- Usury in Florida: Exceptions to Civil Penalties
- December 29, 2014 | Authors: Scott Jonathan Kennelly; Janet C. (Jacy) Owens
- Law Firm: Rogers Towers, P.A. - Jacksonville Office
When a lender “willfully” charges interest in excess of statutory limits, civil usury penalties may apply. However, Florida’s usury statutes provide for two exceptions to the application of civil usury penalties.
The first exception applies to purchasers or transferees of a loan purchased prior to its maturity date. In that case, purchasers or transferees will not be liable for civil penalties unless the usurious nature of the loan document is apparent on its face, or unless the purchaser or transferee had actual notice of the usurious nature of the document before it was purchased. Of course, a purchaser or transferee would be liable if it took any usurious action after its purchase of the loan.
The second exception involves “repenting lenders.” If the borrower has not filed a lawsuit (or asserted a defense or claim in an existing lawsuit) regarding the usurious transaction, or if the borrower has not notified the lender in writing that usurious interest has been charged or collected, the lender has the opportunity to “repent.” Such repentance involves: (1) notifying the borrower of the usurious overcharge; (2) refunding to the borrower all of the overcharge, together with interest at the maximum lawful rate in effect at the time the usurious overcharge was taken; and (3) taking whatever steps are necessary to ensure that the borrower will not be required to pay additional usurious overcharges in the future. Compliance with these steps will not render the loan non-usurious, but it will prevent application of civil penalties under the usury statutes.
Thus, if lenders become aware that a loan transaction violates Florida’s usury statutes, actions may need to be taken to avoid civil penalties. Lenders should consult with an attorney if in doubt as to what actions are needed.