KANSAS OFFICE of
  REVISOR of STATUTES

  

Home >> Statutes >> Back


Click to open printable format in new window.Printable Format
 | Next

16-205. Interest rates or charges; contract rates continue until payment in full; judgments; excess rates and charges void. (a) When a rate of interest or charges is specified in any contract, that rate shall continue until full payment is made, and any judgment rendered on any such contract shall bear the same rate of interest or charges mentioned in the contract, which rate shall be specified in the judgment; but in no case shall such rate or charges exceed the maximum rate or amount authorized by law, and any bond, note, bill, or other contract for the payment of money, which in effect provides that any interest or charges or any higher rate of interest or charges shall accrue as a penalty for any default, shall be void as to any such provision.

(b) Judgments taken in accordance with the provisions of subsection (a) shall be expressed as follows:

(1) Judgments upon interest-bearing contracts shall provide (i) the unpaid principal balance, (ii) the date to which interest is paid, (iii) the contract rate of interest and (iv) that the unpaid principal balance shall draw the contract rate of interest from the date to which interest is paid until payment in full.

(2) Judgments upon precomputed interest-bearing contracts shall provide: (i) The unpaid principal balance shall be ascertained by deducting from the remaining total of payments owed on the contract that portion of the precomputed finance charges that are unearned as of the date of acceleration of the maturity of the contract, as provided in K.S.A. 16a-2-510 for computing the unearned portion of precomputed finance charges in the event of prepayment in full. Any delinquency or deferral charges added to the unpaid balance subsequent to the date of acceleration shall be first deducted from the unpaid balance prior to any such acceleration. The contract shall be accelerated as of the date provided for in the provisions of the contract, or if the contract does not provide for the date on which the contract shall be accelerated, it shall be accelerated as of the actual date of any such acceleration; (ii) the date to which interest is paid, which date shall be the maturity date of the next installment due after the date of acceleration, except those contracts which are accelerated on an installment due date which shall be the date of acceleration; the date to which interest is paid for those contracts that have matured prior to judgment shall be calculated from maturity date of the contract; (iii) the contract rate of interest; and (iv) that the unpaid principal balance shall draw the contract rate of interest from the date to which interest is paid until payment in full.

(3) Judgments upon contracts where the finance charges are computed in dollars per hundred and added on to the original balance to be financed shall provide: (i) The unpaid principal balance shall be ascertained by deducting from the remaining total of payments owed on the contract that portion of the precomputed finance charges that are unearned as of the date of acceleration of the maturity of the contract as provided in K.S.A. 16a-2-510 for computing the unearned portion of precomputed finance charges in the event of prepayment in full. Any delinquency or deferral charges added to the unpaid balance subsequent to the date of acceleration shall be first deducted from the unpaid balance prior to any such acceleration. The contract shall be accelerated as of the date provided for in the provisions of the contract, or if the contract does not provide for the date on which the contract shall be accelerated, it shall be accelerated as of the actual date of any acceleration; (ii) the date to which interest is paid, which date shall be the maturity date of the next installment due after the date of acceleration, except those contracts which are accelerated on an installment due date which shall be the date of acceleration; the date to which interest is paid for those contracts that have matured prior to judgment shall be calculated from the maturity date of the contract; (iii) the contract rate of interest expressed as an annual percentage figure, which may be taken from the contract if it discloses the annual percentage rate, or it shall be ascertained in accordance with the constant ratio method which is mathematically expressed as follows:

2mc
R =
where
p(n + 1)

R = rate of charge

m = number of payment periods in one year

n = number of payments to discharge the debt

c = charge in dollars

p = principal or cash advanced

and (iv) that the unpaid principal balance shall draw the contract rate of interest as determined herein from the date to which interest is paid until payment in full.

History: L. 1889, ch. 164, § 5; R.S. 1923, 41-105; L. 1955, ch. 135, § 27; L. 1974, ch. 90, § 1; L. 1976, ch. 96, § 1; July 1.

Source or Prior Law:

G.S. 1868, ch. 51, § 6; 41-105.

Law Review and Bar Journal References:

Impact of the Uniform Consumer Credit Code upon Kansas, Barkley Clark, 18 K.L.R. 277, 285 (1970).

"Summary Repossession, Replevin, and Foreclosure of Security Interests," Thomas V. Murray, 46 J.B.A.K. 93, 103 (1977).

