaced with a broadly applicable cap.

3. 3

   A narrower cap applies only to a lender "regularly engaged in the business of making loans" to consumers (more than 25 loans in the preceding calendar year): 30% per year on the unpaid balance up to $2,000, 24% from $2,000 to $4,000, and 18% above $4,000, or a flat 18% if the amount financed exceeds $8,000. (Maine Revised Statutes Title 9-A, Section 2-401) A one-off private lender, such as a family member, does not meet that "regularly engaged" threshold and falls outside this cap.

4. 4

   A Maine promissory note does not need to be notarized or witnessed to be enforceable. Maine Revised Statutes Title 11, Section 3-1104 lists what makes a note a valid negotiable instrument (an unconditional promise, a fixed amount, a signature, payable on demand or by a definite date), and notarization isn't one of the requirements.

5. 5

   Confession-of-judgment clauses (a clause letting the payee get a court judgment without filing a lawsuit) are in an unsettled position under Maine law. The negotiable-instruments statute does not treat a confession-of-judgment clause as disqualifying a note's validity, but no Maine statute confirms that clause is actually enforceable in court without a lawsuit; confirm the current rule before relying on one, and this template does not include such a clause.

6. 6

   You generally have 6 years from a missed payment or the note's stated due date to sue to collect on a written promissory note in Maine. (Maine Revised Statutes Title 14, Section 752)

7. 7

   If a Maine promissory note is secured by personal property, the lender generally needs to file a UCC financing statement to perfect the security interest and protect its priority against other creditors. (Maine Revised Statutes Title 11, Section 9-1310)

Maine Requirements for Promissory Note

• Regulated Lender Rate Caps (Maine Revised Statutes Title 9-A, Section 2-401)

  For a lender regularly engaged in the business of making consumer loans, the finance charge is capped at 30% per year on the unpaid balance up to $2,000, 24% from $2,000 to $4,000, and 18% above $4,000, or a flat 18% if the amount financed exceeds $8,000.

• Negotiable Instruments Requirements (Maine Revised Statutes Title 11, §3-1104)

  To be a valid negotiable instrument, a note must be an unconditional promise to pay a fixed amount, signed by the maker, and payable on demand or at a definite time.

• Statute of Limitations (Maine Revised Statutes Title 14, §752)

  Generally 6 years from a missed payment or the note's stated due date to sue to collect on a written promissory note.

• Notarization Not Required for Validity (Maine Revised Statutes Title 11, Section 3-1104)

  Maine does not require a promissory note to be notarized or witnessed to be enforceable. Title 11, Section 3-1104's list of what makes a note a valid negotiable instrument does not include notarization or witnessing; notarization is optional and used only for evidentiary purposes.

• Secured Transaction Filing (Maine Revised Statutes Title 11, Section 9-1310)

  If a note is secured by personal property, the lender generally must file a UCC financing statement to perfect and prioritize its security interest against other creditors.

• Maximum Legal Interest Rate (No General Usury Cap for a Private Loan)

  Maine has no general statutory interest-rate cap on an ordinary private loan. Maine Revised Statutes Title 9, Sections 228 and 229, the state's former general usury statute, were repealed in 1975 and 1973 and never replaced.

• Confession of Judgment Status (Maine Revised Statutes Title 11, Section 3-1104)

  Maine's negotiable-instruments statute does not disqualify a note's validity for including a confession-of-judgment clause, but no Maine statute confirms such a clause is actually enforceable on a private note without a lawsuit. Confirm the current rule before relying on one.

• Maine Consumer Credit Code Scope (Maine Revised Statutes Title 9-A, Section 1-301)

  The Consumer Credit Code's licensing and rate-cap requirements apply only to a lender "regularly engaged in the business of making loans" (more than 25 loans a year). An isolated private person-to-person loan does not trigger these requirements.