I had a tenant that skipped out on me and I have threatened to sue him so he has offered to give me a promissory note and pay back the money he owes me over time. Do I have to comply with any truth in lending, so-called, statutes or regulations?

The truth in lending laws, so-called, apply to creditors who in the regular course of business offer extensions of credit to consumers. The law was passed so that consumers could shop for credit like any other commodity. However the way interest rates were expressed at the time before the law was passed varied greatly. In order to remedy that the federal government passed these laws which authorized regulatory agencies to pass regulations so that there would be a uniformity and consistency in the way the cost of credit was advertised and offered. It led to the adoption of the annual percentage rate calculations ( APR) which you see frequently today which are required to include all of the costs to obtain the credit as well as the actual interest rate being charged on the amount of the credit. You will also see the banks who advertise depository accounts advertise using APR rates. The law was aimed at people who are in the business of providing credit and not the occasional transaction involving a business or homeowner who may take back a note and a mortgage in the sale of the property. Clearly it doesn't apply to someone like you who gave the credit involuntarily as a result of your tenant failing to pay their debt to you when it was owed. If your tenant now gives you a promissory note that it is merely a contractual agreement to pay you back the debt they already owe you over a period of time and perhaps with some interest. So you need not be concerned in this situation about running into any required disclosure laws as long as the interest rate does not exceed 20%. You can  charge that much, or more, but you first need to notify the Attorney General of your intention to charge interest at a rate greater than 20%.

If you have questions about this or any other legal matter, please contact Tom Bennett at (617) 531-6574 or tvb@barronstad.com.