Virginia Promissory Note
Virginia promissory note template within the 12% usury cap and 5-year statute of limitations under state law. Free template. Attorney review available.
Introduction
Virginia's 12% usury cap sounds like a hard ceiling, but it barely touches business lending. Under Virginia Code Section 6.2-303, a written loan generally can't carry more than 12% interest per year, or the entire contract is void and the lender forfeits all principal, interest, and fees. But a corporation, an LLC, a business trust, or a partnership required to file a certificate can never raise usury as a defense at all, at any loan size (Section 6.2-308), and even an individual borrowing $5,000 or more for a business or investment purpose loses that defense too (Section 6.2-317). In practice, the 12% cap and its steep penalty mainly protect a smaller personal, family, or household loan. A promissory note is what fixes the terms of a loan like that in writing, a signed promise by one party, the maker, to pay a definite sum to another, the payee, on demand or by a set date, and the template below turns Virginia's rate and enforcement rules into an actual fillable note. Virginia also still allows a confession-of-judgment clause, letting the payee obtain a court judgment without a full lawsuit if the maker defaults, but only if the note's face carries a specific warning, printed in boldface type of at least eight points, telling the debtor the clause waives important rights; a note without that exact notice can't support a confessed judgment. A Virginia note doesn't need to be notarized or witnessed to be enforceable. You generally have 5 years from a missed payment or the note's due date to sue to collect on a written note.
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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
Virginia caps interest on a written loan at 12% per year; a contract charging more is void, and the lender forfeits the right to collect or retain any principal, interest, or fees on it. (Va. Code Section 6.2-303) The default rate absent a written rate agreement is 6% per year. (Section 6.2-301)
- 3
A corporation, a partnership required to file a certificate, a limited liability company, a business trust, or certain real-estate joint ventures can never raise usury as a defense, at any loan size (Section 6.2-308), and any loan of $5,000 or more for business or investment purposes is also exempt from the usury defense even when the borrower is an individual (Section 6.2-317). The 12% cap realistically protects only a smaller personal, family, or household loan.
- 4
A Virginia promissory note does not need to be notarized or witnessed to be enforceable. Virginia Code Section 8.3A-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, letting the payee obtain a court judgment against the maker without a full lawsuit, are allowed in Virginia, but the note must carry a specific notice on its face, in boldface print of not less than eight-point type, warning the debtor that the clause waives important rights; without that exact notice, the clause cannot support a confessed judgment. (Va. Code Section 8.01-433.1)
- 6
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 signed by the party being sued. (Va. Code Section 8.01-246)
- 7
If a Virginia promissory note is secured by personal property rather than real property, the lender generally needs to file a UCC-1 financing statement with the Clerk's Office of the Virginia State Corporation Commission to protect its priority against other creditors. Promissory notes are commonly used in Virginia for both family loans and business or LLC loans. (Va. Code Section 8.9A-310)
Key decisions before you file
Before you file a Promissory Note in Virginia, 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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Once your Promissory Note is ready, you can check whether it needs to be notarized in Virginia in about a minute, and notarize it online through DocDraft if it does.
Virginia Requirements for Promissory Note
Negotiability Requirements (Virginia Code Section 8.3A-104)
To be a valid negotiable instrument, a note must be an unconditional promise to pay a fixed amount, signed by the maker, payable to bearer or order, and payable on demand or at a definite time.
Maximum Legal Interest Rate (Virginia Code Section 6.2-303; Section 6.2-301)
Virginia caps interest on a written loan at 12% per annum; a contract above the cap is void, and the lender forfeits the right to collect or retain any principal, interest, or fees on it. The default rate absent a written rate agreement is 6% per annum.
Statute of Limitations (Virginia Code § 8.01-246)
Generally 5 years from a missed payment or the note's stated due date to sue to collect on a written promissory note signed by the party to be charged.
Usury Defense Unavailable to Businesses (Virginia Code Section 6.2-308; Section 6.2-317)
A corporation, a partnership required to file a certificate, a limited liability company, a business trust, or a real-estate-holding joint venture can never raise usury as a defense at any loan size (Section 6.2-308). A loan of $5,000 or more for business or investment purposes is also exempt from the usury defense even when the borrower is an individual (Section 6.2-317).
Confession of Judgment Requires Boldface Notice (Virginia Code Section 8.01-433.1)
A confession-of-judgment clause can support a confessed judgment only if the note's face carries a notice, typed in boldface print of not less than eight-point type, warning the debtor that the clause waives important rights. This notice requirement applies to a note entered into after January 1, 1993.
Secured Transaction Filing (Virginia Code Section 8.9A-310)
If a note is secured by personal property, the lender generally must file a UCC-1 financing statement with the Clerk's Office of the Virginia State Corporation Commission to perfect and prioritize its security interest against other creditors.
Virginia Consumer Finance Act Scope (Virginia Code Section 6.2-1501)
A license from the State Corporation Commission is required only for a person engaged in the business of making loans to individuals for personal, family, or household purposes at a rate above what Section 6.2-303 permits. An isolated private person-to-person promissory note does not trigger this requirement.
Notarization Not Required for Validity (Virginia Code Section 8.3A-104)
Virginia does not require a promissory note to be notarized or witnessed to be enforceable. Section 8.3A-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.
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