SOL M. ROSS, AS TRUSTEE OF DAVID SCOTT ROSS AND JO ANNE ROSS TRUST, APPELLANT,
v.
STEVE M. BARNETT AND LOIS M. ROSS, AS TRUSTEES OF THE BARNETT FAMILY TRUST, APPELLEES
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Section 687.03(5)(a) applies retroactively to pre-July 1, 1979 loans with adjustable interest rates, and a promissory note with a fluctuating rate pegged to prime is an adjustable-rate note excepted from usury limits, making excess interest a breach of contract claim rather than usury.
A promissory note with a fluctuating interest rate pegged to a prime rate is an adjustable-rate note excepted from the usury statute, and the 18% interest rate ceiling in section 687.03(5)(a) applies retroactively to loans made before July 1, 1979 if the lender has a contractual right to adjust the rate.
[1] A promissory note with an interest rate that fluctuates within a specified range and is pegged to a prime interest rate constitutes an adjustable-rate note excepted from…
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Join FLexlaw to unlock all legal intelligenceRoss, as trustee, loaned $75,000 via promissory note executed in 1975 with a fluctuating interest rate between 6% and 10% pegged to prime. Barnett and…
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FERGUSON, Judge.
Section 687.03(5)(a), Florida Statutes (1979) which raised the legal interest rate ceiling from 10% to 18% has retroactive application to loans made prior to July 1, 1979, where by terms of the contract the lender has the legal right to adjust the interest rate.1 U.P.C., Inc. v. Intercontinental Bank, 410 So. 2d 554 (Fla. 3d DCA 1982). The $75,000 promissory note in this case, executed in 1975 provides for a fluctuating rate of interest (between 6% and 10%) pegged to a prime interest rate and is, therefore, an adjustable interest rate note which is excepted from the usury statute, notwithstanding the fact that the interest rate cannot exceed 10%. If, as contended, the appellees have exacted interest in excess of 10%, but less than 18%, the appellants have an action for breach of contract, but the interest charged in excess of 10% is not usurious.
Summary judgment granted on the usury claim is AFFIRMED.
. § 687.03 “Unlawful rates of interest” defined; proviso.—
(1) Except as provided herein, it shall be usury and unlawful for any person, or for any agent, ... to reserve, charge, or take for any loan, advance of money ... a rate of interest greater than the equivalent of 18 percent per annum simple interest....
**
(5) As amended by Chapter 79-592, Laws of Florida, Chapter 79-274, Laws of Florida, which amended subsection (1):
(a) Shall apply only to loans, ... made on or subsequent to July 1, 1979, and to loans ... made prior to that date if the lender has the legal right to ... adjust or modify the interest rate, by renewal, assumption, reaffirmation, contract, or otherwise.... (e.s.).
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Citator
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- U. P. C., Inc. v. Intercontinental Bank, 410 So. 2d 554 (Fla. 3d DCA 1982)