(a) A creditor may enter into and invoice a debtor and receive interest or time price differences from a debtor. Section 304.002 of the Texas Financial Code states: Ҥ 304.002. Judgment Interest rate: interest rate or price difference over time in the contract A pecuniary judgment of a court of that State on a contract providing for interest or a price difference over time shall earn interest according to the judgment at the lower of the following rates: (1) the rate of interest specified in the contract, which may be a variable rate; or (2) 18% per annum. Confusion about conditional obligations Texas law is unclear as to whether a conditional bond can constitute a disguised interest leading to usury. Fed. Service. & Loan Ins. Corp. v. Griffin, 935 F.2d 691, 700 n.5 (5th Cir. 1991). A number of cases conclude that a conditional obligation may not be the basis for usury. See, for example, Beavers v.

Taylor, 434 pp.2d 230 (Tex. App.—Waco 1968, writ ref`d n.r.e.); Fin. Sec. Servs., Inc. v Phase I Electronics of W. Texas, Inc., 998 S.W.2d 674, 681–82 (Tex. App.—Amarillo 1999, pet. denied). However, a separate set of cases asserts that “a contract is usurious if there is a type or contingency by which the lender could receive more than the maximum interest rate permitted by law.” See, for example, Dixon v.

Brooks, 678 pp.2d 728, 729 (Tex. App.—Houston [14th Dist.] 1984, writ ref`d n.r.e); Grotjohn Precise Connexiones Intern., S.A. v. JEM Fin., Inc., 12 S.W.3d 859, 876 (Tex. App.—Texarkana 2000, without pet). The Texas Supreme Court provided some guidance on the issue, noting that it supported Beavers for the proposition that a conditional obligation to pay an amount was a factor in determining whether the amount was disguised interest, and clarified that “uncertainty as to the value of a contractual right asserted by a debtor raises doubts as to whether that value qualifies as interest.” First USA Mgmt., Inc. v. Esmond, 960 S.W.2d 625, 628 (Texas 1997).

The notices are available on the Commissioner`s website. www.occc.texas.gov/publications/interest-rates The attrition rate in Texas is ten (10) percent per annum, unless otherwise required by law. Tex. Fin. Code ann. § 302.001. The ten percent usury rate means virtually nothing, as the interest limits in Chapter 303 of Subchapter A of the Texas Financial Code create an exception to the usury rule, which more or less swallows up the rule as a whole. “Subject to the provisions of Subchapter B [primarily with respect to credit cards], a person may contract, charge or receive an interest rate or an amount that does not exceed the applicable interest rate limit set out in this Chapter.” Code ann. § 303.001. “The parties to a written agreement may agree on an interest rate.

that does not exceed the applicable weekly limit. » Code ann. § 303.002. In principle, most loans can calculate the weekly cap, which will usually be much higher than the usurious rate of ten (10) percent, making the default rate rarely applicable. The weekly rate can be found in the Texas Credit Letter, published weekly by the Texas Office of Consumer Credit Commissioner at 2601 N. Lamar Blvd., Austin, Texas 78705-4207. In Texas` letter of credit dated April 16, 2019, the weekly interest limit was 18.00%. The Texas letter of credit can be found online: occc.texas.gov/publications/interest-rates Texas usury laws can be a nasty surprise for any business because the penalties are so severe. The creditor may be liable to the debtor for (1) three times the agreed-upon excess interest on the interest calculated or received, or (2) $2,000.00 or 20% of the principal amount, whichever is less. The penalty is deducted from the principal amount owing, which may mean that the creditor is actually liable to the debtor. The situation is getting worse. If more than double the legal interest rate is agreed, calculated or received, the creditor can also lose the principal amount of the debt and be charged with a misdemeanor – with a penalty of up to $1,000.00! Penalties for a usurious business transaction In Texas, the mere conclusion of usurious interest is sufficient for a borrower to assert a claim for usury. Tex.

Fin. Code ann. § 305.001(a-1) (West 2013); Bernie`s Custom Coach of Texas, Inc. v. Small Bus. Admin., 987 F.2d 1195, 1197 (5th Cir. 1993) (citations omitted). Of course, the actual receipt of usurious interest by the lender also leads to a claim for usury. Tex.

Fin. Code ann. § 305.001(a-1). Subject to certain defenses the lender may make, the borrower`s usury claim entitles the borrower to recover two major penalties from the lender. First, the lender must pay the borrower three times the difference between usurious interest rates and the maximum interest rates permitted by law. Second, the lender must pay the borrower`s reasonable attorneys` fees, as determined by a court. Tex. Fin. Code Ann.

§ 305.005 (West 2013). According to Article 302,002, the maximum statutory interest rate of the State is six per cent per annum. According to article 304.002, the interest rate on monetary judgments is 18% per annum. If the judgment is based on a contract setting a different interest rate, the interest will be equal to the lower interest rate specified in the transaction. “For the purpose of determining whether a loan secured in part by an interest in immovable property, including a lien, mortgage or security, is usurious, the interest rate shall be calculated by amortizing or distributing at any time all interest incurred, calculated or received on the loan, using the actuarial method during the specified term of the loan.” Code Ann. § 302.101. “The Civil Court of Appeal wrongly pointed to the labels imposed by the Savings and Credit Association on fees as a check on their actual nature. It has often been said that when determining the existence or non-existence of usury, courts will look beyond the form of the transaction to examine its content. Gonzales County Sav. & Loan Ass`n v. Freeman, 534 S.W.2d 903, 906 (Tex. 1976).

“This rule applies equally to borrowers and lenders. Labels imposed on specific fees are not controlling.