"New Kansas Usury Laws and Interest Rate Regulation," Robert G. Martin, 20 W.L.J. 572, 586 (1981).

"Liquidated Damages - When is the Claimant Entitled to Prejudgment Interest?" Mary E. Christopher and Michelle M. Watson, 74 J.K.B.A. No. 5, 14 (2004).

CASE ANNOTATIONS

1. Judgment draws interest until sale is confirmed. Lombard Investment Co. v. Burton, 5 Kan. App. 197, 198, 47 P. 154.

2. Statute applies only to contracts made after law became effective. Getto v. Friend, 46 Kan. 24, 30, 26 P. 473.

3. Contracted interest illegal, judgment bears interest fixed by law. Shafer v. National Bank, 53 Kan. 614, 617, 36 P. 998.

4. When parties agree upon legal interest the agreement controls. Holmes v. Dewey, 66 Kan. 441, 71 P. 836.

5. Wrongful conversion of mortgaged property; judgment bears only statutory interest. Johnson v. Oil Well Supply Co., 85 Kan. 507, 512, 117 P. 1022.

6. Penalty agreed upon after maturity valid; retrospective penalty, invalid. Robbins v. Maddy, 95 Kan. 219, 220, 147 P. 826.

7. Statutory interest is allowed without being claimed. Kirkpatrick v. Berry, 133 Kan. 244, 245, 299 P. 598.

8. Cited in determining rate of interest permitted. McDermott v. Sterling, 133 Kan. 521, 522, 1 P.2d 78.

9. Cited in construing K.S.A. 41-104. Davis v. Davis, 148 Kan. 211, 213, 81 P.2d 55.

10. Sections K.S.A. 16-202, 16-203, 16-205 part of Consumer Loan Act; construed with chapter 16, article 4. Young v. Barker, 185 Kan. 246, 252, 342 P.2d 150.

11. Question of usurious interest not properly raised. Home Finance Corporation v. Cox, 190 Kan. 553, 562, 376 P.2d 884.

12. Cited in upholding the use of the rule of 78's in a mortgage foreclosure action. First Nat'l Bank of Olathe v. Clark, 226 Kan. 619, 625, 602 P.2d 1299.

13. Interest limited to statutory rates where relief arises from statutory right under mechanic's lien. Scott v. Strickland, 10 Kan. App. 2d 14, 25, 691 P.2d 45 (1984).

14. Prejudgment interest of 18% allowed when course of dealing that is subject of suit normally provided same. Bob Eldridge Constr. Co. v. Pioneer Materials, Inc., 235 Kan. 599, 607, 684 P.2d 355 (1984).

15. Where a trial court erred in holding loan interest abated, postjudgment interest is applicable. Ram Co. v. Estate of Kobbeman, 236 Kan. 751, 763, 696 P.2d 936 (1985).

16. Claim for prejudgment interest considered in action on contractors performance bond. Blinne Contracting v. Bobby Goins Enterprises, 715 F. Supp. 1044, 1046 (1989).

17. Mechanics' lienholders entitled to prejudgment interest on amounts due provided amounts due are liquidated. J. Walters Constr. Co. v. Greystone South Partnership, 15 Kan. App. 2d 689, 700, 817 P.2d 201 (1991).

18. Whether a contracted prospective increase in a note's interest rate upon default constitutes a "penalty" examined. Wagnon v. Slawson Exploration Co., 255 Kan. 500, 501, 503, 874 P.2d 659 (1994).

19. Judgment creditor violated statute by charging interest on interest. D.A.N. Joint Venture III v. Turk, 36 Kan. App. 2d 353, 358, 359, 138 P.3d 1253 (2006).


 | Next

LEGISLATIVE COORDINATING COUNCIL
  6/03/2024 Meeting Notice 

  LCC Policies

REVISOR OF STATUTES
  2023 New, Amended and Repealed by KSA
  2023 New, Amended and Repealed by Bill
  2024 Valid Section Numbers
  Chapter 72 Statute Transfer List
  Kansas School Equity & Enhancement Act
  Gannon v. State
  Information for Special Session 2021
  General Info., Legal Analysis & Research
  2022 Amended & Repealed Statutes
  2021 Amended & Repealed Statutes
  2020 Amended & repealed Statutes
  2019 Amended & Repealed Statutes

USEFUL LINKS
Session Laws

OTHER LEGISLATIVE SITES
Kansas Legislature
Administrative Services
Division of Post Audit
Research Department