Washington Secured Promissory Note Overview
A secured promissory note in Washington is a loan agreement where the borrower pledges specific collateral to guarantee repayment. Washington 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 Washington is 12%.
12% per annum maximum or 4% above the 26-week T-bill rate, whichever is greater; higher rates for certain licensed lenders. Lenders should verify that the agreed-upon interest rate complies with Washington'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 Washington, 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.
12%
Usury rate cap
Department of Licensing
UCC filing office
Non-judicial
Foreclosure type
Not available after non-judicial foreclosure
Deficiency judgment
Washington Legal Requirements
Washington has specific requirements for secured promissory notes. Here's what you need to ensure your note is enforceable under WA law:
Important: Washington Usury Laws
Washington's maximum interest rate is 12%. 12% per annum maximum or 4% above the 26-week T-bill rate, whichever is greater; higher rates for certain licensed lenders. 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 Washington's 12% 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 Licensing, UCC Section for personal property collateral
- Default Provisions: Clear events of default, cure periods, and remedies including foreclosure/repossession rights
UCC Filing in Washington
To perfect a security interest in personal property in Washington, the lender must file a UCC-1 financing statement with the Department of Licensing, 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 Licensing
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
Washington Foreclosure & Repossession
Washington 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 Washington: Not available after non-judicial foreclosure; Yes for judicial. The lender must follow Washington's specific procedures for disposing of collateral in a commercially reasonable manner, providing proper notice to the borrower before any sale.
| Aspect | Washington Rule |
|---|---|
| Foreclosure Type | Non-judicial (deed of trust, most common) and judicial |
| Deficiency Judgment | Not available after non-judicial foreclosure; Yes for judicial |
| Statute of Limitations | 3 years (oral), 6 years (written contracts) |
| Usury Rate | 12% |
| UCC Filing Office | Department of Licensing, UCC Section |
Sample Washington Secured Promissory Note
Below is a preview of our Washington-specific secured promissory note. Your customized document will include all terms compliant with WA law.
STATE OF WASHINGTON
SECURED PROMISSORY NOTE
Collateral-Backed Loan Agreement
LENDER (Secured Party):
Name: [Lender Name]
Address: [Washington Address]
BORROWER (Debtor):
Name: [Borrower Name]
Address: [Washington Address]
LOAN TERMS
Principal: $[Amount]
Interest: [Rate]% per annum (max 12% in WA)
Collateral: [Description]
Washington Secured Promissory Note FAQ
Answers to common questions about secured promissory notes, UCC filings, and collateral requirements in Washington.
Official Washington Resources
Use these official resources to verify Washington requirements, file UCC documents, and access state legal information.
Other Washington Promissory Note Types
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