The remedies provided under this act are in addition to any other procedures or remedies for any violation or conduct provided for in any other law. Notwithstanding any other provision of this section, any lessor or merchant, or any person who lends money or extends any other form of credit, who is regularly engaged in the business of selling or leasing merchandise, goods, or services which are for other than personal, family, or household purposes, or any assignee of such lessor, merchant, or person who lends money or extends any other form of credit, who is the holder of a commercial installment contract, each of which persons or entities is subject to the laws of any jurisdiction of the United States, any state, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or insular possession of the United States, may, if the contract so provides, charge a delinquency charge on each installment which is in default for a period of not less than 10 days in an amount not in excess of 5 percent of such installment. 1996); Diversifield Enter., Inc. v. West, 141 So. There are several key provisions of the law that you should know about: We should note here that while these protections look impressive, payday loans that operate within them are still predatory and its best to avoid them. The Legislature finds that the discontinuation of the London Interbank Offered Rate (LIBOR) as a viable interest rate threatens the continued viability of certain contracts, securities, and instruments and the rights of the parties to those contracts, securities, or instruments. 687.06 Attorney's fee in enforcing nonusurious contracts; proviso; 97-102; s. 1877, ch. 29705, 1955; s. 1, ch. Therefore, courts should not relieve borrowers of the obligation to prove the lenders corrupt intent to violate the law. There are many exceptions to usury. 1968). Person lending money to give borrower receipt for payments; contents of receipt; penalty for violation. Furthermore, the threat of unknown and potentially unbounded liability and the viability of contracts, securities, and instruments threatens the states economy and has created an overpowering public necessity to provide an immediate and remedial legislative solution. However, Floridas usury statutes provide for two exceptions If you would like to know more about usury laws, or if you would like to discuss the specifics of your case with a legal professional, there are many attorneys throughout Florida with usury experience who may be able to help. The office may order a loan broker to cease and desist whenever the office determines that the loan broker has violated or is violating or will violate any provision of this act, any rule of the commission, order of the office, or written agreement entered into with the office. 71-136; s. 747, ch. No lender may charge more than 18% interest for loans less than $500,000. Used in any determination of the benchmark under or with respect to the contract, security, or instrument occurring on and after the LIBOR replacement date. A commitment to guarantee by the United States Department of Veterans Affairs. Publications, Help Searching Extension of credit means to make or renew a loan of money or any agreement for forbearance to enforce the collection of such loan. 6 Chandler v. Kendrick, 146 So. The provisions of this chapter shall not apply to any international banking facility deposit, borrowing, or extension of credit, as those terms are defined by the commission pursuant to s. 655.071. s. 1, ch. 687.03 indicates that it constitutes usury for any person to willfully reserve, charge, or take a sum of money equivalent to a rate of interest greater than 18 percent.46 Skillful attorneys will litigate over what is meant by willful in this context. 2003-261. CHAPTER 687 INTEREST AND USURY; LENDING PRACTICES. Without guidance from the legislature, it is difficult for investors and lenders to anticipate the potential consequences of their agreements.18. This percentage shall then be divided by the number of years, and fractions thereof, of the loan, advance of money, line of credit, forbearance to enforce collection of a debt, or other obligation according to its stated maturity date, without regard to early maturity in the event of default. The lender may not charge a higher interest rate than they did for the initial loan. 77-374; s. 1, ch. 91-87; s. 749, ch. Predatory lending isnt limited to payday loans. 1958); see also River Hills, Inc. v. Edwards, 190 So. Web687.04 Penalty for usury; not to apply in certain situations. Web687.04 Penalty for usury; not to apply in certain situations. Section 2, ch. Ann. 70-331; s. 2, ch. Office means the Office of Financial Regulation of the commission. 1985). 2d 451, 456 (Fla. 5th D.C.A. Florida's interest rate laws are designed to protect consumers when they need loans. 2023 The Florida Bar. WebUnder Florida's usury law, s. 687.03, F. S., a mortgage guarantee premium which is paid to someone other than the lender in connection with a home mortgage loan is not required 5960, 1909; RGS 4856; CGL 6943; s. 4, ch. No provision for the payment of attorneys fees, or charge for exchange or similar charge shall render such instrument subject to the terms of any statute of this state, limiting the amount of interest which shall be charged on such instrument. 39 See, e.g., Harvey,568 F. Supp. 5960, 1909; RGS 4850; CGL 6937; s. 1, ch. 4374, 1895; GS 3107; RGS 4853; CGL 6940. 84-193. This does not mean that your lender is necessarily violating the law. Recharacterization of Equity Share as Interest Turning to the hypothetical scenario set forth in the introduction, there is very little Florida case law as to whether a lenders equity share should be deemed interest in a hybrid debt/equity investment.19 In Jersey Palm-Gross, Inc. v. Paper, 658 So. See also Lord v. Hodge, 209 So. Generally speaking, Florida courts are fairly restrictive when it comes to dealing with issues involving usury and lending practices. 