West Virginia Promissory Note
West Virginia promissory note template with the 8% usury cap and 10-year statute of limitations under state law. Free template. Attorney review available.
Introduction
West Virginia's usury cap disappears entirely for a business-purpose debt owed by a business entity, regardless of size, but a natural person only gets that exemption at $20,000 principal or more. Below that line, a written note is capped at 8% per year, or 6% by default without a written rate. Charge more and the penalty is explicit: the note is void as to all interest, and the borrower can recover four times the interest agreed to be paid, with a $100 minimum. A promissory note is a written, signed promise by one party, the maker, to pay a definite sum to another, the payee, on demand or by a set date, the paper trail behind a family or business loan. A West Virginia note doesn't need to be notarized or witnessed to be enforceable. Confession-of-judgment clauses, letting a payee get judgment against the maker without a lawsuit, are void in a "consumer loan," a term West Virginia defines narrowly: a lender regularly engaged in the business of making loans, for a personal, family, household, or agricultural purpose, $45,000 or less unless land-secured. Outside that definition, the Commercial Code lists such a clause as one a note can carry without losing negotiable-instrument status. You generally have 10 years 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
West Virginia caps interest on a written promissory note at 8% per year (6% per year by default if no written rate is stated). A debt incurred primarily for a business purpose is exempt from the cap entirely if owed by a business entity, or, if owed by a natural person, exempt once the principal reaches $20,000. (W. Va. Code Section 47-6-5; Section 47-6-11)
- 3
Charging more than the lawful rate (usury) has a stated penalty in West Virginia: the note becomes void as to all interest, and the borrower may recover four times the interest agreed to be paid, with a $100 minimum. (W. Va. Code Section 47-6-6)
- 4
A West Virginia promissory note does not need to be notarized or witnessed to be enforceable. West Virginia's Commercial Code Section 46-3-104 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 filing a lawsuit, are void in a "consumer loan," defined as a loan by a lender regularly engaged in the business of making loans, for a personal, family, household, or agricultural purpose, of $45,000 or less unless secured by land. Outside that definition, the Commercial Code lists a confession-of-judgment authorization as a clause a note can carry without losing negotiability. (W. Va. Code Section 46A-2-117; Section 46-3-104(a)(3)(ii))
- 6
You generally have 10 years from a missed payment or the note's stated due date to sue to collect on a written, signed promissory note in West Virginia. (W. Va. Code Section 55-2-6)
- 7
If a West Virginia promissory note is secured by personal property rather than real property, the lender generally needs to file a UCC-1 financing statement to protect its priority against other creditors. Promissory notes are commonly used for both family loans and business loans in West Virginia. (W. Va. Code Section 46-9-310)
Key decisions before you file
Before you file a Promissory Note in West 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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West Virginia Requirements for Promissory Note
West Virginia does not require a promissory note to be notarized or witnessed to be enforceable. Commercial Code Section 46-3-104'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.
For a written promissory note, the maximum is 8% per annum. Absent a written rate, the default statutory rate is 6% per annum. A business-purpose debt owed by a business entity is exempt from the cap entirely; a business-purpose debt owed by a natural person is exempt once the principal reaches $20,000.
A contract charging more than the lawful rate of interest is void as to all interest, and the borrower may recover from the lender an amount equal to four times all interest agreed to be paid, with a minimum recovery of $100. A usurious contract is presumed willfully made, but a bona fide error corrected within 15 days of notice is not a violation.
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 confession-of-judgment authorization is void in a "consumer loan," "consumer credit sale," or "consumer lease" as those terms are defined by the West Virginia Consumer Credit and Protection Act. Outside that defined scope, the Commercial Code lists a confession-of-judgment authorization as a clause a note may carry without losing its status as a negotiable instrument (Section 46-3-104(a)(3)(ii)).
Generally 10 years from a missed payment or the note's stated due date to sue to collect on a written contract signed by the party to be charged.
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.
No interest-rate limit or usury penalty applies to a debt incurred primarily for a business purpose, or to a refinancing of such a debt. If the debt is incurred by a natural person rather than a business entity, this exemption applies only once the debt's principal amount is $20,000 or more.
Frequently Asked Questions
West Virginia caps interest on a written promissory note at 8% per year, or 6% per year by default if no written rate is stated. A debt incurred primarily for a business purpose is exempt from the cap entirely if the borrower is a business entity, or, if the borrower is a natural person, exempt once the principal reaches $20,000.
No. West Virginia's Commercial Code Section 46-3-104 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 West Virginia's usury cap), the repayment schedule, what counts as default, and the signatures of the maker and payee. If the note qualifies as a "consumer loan" under the West Virginia Consumer Credit and Protection Act, leave out a confession-of-judgment clause, since one would be void.
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 Commercial Code Section 46-3-104: 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 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. A confession-of-judgment clause is void if the loan is a "consumer loan" as West Virginia defines that term (a loan by a lender regularly engaged in the business of making loans, for personal, family, household, or agricultural purposes, of $45,000 or less unless secured by land); outside that definition, West Virginia's Commercial Code allows a note to carry a confession-of-judgment authorization without losing its status as a negotiable instrument.
Generally 10 years from a missed payment or the note's stated due date, under West Virginia's statute of limitations for an action on a written contract signed by the party to be charged (Code Section 55-2-6). 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 West Virginia. The usury cap works differently depending on who's borrowing: a family loan to a natural person is capped at 8% (or exempt only above $20,000 if it's genuinely for a business purpose), while a loan to a business entity for a business purpose is exempt from the cap regardless of size.