Texas Secured Promissory Note Overview
A secured promissory note in Texas is a loan agreement where the borrower pledges specific collateral to guarantee repayment. Texas 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 Texas is 10% (default) / 18% (max).
10% default rate; 18% maximum for written contracts (28% for certain commercial loans); penalties for usury include forfeiture of interest plus borrower may recover three times the usurious interest. Lenders should verify that the agreed-upon interest rate complies with Texas'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 Texas, non-judicial (deed of trust, most common) 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.
10% (default) / 18% (max)
Usury rate cap
Secretary of State
UCC filing office
Non-judicial
Foreclosure type
Yes
Deficiency judgment
Texas Legal Requirements
Texas has specific requirements for secured promissory notes. Here's what you need to ensure your note is enforceable under TX law:
Important: Texas Usury Laws
Texas's maximum interest rate is 10% (default) / 18% (max). 10% default rate; 18% maximum for written contracts (28% for certain commercial loans); penalties for usury include forfeiture of interest plus borrower may recover three times the usurious interest. 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 Texas's 10% (default) / 18% (max) 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 Texas
To perfect a security interest in personal property in Texas, 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
Texas Foreclosure & Repossession
Texas uses non-judicial (deed of trust, most common) 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 Texas: Yes, with fair market value protection. The lender must follow Texas's specific procedures for disposing of collateral in a commercially reasonable manner, providing proper notice to the borrower before any sale.
| Aspect | Texas Rule |
|---|---|
| Foreclosure Type | Non-judicial (deed of trust, most common) and judicial |
| Deficiency Judgment | Yes, with fair market value protection |
| Statute of Limitations | 4 years (oral and written contracts) |
| Usury Rate | 10% (default) / 18% (max) |
| UCC Filing Office | Secretary of State, UCC Section |
Sample Texas Secured Promissory Note
Below is a preview of our Texas-specific secured promissory note. Your customized document will include all terms compliant with TX law.
STATE OF TEXAS
SECURED PROMISSORY NOTE
Collateral-Backed Loan Agreement
LENDER (Secured Party):
Name: [Lender Name]
Address: [Texas Address]
BORROWER (Debtor):
Name: [Borrower Name]
Address: [Texas Address]
LOAN TERMS
Principal: $[Amount]
Interest: [Rate]% per annum (max 10% (default) / 18% (max) in TX)
Collateral: [Description]
Texas Secured Promissory Note FAQ
Answers to common questions about secured promissory notes, UCC filings, and collateral requirements in Texas.
Official Texas Resources
Use these official resources to verify Texas requirements, file UCC documents, and access state legal information.
Other Texas Promissory Note Types
Need a different type of promissory note for Texas? We offer state-specific templates for every type.
Create Your Texas Secured Promissory Note
Answer a few questions and download your Texas-compliant secured note in minutes.
No account required. Free to create and preview.