Michigan Secured Promissory Note Overview
A secured promissory note in Michigan is a loan agreement where the borrower pledges specific collateral to guarantee repayment. Michigan 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 Michigan is 7% (default).
7% default rate; 25% criminal usury cap; parties may agree to any rate by written contract for non-consumer loans. Lenders should verify that the agreed-upon interest rate complies with Michigan'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 Michigan, non-judicial (by advertisement) and 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.
7% (default)
Usury rate cap
Secretary of State
UCC filing office
Non-judicial
Foreclosure type
Yes (judicial only)
Deficiency judgment
Michigan Legal Requirements
Michigan has specific requirements for secured promissory notes. Here's what you need to ensure your note is enforceable under MI law:
Important: Michigan Usury Laws
Michigan's maximum interest rate is 7% (default). 7% default rate; 25% criminal usury cap; parties may agree to any rate by written contract for non-consumer loans. 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 Michigan's 7% (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 Section for personal property collateral
- Default Provisions: Clear events of default, cure periods, and remedies including foreclosure/repossession rights
UCC Filing in Michigan
To perfect a security interest in personal property in Michigan, the lender must file a UCC-1 financing statement with the Secretary of State, UCC Section. 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
Michigan Foreclosure & Repossession
Michigan uses non-judicial (by advertisement) and 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 Michigan: Yes (judicial only); limited after non-judicial foreclosure. The lender must follow Michigan's specific procedures for disposing of collateral in a commercially reasonable manner, providing proper notice to the borrower before any sale.
| Aspect | Michigan Rule |
|---|---|
| Foreclosure Type | Non-judicial (by advertisement) and judicial |
| Deficiency Judgment | Yes (judicial only); limited after non-judicial foreclosure |
| Statute of Limitations | 6 years (oral and written contracts) |
| Usury Rate | 7% (default) |
| UCC Filing Office | Secretary of State, UCC Section |
Sample Michigan Secured Promissory Note
Below is a preview of our Michigan-specific secured promissory note. Your customized document will include all terms compliant with MI law.
STATE OF MICHIGAN
SECURED PROMISSORY NOTE
Collateral-Backed Loan Agreement
LENDER (Secured Party):
Name: [Lender Name]
Address: [Michigan Address]
BORROWER (Debtor):
Name: [Borrower Name]
Address: [Michigan Address]
LOAN TERMS
Principal: $[Amount]
Interest: [Rate]% per annum (max 7% (default) in MI)
Collateral: [Description]
Michigan Secured Promissory Note FAQ
Answers to common questions about secured promissory notes, UCC filings, and collateral requirements in Michigan.
Official Michigan Resources
Use these official resources to verify Michigan requirements, file UCC documents, and access state legal information.
Other Michigan Promissory Note Types
Need a different type of promissory note for Michigan? We offer state-specific templates for every type.
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