Free Washington DC Promissory Note Template

A Washington DC promissory note is a signed, written promise to repay money on set terms. The District draws a sharp line between written and unwritten terms. A written instrument can carry up to 24 percent, while silence leaves a far lower figure.

Chapter 33 of Title 28 of the D.C. Code covers interest and usury. Section 28-3301 sets the contract rate, and § 28-3303 defines usury.

24% in a Written Instrument

Section 28-3301(a) covers an instrument in writing for the payment of money at a future time. In one, the parties may contract for interest on the principal at up to 24 percent a year. That figure is subject to the rest of the section, to § 28-3308, and to chapter 36 of the subtitle.

The Same Cap on Home-Secured Loans

Meanwhile, subsection (b) extends the 24 percent figure to secured lending. It covers a loan secured by a first purchase mortgage or first purchase deed of trust on residential real property. The same goes for first purchase security interests connected with a cooperative housing organization. An assignment of the borrower’s proprietary lease or right of tenancy counts too.

Where No Rate Is Expressed

Then § 28-3302 handles the gap. Its title covers both a rate not expressed and interest on judgments. The rate that applies absent a contract is substantially lower than the written ceiling, so the writing is what unlocks the higher figure.

Other Sections in the Chapter

Also, several nearby sections shape how the chapter works, judging by their titles:

• § 28-3304, action to recover usury paid
• § 28-3305, unlawful interest credited on the principal debt
• § 28-3311, definition of interest
• § 28-3312 and § 28-3313, unlawful practices and penalties
• § 28-3314, right of action
• § 28-3315, exemption of institutions of higher learning from the usury law

The creditor forfeits all the interest. Section 28-3303 defines usury, and its consequence is stated without qualification.

Say a person contracts in writing to pay a greater rate than the law permits. That covers the limits in § 28-3301 and § 28-3308, in chapter 36 of the subtitle, and in § 26-301 and following. Then the creditor forfeits the whole of the interest contracted to be received. However, note the scope: the forfeiture covers the entire interest, not just the portion above the ceiling.

Meanwhile, recovery is available as well. Section 28-3304’s title is an action to recover usury paid, while § 28-3305 covers unlawful interest credited on the principal debt. So a borrower who has already paid has routes beyond a defense.

Tip: The whole interest is at stake, not just the excess. Keep the rate on a Washington DC promissory note clearly inside 24 percent, and count any charges that could be treated as interest.

As always, the writing does the work here. Follow these steps:

1. Put the loan in an instrument in writing for payment at a future time.
2. State the rate in that instrument, since an unwritten rate falls to a lower figure.
3. Keep the rate at or below 24 percent a year on the principal.
4. Check whether the loan is secured by a home or cooperative interest, which has its own subsection.
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 usual terms apply, because the rate has to be expressed in the instrument.

• Lender and borrower names and addresses
• Principal amount
• Annual interest rate, stated in the written instrument
• Any charges beyond interest
• Payment schedule and future payment date
• Late payment and default terms
• Collateral, including any first purchase mortgage or deed of trust
• Signatures and dates

Document Genius’s guided form walks you through each term, so your Washington DC promissory note template is ready to download or e-sign in minutes.