Sage Street Associates v. Northdale Construction Co.
863 S.W.2d 438 | Texas Supreme Court | 1993
What This Case Means for Subcontractors
Sage Street Associates disputed a 10% prejudgment interest rate awarded by a court in a construction contract dispute, claiming Texas's usury law capped it at 6%. The Texas Supreme Court ruled that the state's constitutional usury limits don't apply to interest ordered by judges—only to commercial lending agreements. This means courts have flexibility to award prejudgment interest at rates higher than the usury cap when deciding construction disputes.
Key Takeaways
- •Court-ordered prejudgment interest is not subject to Texas usury limits, so judges can award rates above 6% if they find it appropriate for your case
- •Usury protections only apply to lending transactions between parties, not to judicial remedies for breach of contract
- •If you're owed money from a construction contract dispute, the interest rate a judge awards won't be capped by constitutional lending restrictions
Article XVI, section 11 is inapplicable to the rate of prejudgment interest set by a court.
Frequently Asked Question
Can a court award me more than 6% interest on money owed to me in a construction contract dispute?
Yes. Texas courts can award prejudgment interest above the 6% usury limit because court-ordered interest comes from a judge's decision, not a lending agreement. The constitutional usury cap only restricts commercial lending between parties, not judicial remedies for breach of contract.
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