Oklahoma 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

   Oklahoma's general contracts statute states no flat percentage ceiling for a written note; it lets the parties agree to "any rate as may be authorized by law." Under the Oklahoma Constitution, unless the Legislature has fixed a different maximum for that category of loan, a written rate above 10% per year is deemed usurious, and the default rate absent any written agreement is 6% per year. A knowing violation forfeits the note's entire interest and exposes the payee to double-damages liability if sued within 2 years of the note's maturity. (Okla. Const. Art. XIV, Sections 2-3; 15 O.S. Section 266)

3. 3

   An Oklahoma promissory note does not need to be notarized or witnessed to be enforceable. Oklahoma's Uniform Commercial Code definition of a negotiable instrument (an unconditional promise, a fixed amount, a signature, payable on demand or by a definite date) does not list notarization among the requirements. (12A O.S. Section 3-104)

4. 4

   Confession-of-judgment clauses are not banned outright, but a bare clause written into the note in advance accomplishes nothing by itself: Oklahoma only recognizes a confession of judgment when the maker personally appears in court and the payee assents at that time. Any such authorization is void outright if the note is a consumer loan. (12 O.S. Section 689; 14A O.S. Section 3-407)

5. 5

   You generally have 5 years from a missed payment or the note's stated due date to sue to collect on a written promissory note in Oklahoma. (12 O.S. Section 95(A)(1))

6. 6

   If an Oklahoma promissory note is secured by personal property, the lender generally needs to file a UCC-1 financing statement, and most filings for personal property go to the UCC Central Filing Office in the Office of the Oklahoma County Clerk rather than the Secretary of State. (12A O.S. Sections 1-9-310, 1-9-501)

7. 7

   Promissory notes are commonly used for family loans and business loans in Oklahoma. The Oklahoma Consumer Credit Code's licensing and disclosure rules apply only to a lender regularly engaged in the business of making loans, so an isolated private loan between family members or into a small business generally falls outside those requirements. (14A O.S. Section 3-104)

Oklahoma Requirements for Promissory Note

• Notarization Not Required for Validity (12A O.S. Section 3-104)

  Oklahoma does not require a promissory note to be notarized or witnessed to be enforceable. The Uniform Commercial Code'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.

• Maximum Legal Interest Rate (Oklahoma Constitution Article XIV, Section 2; 15 O.S. Section 266)

  Oklahoma's general contracts statute lets parties agree to "any rate as may be authorized by law" rather than stating a flat ceiling. Under the Constitution, unless the Legislature has fixed a different maximum for that category of loan, a written rate above 10% per annum is deemed usurious; the default rate absent any written agreement is 6% per annum.

• Usury Penalty for Excessive Interest (Oklahoma Constitution Article XIV, Section 3)

  Knowingly charging a rate greater than allowed forfeits the note's entire interest. The party who paid the excessive interest may separately recover double the amount paid, in a suit brought within 2 years after the note's maturity.

• Negotiability Requirements (12A O.S. Section 3-104)

  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 (12 O.S. § 95(A)(1))

  Generally 5 years from a missed payment or the note's stated due date to sue to collect on a written promissory note.

• Secured Transaction Filing (12A O.S. Sections 1-9-310, 1-9-501)

  If a note is secured by personal property, the lender generally must file a UCC-1 financing statement to perfect and prioritize its security interest against other creditors. Most Oklahoma filings for personal property go to the UCC Central Filing Office in the Office of the Oklahoma County Clerk rather than the Secretary of State.

• Oklahoma Consumer Credit Code Scope (14A O.S. Section 3-104)

  Oklahoma Consumer Credit Code licensing and disclosure requirements apply only to a lender "regularly engaged in the business of making loans." An isolated private person-to-person promissory note does not trigger these requirements.

• Confession of Judgment Status (12 O.S. Section 689; 14A O.S. Section 3-407)

  A confession of judgment is only given effect when the maker personally appears in court and the payee assents at that time; a bare advance clause in a note does not by itself authorize judgment without a lawsuit. Any such authorization is void outright if the note is a consumer loan.