Texas Promissory Note
Texas promissory note template with the 10% interest cap and a 4-year statute of limitations under state law. Free template. Attorney review available.
Introduction
Texas prices a loan's interest rate in tiers instead of a single flat number. Say nothing about interest in a written contract and the legal rate defaults to 6% per year. Write a rate into the contract without invoking anything more and it's capped at 10% per year. Only if the note affirmatively elects Texas Finance Code Chapter 303's optional rate-ceiling system can the parties go higher: that ceiling floats with the market, is republished monthly by the Office of Consumer Credit Commissioner, and can never be set below an 18% floor; it's commonly cited as capped at 24% per year for most loans and 28% per year for a business-purpose loan, so confirm the current OCCC notice before relying on those upper figures. A promissory note is what fixes which of these numbers actually governs a given loan, 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; the template below turns these tiers into an actual fillable note. A Texas note doesn't need to be notarized or witnessed to be enforceable. Confession-of-judgment clauses aren't banned outright for an ordinary note, though Texas bars them for a regulated consumer loan priced above 10% per year and, as of September 1, 2025, for a commercial sales-based financing (merchant cash advance) contract. You generally have 4 years from a missed payment or the note's due date to sue to collect on a written note.
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
Texas prices interest in tiers rather than a single number. Absent any rate agreement, the legal rate is 6% per year (Finance Code Section 302.002). A written contract that doesn't invoke a higher ceiling is capped at 10% per year (Finance Code Section 302.001). A note that elects Chapter 303's optional floating ceiling can go higher, published monthly by the Office of Consumer Credit Commissioner and never below an 18% statutory floor; it's commonly cited as capped at 24% per year for most loans and 28% per year for a business-purpose loan, so confirm the current OCCC notice before relying on those upper figures. (Tex. Fin. Code Sections 302.001, 302.002, 303.009)
- 3
A Texas promissory note does not need to be notarized or witnessed to be enforceable. Business and Commerce Code Section 3.104 lists what makes a note a valid negotiable instrument (an unconditional promise, a fixed amount, a signature, payable on demand or a definite date), and notarization isn't one of the requirements.
- 4
Confession-of-judgment clauses (letting the payee get a court judgment without a lawsuit) are not banned outright for an ordinary Texas note. They are barred for a regulated consumer loan priced above 10% per year and licensed by the Office of Consumer Credit Commissioner (Finance Code Section 342.504), and, as of September 1, 2025, for a commercial sales-based financing or merchant-cash-advance contract (Finance Code Section 398.055).
- 5
You generally have 4 years from a missed payment or the note's stated due date to sue to collect on a written promissory note in Texas. (Tex. Civ. Prac. & Rem. Code Section 16.004)
- 6
If a Texas note is secured by personal property, the lender generally needs to file a UCC-1 financing statement with the Texas Secretary of State to protect its priority (Tex. Bus. & Com. Code Section 9.310). A note secured by a lien on the maker's homestead is different: the Texas Constitution protects a homestead from forced sale for any debt except a short, enumerated list of exceptions (purchase money, taxes, a written home-improvement contract, a qualifying home-equity loan, and a few others), so an ordinary note generally cannot be secured by a homestead lien outside those categories. (Tex. Const. Art. XVI, Section 50)
- 7
Promissory notes are commonly used for family loans and business loans in Texas. If a non-depository lender makes a personal, family, or household loan priced above 10% per year, that lender generally needs an Office of Consumer Credit Commissioner license as a regulated consumer lender (Tex. Fin. Code Section 342.004); an occasional private loan between family members or friends is not the kind of transaction this licensing rule targets.
Key decisions before you file
Before you file a Promissory Note in Texas, 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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Texas Requirements for Promissory Note
6% per annum if the written contract states no rate; 10% per annum if a rate is stated without invoking Chapter 303's optional ceiling; a floating ceiling under Chapter 303, published monthly by the Office of Consumer Credit Commissioner, never below an 18% floor and commonly cited as capped at 24% per annum (28% for a business-purpose loan) if the note expressly elects that system. Confirm the current OCCC notice before relying on the 24%/28% figures.
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 4 years from a missed payment or the note's stated due date to sue to collect on a written promissory note.
A non-depository lender making a personal, family, or household loan priced above 10% per year generally must hold an Office of Consumer Credit Commissioner license as a regulated consumer lender. An isolated private person-to-person note does not trigger this requirement.
A confession-of-judgment or power-of-attorney-to-confess-judgment clause is void in a Chapter 342 regulated consumer loan and, as of September 1, 2025, in a commercial sales-based financing (merchant cash advance) contract. Outside those two categories, Texas does not ban the clause by general statute.
Texas does not require a promissory note to be notarized or witnessed to be enforceable. Business and Commerce Code Section 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.
If a note is secured by personal property, the lender generally must file a UCC-1 financing statement with the Texas Secretary of State to perfect and prioritize its security interest against other creditors.
The Texas Constitution protects a homestead from forced sale for any debt except a short, enumerated list of exceptions (purchase money, taxes, a written home-improvement contract, a qualifying home-equity loan, and a few others). A promissory note generally cannot be secured by a lien on the maker's Texas homestead outside those categories.
Frequently Asked Questions
It depends on what the note says. With no rate stated, the legal rate is 6% per year. A written rate that doesn't invoke Finance Code Chapter 303's optional ceiling is capped at 10% per year. A note that expressly elects Chapter 303's optional ceiling can go higher, floating with the market and republished monthly by the Office of Consumer Credit Commissioner, never below an 18% floor; it's commonly cited as capped at 24% per year for most loans and 28% per year for a business-purpose loan, so confirm the current OCCC notice before relying on those upper figures.
No. Texas Business and Commerce Code Section 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 whichever Texas ceiling applies to the note, the repayment schedule, what counts as default, and the signatures of the maker and payee. If the note is a regulated consumer loan priced above 10% per year or a commercial sales-based financing contract, leave out any confession-of-judgment clause, since that kind of clause is void in both of those categories.
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 Business and Commerce Code Section 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; if it's secured by personal property, the lender generally needs to file a UCC-1 financing statement with the Texas Secretary of State to protect its priority. A note cannot generally be secured by a lien on the maker's Texas homestead at all, since the Texas Constitution protects a homestead from forced sale for any debt except a short list of exceptions like purchase money, taxes, or a qualifying home-equity loan.
The payee can declare the remaining balance immediately due if the note includes an acceleration clause, and can sue to collect. A confession-of-judgment clause, letting the payee skip straight to a judgment, is void if the note is a regulated consumer loan priced above 10% per year or a commercial sales-based financing contract; outside those two categories, Texas doesn't ban the clause outright, but enforcement of an ordinary note usually still means filing a lawsuit.
Generally 4 years from a missed payment or the note's stated due date, under the Texas statute of limitations for an action on a debt (Civil Practice and Remedies Code Section 16.004). 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 Texas. The same interest-rate tiers and other rules generally apply. If a business regularly makes personal, family, or household loans priced above 10% per year, it may need an Office of Consumer Credit Commissioner license as a regulated consumer lender, a rule aimed at businesses in the lending business rather than an occasional private loan.