Massachusetts Promissory Note
Massachusetts promissory note template: no set civil usury cap, but a 20% criminal ceiling and 6-year SOL apply. Free template. Attorney review available.
Introduction
Massachusetts writes its interest-rate rule backward from most states: the law does not name a maximum percentage a private lender may charge in a written contract at all. Instead, 6% per year is only the default rate that fills the gap when the parties never agreed on one in writing, and the real ceiling sits much further out, at the criminal law. Charging or receiving interest and expenses that total more than 20% per year on a loan is criminal usury, a felony punishable by up to 10 years in state prison or a $10,000 fine, unless the lender is otherwise regulated or exempt. A promissory note is the document that fixes what a lender can actually charge and collect under this structure, a written, signed promise by one party, the maker, to pay a definite sum to another, the payee, on demand or by a set date; the template below turns these rate rules into an actual fillable note. A narrower rule also applies to small loans of $6,000 or less: a lender charging more than 12% aggregate must be licensed by the Commissioner of Banks, and licensed small-loan lenders are commonly cited as capped near 23% per year plus a $20 fee, though that specific figure should be confirmed against the current regulation before relying on it. A Massachusetts note does not need to be notarized or witnessed to be enforceable. Confession-of-judgment clauses are void outright, a long-standing rule, not a recent reform. You generally have 6 years from a missed payment or the note's due date to sue to collect.
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Key Things to Know
- 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
Massachusetts has no general civil cap naming a maximum interest rate for a private written loan. Absent a written rate agreement, the default rate is 6% per year. Parties may contract in writing for a higher rate, but charging or receiving interest and expenses totaling more than 20% per year is criminal usury, a felony, unless the lender is exempt or separately regulated. (Massachusetts General Laws Chapter 107, Section 3; Chapter 271, Section 49)
- 3
A separate, narrower rule applies to small loans of $6,000 or less: a lender whose interest and expenses exceed 12% per year aggregate must first get a license from the Commissioner of Banks. Licensed small-loan lenders are commonly cited as capped near 23% per year on the unpaid balance plus a $20 administrative fee; confirm the current regulation (209 CMR 26.01) before relying on that specific figure. (Massachusetts General Laws Chapter 140, Section 96)
- 4
A Massachusetts promissory note does not need to be notarized or witnessed to be enforceable. Massachusetts General Laws Chapter 106, Section 3-104 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
Confession-of-judgment clauses, which would let the payee obtain a court judgment against the maker without a full lawsuit, are void under Massachusetts law, a long-standing rule rather than a recent change. A judgment entered on such a clause is set aside or vacated on the maker's motion unless the maker was properly served or given at least 7 days' notice by registered mail. (Massachusetts General Laws Chapter 231, Section 13A)
- 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 Massachusetts. (Massachusetts General Laws Chapter 260, Section 2)
- 7
If a Massachusetts promissory note is secured by personal property rather than real property, the lender generally needs to file a UCC-1 financing statement with the Secretary of the Commonwealth, Corporations Division, to protect its priority against other creditors. (Massachusetts General Laws Chapter 106, Section 9-310)
Key decisions before you file
Before you file a Promissory Note in Massachusetts, a few decisions shape the document: which option to choose and what each one means. The Promissory Note guide walks through them.
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Massachusetts Requirements for Promissory Note
Maximum Interest Rate (M.G.L. c. 271, § 49)
Massachusetts sets no general civil maximum rate for a private written loan. Charging or receiving interest and expenses totaling more than 20% per annum is criminal usury, a felony punishable by up to 10 years in state prison or a $10,000 fine, unless the lender is exempt or separately regulated.
Negotiable Instruments Requirements (M.G.L. c. 106, § 3-104 (UCC Article 3))
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. Notarization or a witness is not required.
Statute of Limitations (M.G.L. c. 260, § 2)
Generally 6 years from a missed payment or the note's stated due date to sue to collect on a written promissory note.
Default Statutory Interest Rate (Massachusetts General Laws Chapter 107, Section 3)
Absent a written rate agreement between the parties, the default statutory rate is 6% per annum. A rate above 6% is only enforceable if the agreement to pay it is in writing.
Licensed Small-Loan Lender Rate Ceiling (209 CMR 26.01)
A Commissioner-of-Banks-licensed small-loan lender is commonly cited as capped at 23% per annum on the unpaid balance (actuarial method) plus a $20 administrative fee; confirm the current regulation before relying on this specific figure.
Small Loan Business Licensing (Massachusetts General Laws Chapter 140, Section 96)
A lender making a loan of $6,000 or less where interest and expenses exceed 12% per annum aggregate must first obtain a license from the Commissioner of Banks. An isolated private loan at or below that threshold does not trigger this licensing requirement.
Confession of Judgment Prohibition (M.G.L. c. 231, § 13A)
Any stipulation in a note whereby the maker agrees in advance to confess judgment is void, and a judgment entered on one is set aside or vacated on the maker's motion unless the maker was properly served or given at least 7 days' notice by registered mail. This is a long-standing prohibition.
Secured Transaction Filing (Massachusetts General Laws Chapter 106, Section 9-310)
If a note is secured by personal property, the lender generally must file a UCC-1 financing statement with the Secretary of the Commonwealth, Corporations Division, to perfect and prioritize its security interest against other creditors.
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