Rhode Island General Laws 6-27-5. Consumer notes
(a) If any contract between a retail seller and a retail buyer for the sale of consumer goods and services requires or involves the execution of a promissory note by a retail buyer in connection with an extension of credit by the retail seller, or by a creditor to whom the retail buyer was referred by the retail seller and to whom the retail seller regularly, as part of the ordinary conduct of its business and with the actual knowledge of the creditor, refers retail buyers for credit, the words “nonnegotiable consumer note” shall be placed prominently on the note and an assignee of a note with the words “nonnegotiable consumer note” appearing prominently on the note shall take the note subject to the claims and defenses permitted under § 6A-3-306, irrespective of whether or not the assignee qualifies as a “holder in due course” as defined in § 6A-3-302. For the purposes of this section “consumer goods” means tangible personal property used or bought for use primarily for personal, family, or household purposes.
Terms Used In Rhode Island General Laws 6-27-5
- Contract: A legal written agreement that becomes binding when signed.
- Credit: means any loan, mortgage, deed of trust, advance, or discount; any conditional sales contract; any contract to sell, or sale or contract of sale of property or services either for present or future delivery, under which part or all of the price is payable subsequent to the making of the sale or contract and the creditor imposes a finance charge; any contract or arrangement for the hire, bailment, or leasing of property in connection with which the creditor imposes a finance charge; any option, demand, lien, pledge, or other claim against or for the delivery of property or money; any purchase, or other acquisition of, or any credit upon the security of, any obligation or claim arising out of any of the foregoing; and any transaction or series of transactions having a similar purpose or effect. See Rhode Island General Laws 6-27-3
- Creditor: means any person engaged in the business of extending credit, including any person who as a regular business practice makes loans or sells or rents property or services on a time, credit, or installment basis, either as principal or as agent, who requires, as an incident to the extension of credit, the payment of a finance charge. See Rhode Island General Laws 6-27-3
- Personal property: All property that is not real property.
(b) A creditor who obtains a note from the maker in violation of this section shall be punished by a fine of not less than one hundred dollars ($100) nor more than five hundred dollars ($500).
(c) If a note is obtained by a creditor from a maker in violation of this section, no finance, delinquency, collection, repossession, or refinancing charges may be recovered in any action or proceeding based on the contract for sale by the creditor and if the charges are recovered from a maker by a holder in due course, the maker may recover the charges from the creditor who violated the provisions of this section.
(d) The provisions of this section shall not apply to any notes executed in connection with any financing that is insured under federal housing administration regulations.
History of Section.
P.L. 1968, ch. 147, § 1; P.L. 1969, ch. 170, § 1; as redesignated by P.L. 1970, ch. 223, § 1; P.L. 2014, ch. 528, § 17.