43 Rebman v. Flagship First Natl Bank of Highlands County, 472 So. 1966). Creditor means a person who extends credit under a credit agreement with a debtor. In order to protect consumers from imbalanced lending practices, Florida has passed laws to limit interest rates even though consumers still have the option to waive those protections. 79-592; s. 1, ch. 2d 1354, 1365 (M.D. 49 Oregrund Ltd. Pship v. Sheive, 873 So. Or, some may be paying a high interest rate, and don't know if the interest rate laws apply to their specific loan. Recommended spread adjustment means a spread adjustment, or method for calculating or determining the spread adjustment, which has been selected or recommended by a relevant recommending body for a recommended benchmark replacement for a particular type of contract, security, or instrument and for a particular term to account for the effects of the transition or change from LIBOR to a recommended benchmark replacement. However, the penalties provided for by this section shall not apply: To a bona fide endorsee or transferee of negotiable paper purchased before maturity, unless the usurious character should appear upon its face, or unless the said endorsee or transferee shall have had actual notice of the same before the purchase of such paper, but in such event double the amount of such usurious interest may be recovered after payment, by action against the party originally exacting the same, in any court of competent jurisdiction in this state, together with an attorneys fee, as provided in s. 687.06; or. It is a basic principle of statutory construction that all provisions of a statute should be given effect.49 The willful requirement would have no effect if a borrower only needed to establish that the lender charged or received interest in excess of the legal rate. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. from the University of Miami School of Law, where he was an editor of the Inter-American Law Review. At FindLaw.com, we pride ourselves on being the number one source of free legal information and resources on the web. 2d 713, 714 (Fla. 4th D.C.A. 5 John D. Skees, Comment, The Resurrection of Historic Usury Principles for Consumption Loans in a Federal Banking System, 55 Cath. Jersey Palm-Gross suggests that a capital partner might include a usury savings clause in a loan agreement to create an opportunity to later claim a lack of corrupt intent.39 However, a contractual disclaimer, such as a usury savings clause, is not a silver bullet. In Jersey Palm-Gross, the inclusion of a usury savings clause did not warrant an automatic dismissal of a usury cause of action.40 The presence of a usury savings clause is only one factor in determining whether the lender possessed intent to exact a usurious rate of interest.41. A spread adjustment, or method for calculating or determining a spread adjustment, which is not a recommended spread adjustment. The office may make investigations and examinations upon reasonable suspicion within or outside of this state as it deems necessary to determine whether a person has violated or is about to violate any provision of this act or any rule or order promulgated thereunder. Copyright 2000- 2023 State of Florida. In making loans or extensions of credit at a rate of interest that, but for this section, would not be authorized, lenders or creditors shall indicate on the promissory note or other instrument evidencing the loan or extension of credit the specific chapter of the Florida Statutes authorizing the interest rate charged. 97-102; s. 1, ch. Javascript must be enabled for site search. 16 In re Boiling, 2008 WL 5100204 *7 (M.D. A reasonable, comparable, or analogous term for LIBOR under or with respect to the contract, security, or instrument. All rights reserved. Any person, or any agent, officer, or other representative of any person, willfully violating the provisions of s. 687.03 shall forfeit the entire interest so charged, or contracted to be charged or reserved, and only the actual principal sum of such usurious contract can be enforced in any court in this state, either at law or in equity; and when said usurious interest is taken or reserved, or has been paid, then and in that event the person who has taken or reserved, or has been paid, either directly or indirectly, such usurious interest shall forfeit to the party from whom such usurious interest has been reserved, taken, or exacted in any way double the amount of interest so reserved, taken, or exacted. There are also some relative statutory provisions that impact lending practices in Florida in Title 33 of the Florida Code. Firms, Determined by comptroller of state by averaging the discount rate of the Federal Reserve Bank of New York for the preceding year and adding 500 basis points to the averaged federal discount rate (, Penalty for Usury (Unlawful Interest Rate), All interest forfeited and repaid double (, Set yearly by the state comptroller by averaging discount rate of Fed. In making loans or extensions of credit, lenders or creditors shall be subject only to the licenses, examinations, regulations, documents, procedures, and disclosures required by the respective laws under which each lender or creditor is licensed or organized, and not to those required by laws governing other lenders or creditors. Your biggest concern is whether Ms. 560.402 and following) to limit what payday lenders can charge and protect consumers from their predatory lending practices. or savings and loan associations, from the restrictions of their usury laws. 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