• Usury in Florida: Penalties
  • November 12, 2014 | Authors: Scott Jonathan Kennelly; Janet C. (Jacy) Owens
  • Law Firm: Rogers Towers, P.A. - Jacksonville Office
  • There are two "tiers" of penalties for violation of the Florida usury statutes, one civil and the other criminal, and both are severe. Civil penalties usually involve forfeiture of the entire interest charged (or contracted to be charged), such that only the principal balance may be enforced. If a court determines that unlawful usurious interest charges have actually been received by the lender, then double the amount of usurious interest taken or received must be returned to the borrower. Moreover, a lender may forfeit the right to collect the entire debt, including the principal, if a court determines that it has violated the criminal usury statute. Lenders who have committed criminal usury may also face jail time and fines.

    For this reason, it is possible for a borrower to raise usury as a defense to a mortgage foreclosure. For example, Florida’s Third District Court of Appeals has held that a trial court may, in its discretion and as a matter of public policy, refuse to exercise its equitable powers in foreclosure of a mortgage securing a usurious loan. Still, most Florida courts have permitted foreclosures in transactions "tainted with usury" by crafting alternate remedies, such as deducting the usury penalty from the principal balance of the loan and foreclosing the mortgage in the amount of the loan transaction that is not usurious.

    Importantly for lenders, the civil usury penalties only apply if the lender "willfully" charges interest in excess of the limits set forth by statute (that is, the lender must intend to charge usurious interest). There are exceptions to the application of civil usury penalties, which we will discuss in a future post.