New Mexico Promissory Note
New Mexico promissory note template: no statutory rate cap above $10,000 in writing, 15% default rate, 6-year SOL. Free template. Attorney review available.
Introduction
New Mexico's usury statute only sets a percentage ceiling when the maker and payee never put a rate in writing: absent a written contract, the default rate is 15% per year. Once a rate is written into the note, for a loan above $10,000, state law sets no percentage ceiling on it at all, a genuinely different structure from a flat cap or a floating index tied to a bank rate. A loan of $10,000 or less falls instead under the New Mexico Small Loan Act or Bank Installment Loan Act, capped at 36% NM-APR. Confirm the current statute (NMSA 1978 Sections 56-8-3 and 56-8-9) before setting a rate above $10,000. A promissory note itself is simpler: 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, and it's the paper trail that makes a family loan, a small business loan, or a loan between friends enforceable if the maker doesn't pay. New Mexico still allows a formal, court-filed confession of judgment, a written statement the debtor signs under oath and files with the district court clerk for a specified sum, but writing that same power directly into a note as a shortcut goes a step further: doing that, or knowingly holding a note with that clause, is a misdemeanor under New Mexico's cognovit-note statute. A New Mexico note doesn't need to be notarized or witnessed to be enforceable. You generally have 6 years from a missed payment or the note's due date to sue to collect (confirm the current limitations period before relying on it), and if a term lets the payee accelerate payment "at will" or when it "deems itself insecure," New Mexico law only allows that if the payee genuinely, in good faith, believes payment is at risk.
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
Absent a written contract fixing a different rate, New Mexico's default interest rate is 15% per year. If a rate is written into the note and the Principal exceeds $10,000, state law sets no percentage ceiling on it. A loan of $10,000 or less is instead capped at 36% NM-APR under the New Mexico Small Loan Act of 1955 or Bank Installment Loan Act of 1959. Confirm the current statute (NMSA 1978 Sections 56-8-3, 56-8-9) before relying on them. (NMSA 1978 Section 56-8-3; Section 56-8-9)
- 3
A New Mexico promissory note does not need to be notarized or witnessed to be enforceable. NMSA 1978 Section 55-3-104 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.
- 4
New Mexico allows a formal, court-filed confession of judgment, a written statement signed and verified under oath and filed with the district court clerk for a specified sum (NMSA 1978 Sections 39-1-9 to 39-1-17). Writing that same power directly into a note, a cognovit clause, is a different matter: procuring, holding, or enforcing one is a misdemeanor under NMSA 1978 Section 39-1-18.
- 5
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 New Mexico, though confirm the current limitations period before relying on it. (NMSA 1978 Section 37-1-3)
- 6
If a New Mexico promissory note is secured by personal property rather than real property, the lender generally needs to file a UCC-1 financing statement with the New Mexico Secretary of State to protect its priority against other creditors. (NMSA 1978 Section 55-9-310)
- 7
Promissory notes are commonly used in New Mexico for family loans, small business loans, and LLC loans between members. A license is generally required to engage in the business of lending $10,000 or less, but occasional, isolated loans to accommodate customers or friends generally don't count as "engaging in the business," so a typical one-off family or LLC loan usually falls outside that licensing requirement. (NMSA 1978 Section 58-15-3)
Key decisions before you file
Before you file a Promissory Note in New Mexico, 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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New Mexico Requirements for Promissory Note
New Mexico does not require a promissory note to be notarized or witnessed to be enforceable. NMSA 1978 Section 55-3-104'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.
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.
Absent a written contract, the default rate is 15% per annum; a written-contract loan above $10,000 has no statutory percentage ceiling; a loan of $10,000 or less is capped at 36% NM-APR under the Small Loan Act of 1955 or Bank Installment Loan Act of 1959. Confirm the current statute before relying on them.
A license is generally required to engage in the business of lending $10,000 or less; occasional, isolated loans to accommodate customers or friends generally do not count as "engaging in the business," though a single transaction can be enough depending on the circumstances. A loan made under either act is capped at 36% NM-APR.
Generally 6 years from a missed payment or the note's stated due date to sue to collect on a written promissory note; confirm the current limitations period before relying on it.
A clause letting the payee accelerate payment "at will" or when it "deems itself insecure" only allows acceleration if the payee genuinely, in good faith, believes payment is at risk; the burden of proving lack of good faith falls on the party against whom the power was used.
A formal, court-filed confession of judgment on a written, sworn statement is a lawful procedure under NMSA 1978 Sections 39-1-9 to 39-1-17, but writing a confession-of-judgment or cognovit power directly into a note is a separate misdemeanor under Section 39-1-18.
If a note is secured by personal property, the lender generally must file a UCC-1 financing statement with the New Mexico Secretary of State to perfect and prioritize its security interest against other creditors.
Frequently Asked Questions
Absent a written contract, New Mexico's default interest rate is 15% per year. Once a rate is written into a contract for a loan above $10,000, state law sets no percentage ceiling on it at all. A loan of $10,000 or less is instead capped at 36% NM-APR under the New Mexico Small Loan Act of 1955 or Bank Installment Loan Act of 1959. Confirm the current statute (NMSA 1978 Sections 56-8-3, 56-8-9) before relying on them.
No. NMSA 1978 Section 55-3-104 lists what makes a note a valid, enforceable negotiable instrument, and notarization isn't one of the requirements. Notarizing a note is optional and can help as evidence of who signed it, but it doesn't affect enforceability.
Include the principal amount, an interest rate consistent with New Mexico's usury rules for the loan's size (confirm the current statute before finalizing a rate above $10,000), the repayment schedule, what counts as default, and the signatures of the maker and payee. Don't write a confession-of-judgment or cognovit clause into the note itself; New Mexico makes that a misdemeanor, so the note relies on a regular lawsuit, or a separate later court filing, for enforcement.
Yes, as long as it meets the basic requirements of a valid contract and, if it's meant to be a negotiable instrument, the elements in NMSA 1978 Section 55-3-104: an unconditional promise to pay a fixed amount, a signature, and payment on demand or by a definite date. It doesn't need to be notarized to be enforceable.
An unsecured note relies only on the maker's promise to pay. A secured note is backed by collateral, and if it's secured by personal property, the lender generally needs to file a UCC-1 financing statement with the New Mexico Secretary of State to protect its priority against other creditors.
The payee can declare the remaining balance immediately due if the note includes an acceleration clause, though an "at will" or insecurity-based acceleration requires the payee to genuinely believe in good faith that payment is at risk. New Mexico also allows a separate, formal confession-of-judgment procedure filed with the district court, but writing that power directly into the note is a misdemeanor, so the note itself should rely on a regular lawsuit.
Generally 6 years from a missed payment or the note's stated due date, under New Mexico's statute of limitations for actions on a written contract (NMSA 1978 Section 37-1-3); confirm the current limitations period before relying on it. Waiting too long can mean losing the right to sue on the note.
Yes. Promissory notes are commonly used in New Mexico for both family loans and business or LLC loans. A license is generally required to engage in the business of lending $10,000 or less, but occasional, isolated loans to accommodate customers or friends generally don't count as "engaging in the business," so a typical one-off family or LLC loan usually falls outside that licensing requirement.