Kentucky Secured Promissory Note Overview
A secured promissory note in Kentucky is a loan agreement where the borrower pledges specific collateral to guarantee repayment. Kentucky law governs the creation, perfection, and enforcement of security interests under the Uniform Commercial Code (UCC) as adopted by the state. The maximum interest rate for most loans in Kentucky is 8% (default).
8% default rate; maximum 19% by written agreement for most loans; 4% above Federal Reserve discount rate for some categories. Lenders should verify that the agreed-upon interest rate complies with Kentucky's usury laws before finalizing the note. Charging interest above the legal limit can result in severe penalties, including forfeiture of interest and potential civil liability.
For secured notes involving real property in Kentucky, judicial foreclosure applies. Understanding your state's foreclosure process is critical because it determines the timeline, costs, and lender's rights in the event of borrower default.
8% (default)
Usury rate cap
Secretary of State
UCC filing office
Judicial
Foreclosure type
Yes
Deficiency judgment
Kentucky Legal Requirements
Kentucky has specific requirements for secured promissory notes. Here's what you need to ensure your note is enforceable under KY law:
Important: Kentucky Usury Laws
Kentucky's maximum interest rate is 8% (default). 8% default rate; maximum 19% by written agreement for most loans; 4% above Federal Reserve discount rate for some categories. Exceeding the legal limit may void the interest portion of your note or result in civil penalties.
Essential Elements
- Written Agreement: The note must be in writing, signed by the borrower, and clearly state the loan terms
- Compliant Interest Rate: Must not exceed Kentucky's 8% (default) usury cap
- Collateral Description: Specific, identifiable description of all pledged property
- Security Agreement: Grant of security interest signed by the borrower (debtor)
- UCC-1 Filing: Filed with the Secretary of State, UCC Branch for personal property collateral
- Default Provisions: Clear events of default, cure periods, and remedies including foreclosure/repossession rights
UCC Filing in Kentucky
To perfect a security interest in personal property in Kentucky, the lender must file a UCC-1 financing statement with the Secretary of State, UCC Branch. This public filing puts other creditors on notice and establishes the lender's priority in the collateral.
Prepare the UCC-1 Form
Include the debtor's exact legal name, secured party name, and detailed collateral description
File with the Secretary of State
Submit online or by mail with the required filing fee
Monitor and Renew
UCC-1 filings last 5 years; file a continuation statement before expiration
Terminate After Payoff
File a UCC-3 termination statement when the loan is fully repaid
Kentucky Foreclosure & Repossession
Kentucky uses judicial foreclosure for real property collateral. For personal property (vehicles, equipment, inventory), the lender generally has the right to repossess the collateral without court action, provided it can be done without breaching the peace.
Regarding deficiency judgments in Kentucky: Yes. The lender must follow Kentucky's specific procedures for disposing of collateral in a commercially reasonable manner, providing proper notice to the borrower before any sale.
| Aspect | Kentucky Rule |
|---|---|
| Foreclosure Type | Judicial |
| Deficiency Judgment | Yes |
| Statute of Limitations | 5 years (oral), 15 years (written contracts) |
| Usury Rate | 8% (default) |
| UCC Filing Office | Secretary of State, UCC Branch |
Sample Kentucky Secured Promissory Note
Below is a preview of our Kentucky-specific secured promissory note. Your customized document will include all terms compliant with KY law.
STATE OF KENTUCKY
SECURED PROMISSORY NOTE
Collateral-Backed Loan Agreement
LENDER (Secured Party):
Name: [Lender Name]
Address: [Kentucky Address]
BORROWER (Debtor):
Name: [Borrower Name]
Address: [Kentucky Address]
LOAN TERMS
Principal: $[Amount]
Interest: [Rate]% per annum (max 8% (default) in KY)
Collateral: [Description]
Kentucky Secured Promissory Note FAQ
Answers to common questions about secured promissory notes, UCC filings, and collateral requirements in Kentucky.
Official Kentucky Resources
Use these official resources to verify Kentucky requirements, file UCC documents, and access state legal information.
Other Kentucky Promissory Note Types
Need a different type of promissory note for Kentucky? We offer state-specific templates for every type.
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