New York Secured Promissory Note Overview
A secured promissory note in New York is a loan agreement where the borrower pledges specific collateral to guarantee repayment. New York 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 New York is 16% civil / 25% criminal.
16% per annum civil usury cap; 25% criminal usury; no cap for business loans over $2.5 million or certain real estate loans. Lenders should verify that the agreed-upon interest rate complies with New York'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 New York, 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.
16% civil / 25% criminal
Usury rate cap
Department of State
UCC filing office
Judicial
Foreclosure type
Yes
Deficiency judgment
New York Legal Requirements
New York has specific requirements for secured promissory notes. Here's what you need to ensure your note is enforceable under NY law:
Important: New York Usury Laws
New York's maximum interest rate is 16% civil / 25% criminal. 16% per annum civil usury cap; 25% criminal usury; no cap for business loans over $2.5 million or certain real estate 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 New York's 16% civil / 25% criminal 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 Department of State, Division of Corporations, UCC Section for personal property collateral
- Default Provisions: Clear events of default, cure periods, and remedies including foreclosure/repossession rights
UCC Filing in New York
To perfect a security interest in personal property in New York, the lender must file a UCC-1 financing statement with the Department of State, Division of Corporations, 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 Department 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
New York Foreclosure & Repossession
New York 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 New York: Yes, within 90 days of sale. The lender must follow New York's specific procedures for disposing of collateral in a commercially reasonable manner, providing proper notice to the borrower before any sale.
| Aspect | New York Rule |
|---|---|
| Foreclosure Type | Judicial |
| Deficiency Judgment | Yes, within 90 days of sale |
| Statute of Limitations | 6 years (oral and written contracts) |
| Usury Rate | 16% civil / 25% criminal |
| UCC Filing Office | Department of State, Division of Corporations, UCC Section |
Sample New York Secured Promissory Note
Below is a preview of our New York-specific secured promissory note. Your customized document will include all terms compliant with NY law.
STATE OF NEW YORK
SECURED PROMISSORY NOTE
Collateral-Backed Loan Agreement
LENDER (Secured Party):
Name: [Lender Name]
Address: [New York Address]
BORROWER (Debtor):
Name: [Borrower Name]
Address: [New York Address]
LOAN TERMS
Principal: $[Amount]
Interest: [Rate]% per annum (max 16% civil / 25% criminal in NY)
Collateral: [Description]
New York Secured Promissory Note FAQ
Answers to common questions about secured promissory notes, UCC filings, and collateral requirements in New York.
Official New York Resources
Use these official resources to verify New York requirements, file UCC documents, and access state legal information.
Other New York Promissory Note Types
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