[SC] For an LLC-to-LLC private loan, what is the maximum legal interest rate that will not be considered usurious?

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Richard

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In South Carolina, there is no legal interest rate ceiling for a commercial loan over $50,000 when the loan is between business entities such as LLCs and is for a business or real estate purpose. (SC Code § 37-10-106) Because your loan is $70,000, made from one LLC to another LLC, and is for a real estate investment, it qualifies as a commercial loan and is exempt from the state’s usury limits under South Carolina law. (SC Code § 37-3-104)

This means the agreed 15% flat interest for a 90-day term is legally permissible and enforceable, even though it would equal a much higher annualized rate.

The key requirement is that the loan is properly documented in writing and is genuinely a business loan, which your promissory note and recorded first-position mortgage support. (SC Code § 30-7-10)

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What's legal interest rate on LLC to LLC private loan lending, the amount is 70K and i borrower agreed to 90 days at 15% flat, not APR.

Lexi, Chatbot

I understand that you're navigating the complexities of private loan lending between LLCs. Can you please confirm the state in which both LLCs are registered?

South Carolina.

Lexi, Chatbot

Have you documented the terms of the loan agreement, including any repayment schedules or collateral involved?

Yes.

Richard

Hello. My name is Richard and I have been a licensed attorney for over 25 years and hope to be of assistance. Please be advised that this platform is for information purposes only and I cannot formally represent users of this platform or perform actual legal services on your behalf. Could you tell me more about the legal interest rate for LLC to LLC private loan lending in South Carolina?

How are we doing today? I’m lending on a real estate deal. My security will be first position recorded on the property with a mortgage. I am using your site to create the promissory note. I also wrote up a step-in addendum for the borrower to attach to the O/A of his LLC. I got questions, lol.

Richard

Could you let me know if there are any specific terms or conditions in the promissory note or the step-in addendum that might impact your lending arrangement?

The interest rate is 15% flat. Hold on, are you a human or ai?

Richard

Got it, thanks for sharing that. Are there any penalties or fees mentioned in the agreement if the repayment is delayed beyond the 90-day period? I am human.

Okay, what’s the legal interest rate ceiling before it’s usury for an LLC-to-LLC private loan? The amount I’m lending is 70K for 90 days at a 15% flat rate, not APR.

I don’t want the borrower to default and the judge says: “Yeah, the borrower doesn’t owe you that, let’s bump it down to 6% APR.” I thought 15% flat was fine, but I just want to ask you as the professional.

Richard

This means the agreed 15% flat interest for a 90-day term is legally permissible and enforceable, even though it would equal a much higher annualized rate.

The key requirement is that the loan is properly documented in writing and is genuinely a business loan, which your promissory note and recorded first-position mortgage support. (SC Code § 30-7-10)

Thank you for response! Also, since I got you here on the line. I typed this up with AI... the borrower agreed to the terms on the term sheet (I can provide if you want to see), so for security for myself I want to add a step-in addendum so the borrower, instead of default with foreclosure, puts me on the LLC and I take the asset over to me without going to court... can I upload it for you to look at?

Richard

You want me to review an AI response?

Well... want to write one up for me this weekend, and I’ll pay you?

Richard

Unfortunately. I cannot give legal advice on your legal document or whether the AI is right. I can only answer general legal questions for educational purposes only on this platform.

Okay, so on this deal I’m doing a recorded first position lien, promissory note, on borrower LLC A/O. What South Carolina deed or trust... first time I’m lending in this state, what instrument is it called? A deed or mortgage instrument?

What’s the legal limit/range for late fee charges per South Carolina state law as well? For $49 I’ve got a few questions, I appreciate your patience.

Right now I have:
Grace Period: 2 weeks.
Late Fees: $25/day after grace period.

I am unaware of SC laws, though.

Richard

In South Carolina, the security instrument used for real estate transactions is typically a mortgage. This means you would use a mortgage instrument to secure your loan with a first-position lien on the property.

Perfect, I understand completely the mortgage part.

Richard

Regarding late fees in South Carolina, there isn't a specific statutory limit for late fees on commercial loans like yours. However, the fees must be reasonable and not punitive. Your current setup of $25 per day after a 2-week grace period seems reasonable, but it's always a good idea to ensure that the borrower agrees to these terms in writing.

Absolutely, he will agree or not get funding, no big deal. I’m just staying within legal limits.

What are the clauses or legality to make all documents reference each other to strengthen position instead of each standing alone? Also, I apologize for my awful spelling. I’m better at verbal negotiation and making money than spelling. It’s just that now I need to make everything I negotiated real on paper and enforceable.

Richard

Cross Referencing Clauses: Including cross referencing clauses in your documents can help ensure that each document is linked to the others, creating a cohesive legal framework. This can strengthen your position by making it clear that all documents are part of a single transaction.

Incorporation by Reference: This legal concept allows one document to include terms from another document by reference, rather than repeating them. This can be useful in ensuring that all documents are considered together in any legal proceedings.

Integration Clauses: These clauses state that the documents represent the entire agreement between the parties, which can prevent any party from claiming that there were additional terms not included in the written documents.

What are the foreclosure laws and timelines in case of default?

Richard

Are you asking what the statute of limitations is for filing a foreclosure in case of a breach?

More the process but yes that too.

Richard

There is a five-year statute of limitations for breach of contract. The process would involve filing a lawsuit for foreclosure.

Okay, so I have a promissory note, mortgage, and LLC operating agreement addendum. Those will be my security instruments. By SC law, who is legally responsible for recording to land records?

And is it legal or common practice to record the addendum? Something about recording a memorandum of understanding. This would be in regards to the LLC paperwork. Recording with the clerk land records, I mean. Same thing. I just care about getting it recorded.

Richard

In South Carolina, the responsibility for recording security instruments, like a mortgage, typically falls on the lender or their representative. It’s important to ensure that these documents are recorded promptly to protect your interest in the property.

Regarding the recording of an addendum or a memorandum of understanding, it is legal and can be a common practice to record such documents if they affect the title or interest in the property. This can help provide public notice of your interest and the terms agreed upon.

Perfect. When it comes to notary work, what’s the legal SC law understanding of when something needs a notary or doesn’t? Also, does DocuSign, the well known application for signing documents online with their process of time-stamping, count in place of a notary?

DocuSign has a certification thing or add on. Is that a legal substitute for a notary?

Richard

In South Carolina, notarization is generally required for documents that affect real estate, such as deeds and mortgages, to ensure their validity and to provide a level of security against fraud. Notarization involves a notary public witnessing the signing of a document and verifying the identity of the signers.

As for DocuSign, while it is a widely accepted tool for electronic signatures, it does not replace the need for notarization where it is legally required. DocuSign's certification and timestamping features provide a secure way to sign documents electronically, but they do not fulfill the legal requirements of a notary public. For documents that require notarization, you would still need to have them notarized by a licensed notary public.

Understood. When it comes to SC, is it a mutual release state in the case of EMD, earnest money deposit? For example, in TX I add mutual release addendums for when I lend on EMDs, and in Florida I have sellers also sign this.

Richard

I am not clear what the question is.

Above is an extracurricular question. Back to my current deal: if I type these up, what is the legal format they all should be in? If you can answer or not, have an amazing weekend.

Richard

I am not clear what you are asking? Legal format?

Never mind, have a great weekend, thank you for all the answers. You're the man!

Richard

I hope I was able to help resolve your issue! Best of luck.

You did!

Richard

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