Ohio Promissory Note
Ohio promissory note template with the 8% usury cap and 6-year statute of limitations under state law. Free template. Attorney review available.
Introduction
Ohio is one of a shrinking number of states that still lets a business-purpose promissory note carry a cognovit clause, a warrant of attorney letting the payee obtain a court judgment against the maker without notice or a trial, but only if the note prints Ohio's exact statutory warning, in type that stands out more clearly than anything else on the page, directly above or below the signature line. That same clause is void, and an Ohio court has no jurisdiction to enter judgment on it, in a consumer loan, one made mainly for personal, family, educational, or household purposes, a rule in place since January 1, 1974. Ohio also caps interest at 8% per year on an ordinary written note, 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, but that cap disappears entirely, not just rises, once the principal tops $100,000 or the loan is a genuine business loan; a real-estate-secured loan gets a different, index-tied ceiling instead. An Ohio note does not need to be notarized or witnessed to be enforceable. If a lender does charge more than the legal rate, the penalty is mild by national standards: the excess is credited back against the principal rather than forfeited or trebled. You generally have 6 years from a missed payment or the note's due date to sue to collect. The template below turns these rules into an actual fillable note, with the cognovit clause included only as an optional, glossed option where Ohio law actually allows it.
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
Ohio caps interest at 8% per year on an ordinary written promissory note. (Ohio Revised Code Section 1343.01) The cap disappears entirely, not just rises, for a note with a principal over $100,000 or a genuine business loan; a loan secured by a mortgage, deed of trust, or land installment contract on real estate instead gets a separate ceiling of up to 8 percentage points over the 90-day commercial paper discount rate at the Federal Reserve Bank of Cleveland.
- 3
If a lender charges more than the legal rate, Ohio's penalty is comparatively mild: the excess interest is treated as a payment on the principal rather than forfeited, and judgment can be entered for no more than the balance actually due after that amount is deducted. (Ohio Revised Code Section 1343.04)
- 4
An Ohio promissory note does not need to be notarized or witnessed to be enforceable. Ohio Revised Code Section 1303.03 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
A cognovit clause (a warrant of attorney letting the payee get a court judgment against the maker without notice or a trial) is allowed in Ohio for a business-purpose note, but only with a specific, conspicuous statutory warning printed directly above or below the signature line. The clause is void, and courts lack jurisdiction to enforce it, in any note for a consumer loan, one made mainly for personal, family, educational, or household purposes. (Ohio Revised Code Section 2323.13)
- 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 Ohio. (Ohio Revised Code Section 2305.06) This period was 8 years for claims that accrued before June 16, 2021, and 15 years before a 2012 change, so an older note's deadline can depend on when the claim accrued.
- 7
If an Ohio promissory note is secured by personal property rather than real property, the lender generally needs to file a UCC-1 financing statement with the Ohio Secretary of State to protect its priority against other creditors. (Ohio Revised Code Section 1309.310) Promissory notes are commonly used in Ohio for family loans and business or LLC loans; a lender engaged in the business of lending $5,000 or less generally needs a Small Loan Act license, though an isolated private note does not trigger that requirement. (Ohio Revised Code Section 1321.02)
Key decisions before you file
Before you file a Promissory Note in Ohio, 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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Ohio Requirements for Promissory Note
Ohio does not require a promissory note to be notarized or witnessed to be enforceable. Ohio Revised Code Section 1303.03'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.
8% per annum for an ordinary written promissory note; the cap does not apply at all to a note with a principal over $100,000 or a genuine business loan, and a real-estate-secured note instead gets a ceiling of up to 8 percentage points over the 90-day commercial paper discount rate at the Federal Reserve Bank of Cleveland.
Interest paid above the legal rate is credited as a payment on the principal rather than forfeited; a court can render judgment for no more than the balance actually due after that deduction.
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.
Generally 6 years from a missed payment or the note's stated due date to sue to collect on a written promissory note; this period was 8 years for claims accrued before June 16, 2021, and 15 years before a 2012 change.
A person engaged in the business of lending money in amounts of $5,000 or less generally needs a license from the Ohio Division of Financial Institutions; an isolated private person-to-person promissory note does not trigger this requirement.
A cognovit clause is permitted for a business-purpose note only with a specific, conspicuous statutory warning printed at the signature line; it is void and unenforceable, and courts lack jurisdiction over it, in any note for a consumer loan (personal, family, educational, or household purposes).
If a note is secured by personal property, the lender generally must file a UCC-1 financing statement, typically with the Ohio Secretary of State, to perfect and prioritize its security interest against other creditors.
Frequently Asked Questions
Ohio caps interest at 8% per year on an ordinary written promissory note. That cap disappears entirely, not just rises, once the principal exceeds $100,000 or the loan is a genuine business loan; a loan secured by a mortgage, deed of trust, or land installment contract on real estate instead gets a separate ceiling of up to 8 percentage points over the 90-day commercial paper discount rate at the Federal Reserve Bank of Cleveland.
No. Ohio Revised Code Section 1303.03 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, the interest rate (within Ohio's usury cap or a qualifying exception), the repayment schedule, what counts as default, and the signatures of the maker and payee. Only add a cognovit (confession-of-judgment) clause for a genuine business-purpose loan, with Ohio's exact statutory warning printed at the signature line; that clause is void for a consumer loan.
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 Ohio Revised Code Section 1303.03: 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 rather than real estate, the lender generally needs to file a UCC-1 financing statement with the Ohio 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) and can sue to collect. If the note is a business-purpose loan with a valid cognovit clause and Ohio's required warning, the payee can also confess judgment against the maker without a full trial; that option is void for a consumer loan.
Generally 6 years from a missed payment or the note's stated due date, under Ohio's statute of limitations for actions on a written contract (Ohio Revised Code Section 2305.06). This period was 8 years for older claims and 15 years before that, so an older note's deadline can depend on when the claim accrued. Waiting too long can mean losing the right to sue on the note.
Yes. Promissory notes are commonly used for both family loans and business or LLC loans in Ohio. The applicable interest-rate cap can look very different depending on the loan: a family loan under $100,000 generally stays under the 8% cap, while a genuine business loan or a loan over $100,000 is exempt from the cap entirely.