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North Dakota Interest Rate Laws

North Dakota governs the rate of interest in the state through the provisions of Title 47, Chapter 47-14.  Section 47-14-05 of this Chapter prescribes the legal rate of interest in the state as six percent (6 %) per annum.  The maximum rate which parties can agree upon a contract in writing is up to 5.5 % higher than average rate of interest on United States treasury bills, but the maximum allowable interest rate must be at least seven percent (7 %).  This provision on contract rates is given under Section 47-14-09.  Violation of this Section is deemed to be usury.

Section 47-14-10 prescribes the civil liability for usury.  Any person charging or receiving usurious interest will forfeit the entire interest and twenty-five percent of the principal.  A person who has paid a usurious interest can recover twice the amount of interest paid along with twenty-five percent (25 %) of the principal from the person taking or receiving such usurious interest.  The criminal penalty for usury is prescribed under Section 47-14-11.  Persons receiving or charging usurious interest will be guilty of a class B misdemeanor.  This penalty is in addition to the civil penalty prescribed in Section 47-14-10.

The rate of interest on a judgment based on contract action will be the same as the contract rate.  The rate on other judgments, which are not based on contract action, was twelve percent (12 %) per annum until December 31, 2005.  From January 1, 2006, the rate of interest on judgments, not based on contract action, is the same as the prime rate published in the Wall Street Journal plus three percentage points rounded up to the next one-half percentage point and may not be compounded in any manner or form.  The state court administrator determines the rate and transmits the same to all clerks of court and to the state bar association of North Dakota.  The rate of interest on judgment is provided in Section 28-20-34.

The following transactions are exempted, under Section 47-14-9, from the usury limit:

  1. Bona fide pawnbroking transaction in an amount not exceeding one thousand dollars which is made by a bona fide pawnbroking business transacted under a pawnbroker’s license;
  2. Loan made to a foreign or domestic corporation, foreign or domestic limited liability company, cooperative corporation or association, or trust;
  3. Loan made to a partnership, limited partnership, or association that files a state or federal partnership income tax return;
  4. Loan or forbearance of money, goods, or things in action the principal amount of which amounts to more than thirty-five thousand dollars; and
  5. Loan made by a lending institution which is regulated or funded by an agency of a state or of the federal government.

N.D. Cent. Code, § 47-14-05

Legal rate of interest — Interest after maturity.
Interest for any legal indebtedness must be at the rate of six percent per annum unless a different rate not to exceed the rate specified in section 47-14-09 is contracted for in writing. All contracts must bear the same rate of interest after maturity as they bear before maturity, and any contract attempting to make the rate of interest higher after maturity is void as to the increase of interest, except for a charge for late payment penalty charged in addition to interest which may not exceed fifteen dollars or fifteen percent of the late payment, whichever is less, unless otherwise agreed to in any commercial, agricultural, or real estate note or mortgage.

N.D. Cent. Code, § 47-14-09

Usury — Definition — Maximum contract rate — Prohibition — Exclusions.
1. Except as otherwise provided by the laws of this state, a person, either directly or indirectly, may not take or receive, or agree to take or receive, in money, goods, or things in action, or in any other way, any greater sum or greater value for the loan or forbearance of money, goods, or things in action than five and one-half percent per annum higher than the current cost of money as reflected by the average rate of interest payable on United States treasury bills maturing in six months in effect for North Dakota for the six months immediately preceding the month in which the transaction occurs, as computed and declared on the last day of each month by the state banking commissioner, but that in any event the maximum allowable interest rate ceiling may not be less than seven percent, and in the computation of interest the same may not be compounded; provided, however, that a minimum interest charge of fifteen dollars may be made. A contract may not provide for the payment of interest on interest overdue, but this section does not apply to a contract to pay interest at a lawful rate on interest that is overdue at the time such contract is made. Any violation of this section is deemed usury.
2. This section does not apply to a:
a. Bona fide pawnbroking transaction in an amount not exceeding one thousand dollars which is made by a bona fide pawnbroking business transacted under a pawnbroker’s license;
b. Loan made to a foreign or domestic corporation, foreign or domestic limited liability company, cooperative corporation or association, or trust;
c. Loan made to a partnership, limited partnership, or association that files a state or federal partnership income tax return;
d. Loan or forbearance of money, goods, or things in action the principal amount of which amounts to more than thirty-five thousand dollars; and
e. Loan made by a lending institution which is regulated or funded by an agency of a state or of the federal government.
3. Notwithstanding the interest rate limit set under this section, state-chartered banks and the Bank of North Dakota may charge interest at a rate equal to the maximum allowable rate which lawfully may be charged for a particular type of loan by national banking associations or state or federally chartered savings and loan associations operating out of facilities located in this state.
4. As used in this section, “bona fide pawnbroking transaction” means a transaction with a licensed pawnbroker which includes both possession and a pledge of tangible personal property.

N.D. Cent. Code, § 47-14-10

Civil liability for usury — Forfeiture of interest.
The taking, receiving, reserving, or charging of a rate of interest greater than is allowed by the laws of this state relative to usury shall be deemed a forfeiture of the entire interest which the note, bill, or other evidence of debt carries with it or which has been agreed to be paid thereon, and in addition thereto, a forfeiture of twenty-five percent of the principal thereof. In case the greater rate of interest has been paid, the person by whom it has been paid, or that person’s legal representative may:
1. Recover back twice the amount of interest thus paid, together with twenty-five percent of the principal from the person taking or receiving the same, but an action must be commenced for such purpose within four years after the time when the usurious transaction occurred; or
2. Offset twice the amount of such interest against any indebtedness which the person who paid the same owes to the party or parties receiving such usurious interest.

N.D. Cent. Code, § 47-14-11

Criminal penalty for usury.
Any person who shall take, receive, reserve, or charge a usurious rate of interest, in addition to being liable for the penalties and forfeitures specified in section 47-14-10, shall be guilty of a class B misdemeanor.

N.D. Cent. Code, § 28-20-34

Interest rate on judgments.
Interest is payable on judgments entered in the courts of this state at the same rate as is provided in the original instrument upon which the action resulting in the judgment is based, which rate may not exceed the maximum rate provided in section 47-14-09. If such original instrument contains no provision as to an interest rate, or if the action resulting in the judgment was not based upon an instrument, interest is payable at the rate of twelve percent per annum through December 31, 2005. Beginning January 1, 2006, the interest is payable at a rate equal to the prime rate published in the Wall Street Journal on the first Monday in December of each year plus three percentage points rounded up to the next one-half percentage point and may not be compounded in any manner or form. On or before the twentieth day of December each year, the state court administrator shall determine the rate and shall transmit notice of that rate to all clerks of court and to the state bar association of North Dakota. As established, the rate shall be in effect beginning the first day of the following January through the last day of December in each year. Except as otherwise provided in this section, interest on all judgments entered in the courts of this state before January 1, 2006, must remain at the rate per annum which was legally prescribed at the time the judgments were entered, and such interest may not be compounded in any manner or form. Interest on unpaid child support obligations must be calculated under section 14-09-25 according to the rate currently in effect under this section regardless of the date the obligations first became due and unpaid.


Inside North Dakota Interest Rate Laws