Texas Demand Promissory Note Overview
A demand promissory note in Texas is a flexible loan agreement where the lender can request full repayment at any time. There is no fixed maturity date — the loan remains outstanding until the lender makes a formal demand. The maximum interest rate in Texas is 10% (default) / 18% (max).
10% default; 18% max for written contracts; severe usury penalties. Demand notes are commonly used in Texas for family loans, loans between friends, shareholder loans, and informal business financing where both parties want flexibility.
Regarding demand notice in Texas: Demand must be clear and unconditional; no fixed period. The statute of limitations for collecting on a promissory note in Texas is 4 years (oral and written), though the start date for demand notes can vary.
10% (default) / 18% (max)
Usury rate cap
On Demand
No fixed maturity
4 years
Statute of limitations
30 Days
Recommended notice
Texas Legal Requirements
Texas has specific requirements for demand promissory notes:
Important: Texas Usury & Demand Rules
Texas's maximum interest rate is 10% (default) / 18% (max). Demand must be clear and unconditional; no fixed period. Specify a clear notice period in your note to avoid disputes.
- Written Agreement: Must be in writing and signed by the borrower
- Demand Clause: Clearly state the note is “payable on demand”
- Notice Period: Specify days borrower has to pay after written demand (30-90 days recommended)
- Compliant Interest Rate: Must not exceed Texas's 10% (default) / 18% (max) usury cap
- Delivery Method: Specify how demand must be delivered (certified mail recommended)
- Governing Law: Specify Texas as the governing jurisdiction
Making a Demand in Texas
When the lender is ready to call in the loan, they must follow proper demand procedures:
Prepare the Demand Letter
State the total amount owed (principal + accrued interest), reference the original note, and specify the deadline for payment
Send via Certified Mail
Send the demand letter by certified mail with return receipt to prove delivery under Texas law
Wait the Notice Period
Allow the borrower the full notice period specified in the note (or a reasonable time if not specified) to arrange payment
Pursue Collection if Unpaid
Demand letter, suit in justice or district court
Collection Procedures in Texas
If the borrower fails to pay after a proper demand, the lender can pursue legal remedies in Texas.
| Aspect | Texas Rule |
|---|---|
| Usury Rate | 10% (default) / 18% (max) |
| Demand Notice | Demand must be clear and unconditional; no fixed period |
| Statute of Limitations | 4 years (oral and written) |
| Collection Procedure | Demand letter, suit in justice or district court |
Sample Texas Demand Promissory Note
Below is a preview of our Texas-specific demand promissory note template.
STATE OF TEXAS
DEMAND PROMISSORY NOTE
Payable on Demand — No Fixed Maturity
FOR VALUE RECEIVED, the undersigned promises to pay ON DEMAND to the order of Lender the sum of $[Amount]
LENDER:
Name: [Lender Name]
Address: [Texas Address]
BORROWER:
Name: [Borrower Name]
Address: [Texas Address]
TERMS
Interest: [Rate]% per annum (max 10% (default) / 18% (max) in TX)
Payable within 30 days of written demand by Lender
Texas Demand Promissory Note FAQ
Answers to common questions about demand promissory notes in Texas.
Official Texas Resources
Official resources for Texas lending laws and court procedures.
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