Free Massachusetts Promissory Note Template

A Massachusetts promissory note is a signed, written promise to repay money on set terms. Two numbers shape it. Above 6%, the rate has to be in writing before a lender can recover it, while 20% is where criminal usury begins.

Chapter 107 of the General Laws sets the civil rate rules. Meanwhile, Chapter 271 carries the criminal usury statute.

6% Without an Agreement

Under G.L. c. 107, § 3, interest runs at six dollars on each hundred for a year. That applies where there is no agreement, or provision of law, for a different rate.

Any Rate, If You Write It Down

The same section is permissive about higher rates. Apart from certain sections of chapter 140, it is lawful to pay, reserve, or contract for any rate of interest or discount. However, no greater rate than 6% may be recovered in a suit unless the agreement to pay it is in writing.

The 20% Criminal Line

Chapter 271, § 49(a) draws the criminal line. It covers knowingly contracting for, charging, taking, or receiving interest and expenses whose aggregate exceeds 20% a year on the sum loaned. Direct and indirect charges both count. So does the equivalent rate over a longer or shorter period. If convicted, a lender faces up to ten years in state prison, a fine of up to $10,000, or both.

A Court Can Void the Loan

In addition, the Attorney General’s Office states that § 49(c) allows the Supreme Judicial Court to declare a loan at such a rate void.

The Attorney General Notice

However, § 49(d) offers a way out of paragraphs (a) to (c). It doesn’t apply to a person who notifies the Attorney General of an intent to engage in such transactions. Those notifications last two years and must give the person’s name and accurate address, and the office now accepts copies through an online portal.

Then record-keeping comes with that route. The records must show the borrower’s name and address, the amount borrowed, and the interest and expenses the borrower will pay. On top of that come the date of the loan and the dates payments fall due. Those records stay confidential, but must go to the Attorney General for inspection on request. Finally, advertising the notification publicly, or using it to solicit business, carries a $1,000 fine.

Twenty percent a year, counting expenses. Because the criminal usury statute measures interest and expenses in the aggregate, fees and charges count toward that figure rather than sitting outside it.

Below that line, though, the civil rules are permissive. Any rate may be contracted for, but only a written agreement lets a lender recover more than 6% in court.

Above the line, one narrow route exists. That is the notice to the Attorney General under § 49(d), with the record-keeping that goes with it. Even so, that is a lender’s compliance step rather than something to reach for on a family loan.

Tip: Add up the fees before you set the rate. An 18% Massachusetts promissory note with a few points of charges can cross the 20% line, especially if the loan is repaid early.

As always, write the rate down and total the cost. Use these steps:

1. Agree the principal, the schedule, and an annual rate.
2. Put the rate in writing, since above 6% nothing else is recoverable in court.
3. Add up interest plus every expense as an annual figure.
4. Keep that total clearly below 20%.
5. Have the borrower and any cosigner sign, and date the note.
6. Give each party a copy, and keep a record of every payment.

Here too, the standard terms apply, with the full cost of the loan visible.

• Lender and borrower names and addresses
• Principal amount
• Annual interest rate, in writing
• Every expense or charge the borrower pays
• Payment schedule and due dates
• Late payment and default terms
• Collateral, if secured
• Signatures and dates

Start your Massachusetts promissory note template with Document Genius’s step-by-step questionnaire, and have it ready to sign in minutes.