Haynes and Boone's Newsroom

2005 Texas Usury Reform: Finance Code Amendments Relating to Commercial Loans
12/01/2005
Paul H. Amiel, Terry W. Conner, Theresa Einhorn, Sue P. Murphy, Scott G. Night, Kenneth A. Rogers, Albert C. Tan, Joseph A. Vilardo

In Texas, a lender who contracts for, charges, or receives interest in excess of the amount allowed by law can be subject to harsh penalties.  In 1997 and 1999, the Texas Legislature passed several significant reforms that provided some relief to lenders under Texas’ usury statutes.  Despite these reforms and unlike many other states, commercial loans are still subject to Texas usury laws.  Texas usury laws can affect the ability of lenders to structure loans in certain ways and, as a result, have led some lenders to look for ways to avoid Texas law.  In some instances, Texas usury laws have discouraged lenders from making loans to borrowers in Texas.