Rhode Island Promissory Note
Rhode Island promissory note template within the 21% usury cap; a usurious note is void under law. Free template, 10-year SOL. Attorney review available.
Introduction
Rhode Island allows a higher interest rate than most states, up to 21% per year, or 9 percentage points over the Wall Street Journal's prime rate if that formula lands higher, but it treats crossing that line harshly. A usurious contract, and any security pledged for it, is void outright, and a willful, knowing violation is criminal usury, a felony carrying up to 5 years in prison. A promissory note pins the rate down in writing, a written, signed promise by one party, the maker, to pay a definite sum to another party, the payee, on demand or by a set date, so it decides which side of that line a loan lands on. The 21% figure is not universal: licensed pawnbrokers are exempt, and a commercial loan over $1,000,000 not secured by a primary residence carries no rate limit once a licensed CPA confirms repayment ability. A Rhode Island note does not need to be notarized or witnessed to be enforceable. Confession-of-judgment clauses are restricted, not banned outright, for a lender or loan broker under the state's lending-licensing law, and an occasional private lender may fall outside that licensing scheme entirely. You generally have 10 years, longer than in many states, from a missed payment or the note's due date to sue to collect.
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
Rhode Island caps interest at 21% per year, or 9 percentage points plus the domestic prime rate published in the Wall Street Journal, whichever is greater. Licensed pawnbrokers are exempt, and a commercial loan over $1,000,000 not secured by a borrower's primary residence carries no rate limit at all once a Rhode Island-licensed CPA confirms repayment ability. (R.I. Gen. Laws Section 6-26-2)
- 3
A contract that violates the usury cap, and any mortgage, pledge, or other security given for it, is void. A willful, knowing violation is criminal usury, a felony punishable by up to 5 years in prison. A regulated financial institution that knowingly charges a usurious rate forfeits the entire interest, and a borrower who already paid usurious interest can recover twice that amount if they sue within 2 years. (R.I. Gen. Laws Sections 6-26-3, 6-26-4)
- 4
A Rhode Island promissory note does not need to be notarized or witnessed to be enforceable. R.I. Gen. Laws Section 6A-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 restricted, not flatly banned statewide. Rhode Island's Lenders and Loan Brokers Act bars a "lender or loan broker" from taking a confession of judgment or a general power of attorney from a borrower, apart from a narrow power to enforce a chattel mortgage or pledge after default, and this particular restriction does not apply to real estate secured loans. (R.I. Gen. Laws Section 19-14.1-1)
- 6
You generally have 10 years from a missed payment or the note's stated due date to sue to collect on a written promissory note in Rhode Island, under the state's general catch-all statute of limitations for civil actions. (R.I. Gen. Laws Section 9-1-13)
- 7
If a Rhode Island promissory note is secured by personal property rather than real property, the lender generally needs to file a UCC-1 financing statement with the Rhode Island Department of State to protect its priority against other creditors. (R.I. Gen. Laws Section 6A-9-310)
Key decisions before you file
Before you file a Promissory Note in Rhode Island, 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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Rhode Island Requirements for Promissory Note
21% per annum, or 9 percentage points plus the Wall Street Journal domestic prime rate, whichever is greater. Licensed pawnbrokers are exempt, and a commercial loan exceeding $1,000,000 not secured by a borrower's primary residence carries no rate limit once a Rhode Island-licensed CPA confirms repayment ability.
Generally 10 years from a missed payment or the note's stated due date to sue to collect on a written promissory note, under Rhode Island's general catch-all civil-action limitations period.
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.
A contract that violates the usury cap, and any security given for it, is void. A willful, knowing violation is criminal usury, a felony punishable by up to 5 years in prison. A regulated financial institution that knowingly charges a usurious rate forfeits the entire interest, and a borrower who already paid it can recover twice that amount by suing within 2 years.
A lender or loan broker may not take a confession of judgment or a general power of attorney from a borrower, apart from a narrow power to enforce a chattel mortgage or pledge after default; this particular restriction does not apply to real estate secured loans.
A "lender," a person who makes or funds a loan with the person's own funds, must generally be licensed under the Lenders and Loan Brokers Act. A person making fewer than 6 loans in Rhode Island in a consecutive 12-month period is exempt from that licensing requirement, though a loan broker has no equivalent exemption.
If a note is secured by personal property, the lender generally must file a UCC-1 financing statement with the Rhode Island Department of State to perfect and prioritize its security interest against other creditors.
Rhode Island does not require a promissory note to be notarized or witnessed to be enforceable. Section 6A-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.
Frequently Asked Questions
Rhode Island caps interest at 21% per year, or 9 percentage points plus the domestic prime rate published in the Wall Street Journal, whichever is greater. Licensed pawnbrokers are exempt, and a commercial loan over $1,000,000 not secured by a borrower's primary residence carries no rate limit at all once a Rhode Island-licensed CPA confirms the borrower can repay it. A contract that violates the cap is void, and a willful violation is criminal usury, a felony punishable by up to 5 years in prison.
No. R.I. Gen. Laws Section 6A-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 within Rhode Island's 21% usury cap, the repayment schedule, what counts as default, and the signatures of the maker and payee. Because Rhode Island's Lenders and Loan Brokers Act bars a lender or loan broker from taking a confession-of-judgment or general power-of-attorney clause from a borrower, leave that kind of clause out of a basic note; enforcement after default relies on a regular lawsuit.
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 R.I. Gen. Laws Section 6A-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 rather than real estate, the lender generally needs to file a UCC-1 financing statement with the Rhode Island Department 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. Rhode Island's Lenders and Loan Brokers Act keeps a lender or loan broker from using a confession-of-judgment shortcut, so the payee generally cannot get a judgment without filing a regular lawsuit.
Generally 10 years from a missed payment or the note's stated due date, under Rhode Island's general catch-all statute of limitations for civil actions (R.I. Gen. Laws Section 9-1-13). That is longer than the window in many other states, but waiting too long can still 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 Rhode Island. The same 21% usury cap generally applies to both, though a large commercial loan over $1,000,000 that isn't secured by a residence can be exempt from the cap entirely, and a lender making six or more loans in Rhode Island in a 12-month period may need to be licensed under the Lenders and Loan Brokers Act.