Posted by John Merchant on September 02, 2003 at 19:26:31:
As the applicable usury law will be a state law, in the state of the deal, or the RE, or the lender, or the borrower*, if not one and the same, you’ll simply have to get a legal opinion from lawyer.
This is one of those situations where $1000 or so in legal fees now might make you or save you LOTS of $$$ in future deals…since, if a loan were to be declared usurious, you might lose all interest, all right to recoup your principal, and even have to pay other party’s legal fees and court costs and punitive damages! Not a fun thought, is it?
Generally, I do short term, high interet deals in my state of WA via Buy, lease back with option to repurchase, as these do, in my studied opinion, avoid WA usury limitations here-not being loans but sales.
But then I’ve done so much study on WA usury laws that I’d suppose I have maybe as much knowledge as anybody in WA…NOT a common situation, but since I’ve written several papers on the subject, I had to really dig into the subject here.
*As per law of “conflicts”, the laws of any or all these states could impact/affect your deal, so it’d be wise to have legal opinion on all states involved.