Washington Promissory Note
Washington promissory note template within the state's 12% usury cap and RCW 19.52.030 overcharge penalty rule. Free template. Attorney review available.
Introduction
Break Washington's usury cap and the law doesn't stop at calling the loan illegal. Washington Revised Code Section 19.52.030 spells out the remedy: the lender collects only the principal minus double whatever interest the maker already paid, and the maker recovers costs and attorney's fees on top. The cap itself, Section 19.52.020, lets a written note carry interest up to the higher of 12% per annum or 4 points above the yield on 26-week Treasury bills, a formula that has kept 12% as the practical ceiling for years. A loan primarily for a business, agricultural, commercial, or investment purpose can't raise a usury defense at all; only a personal, family, or household loan can. A promissory note itself is simpler than that math: a written, signed promise by the maker to pay a definite sum to the payee, on demand or by a set date, the paper trail that makes a family or business loan enforceable if the maker doesn't pay. A Washington note doesn't need to be notarized or witnessed to be enforceable. Confession of judgment is allowed but isn't a clause that fires the moment a payment is missed: acting on one requires a separate sworn statement from the maker, approved by a judge before the clerk enters judgment. You generally have 6 years from a missed payment or the note's due date to sue 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
Washington caps interest on a written note at the higher of 12% per annum or 4 percentage points above the yield on 26-week Treasury bills at the most recent auction (Washington Revised Code Section 19.52.020). A loan made primarily for a business, agricultural, commercial, or investment purpose can't raise a usury defense at all; that carve-out doesn't apply to a consumer loan made primarily for personal, family, or household purposes (Washington Revised Code Section 19.52.080).
- 3
Charging above the cap doesn't void the note. Instead, in a lawsuit on the note, the creditor recovers only the principal minus twice the interest already paid, and the debtor recovers costs and reasonable attorney's fees plus whatever was overpaid. (Washington Revised Code Section 19.52.030)
- 4
A Washington promissory note does not need to be notarized or witnessed to be enforceable. Washington Revised Code Section 62A.3-104, Washington's version of Uniform Commercial Code Article 3, 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
Washington permits a confession-of-judgment clause (letting the payee seek a court judgment without a full lawsuit), but acting on one takes more than a signature on the note itself: Washington Revised Code Chapter 4.60 requires a separate written statement, signed by the maker and verified under oath, submitted to and approved by a superior court judge before the clerk can enter judgment.
- 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 Washington, running from the breach rather than the date the note was signed. (Washington Revised Code Section 4.16.040)
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If a Washington note is secured by personal property, the lender generally needs to file a UCC-1 financing statement to protect its priority against other creditors, and unlike most states, that filing goes to the Washington Department of Licensing rather than the Secretary of State (Washington Revised Code Section 62A.9A-310). Promissory notes are commonly used in Washington for family loans; Washington's Consumer Loan Act licensing rules exempt a person lending to an immediate family member from the licensing requirement that otherwise applies to businesses in the lending trade (Washington Revised Code Section 31.04.035).
Key decisions before you file
Before you file a Promissory Note in Washington, 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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Washington Requirements for Promissory Note
Washington's statute of frauds requires certain promises to be in writing and signed by the party to be charged. Notarization is not a validity requirement for a promissory note in Washington.
The rate on a written note may not exceed the higher of 12% per annum or 4 percentage points above the equivalent coupon issue yield on 26-week Treasury bills at the most recent auction. A loan primarily for a business, agricultural, commercial, or investment purpose cannot support a usury defense at all (Washington Revised Code Section 19.52.080).
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. Notarization is not one of the requirements.
Generally 6 years from a missed payment or the note's stated due date to sue to collect on a written promissory note.
Washington allows confession of judgment, but it requires a separate written statement, signed by the maker and verified under oath, approved by a superior court judge before the clerk can enter judgment. A confession-of-judgment clause in the note itself is not self-executing.
A person must generally hold a Consumer Loan Act license to engage in the business of making loans, but Washington Administrative Code rules exempt a person lending to an immediate family member, and a person financing the sale of their own home, from that licensing requirement.
An overcharge does not void the note. The creditor recovers only the principal minus twice the interest already paid, and the debtor recovers costs and reasonable attorney's fees plus any amount overpaid beyond what the creditor is entitled to.
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. Washington files these with the Department of Licensing rather than the Secretary of State.
Frequently Asked Questions
For a written note, the maximum is the higher of 12% per annum or 4 percentage points above the equivalent coupon issue yield on 26-week Treasury bills at the most recent auction. A loan made primarily for a business, agricultural, commercial, or investment purpose can't raise a usury defense at all; that carve-out doesn't apply to a personal, family, or household loan.
No. Washington Revised Code Section 62A.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, the interest rate (within Washington's usury cap), the repayment schedule, what counts as default, and the signatures of the maker and payee. If the parties want a confession-of-judgment clause, note that acting on it later still requires a separate sworn statement approved by a judge; it's never automatic just because the note includes the authorization.
The note isn't void. In a lawsuit to collect, the creditor is limited to the principal minus twice the interest already paid, and the debtor recovers costs and reasonable attorney's fees plus any amount overpaid beyond what the creditor is entitled to. (Washington Revised Code Section 19.52.030)
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, the lender generally needs to file a UCC-1 financing statement with the Washington Department of Licensing (not the Secretary of State, as in most other states) to protect its priority against other creditors.
Only through the formal confession-of-judgment process in Washington Revised Code Chapter 4.60, and only if the note's terms allow for it. The maker must sign a separate written statement, verified under oath, which is then submitted to a superior court judge for approval before the court clerk can enter judgment. A confession-of-judgment authorization inside the note is never self-executing.
Generally 6 years from a missed payment or the note's stated due date, under Washington's statute of limitations for actions on a written contract (Washington Revised Code Section 4.16.040). Waiting too long can mean losing the right to sue on the note.
Yes, and Washington's Consumer Loan Act licensing rules specifically exempt a person providing loans or extending credit to immediate family members from the licensing requirement that otherwise applies to businesses engaged in lending. The usury cap and other note requirements still generally apply to a family loan.