On April 20, 2021, the First Department issued a decision in Salamone v. EIP Global Fund LLC, 2021 NY Slip Op. 02372, holding that fees are considered in determining whether a loan is usurious, explaining:
In the absence of estoppel, the forbearance agreement is otherwise void as usurious and the forbearance fee is properly considered interest. Its purpose, by plaintiff’s own account, was to compensate him for losses he sustained by providing the loan to defendants, i.e., the cost of the funds (see General Obligations Law § 5-501).
New York’s usury laws can sometimes provide a defense to payment: the interest rate in an agreement can be so high that a court will not enforce it. Contact Schlam Stone & Dolan partner John Lundin at firstname.lastname@example.org if you or a client have a question regarding whether the interest rate in an agreement or note is legal.
Click here to subscribe to this or another of Schlam Stone & Dolan’s blogs.