NOTICE TO BORROWERS
CERTAIN LOAN AGREEMENTS
MUST BE IN WRITING
TEXAS LAW (Section 26.02, Business and Commerce Code) requires that all
financial institutions conspicuously post notices summarizing requirements that
loan agreements be in writing. You should know that:
•An agreement, promise, or commitment to loan more than $50,000 MUST BE IN
WRITING AND SIGNED BY THE LENDER OR IT WILL BE UNENFORCEABLE.
•The written loan agreement will be the ONLY source of rights and obligations for
agreements to lend more than $50,000.
•Oral agreements relating to loans over $50,000 are NOT EFFECTIVE either to
establish a commitment to lend or to vary the terms of a written loan agreement.
As part of the documentation required for loans over $50,000, BORROWERS MUST
BE PROVIDED AND MUST SIGN A NOTICE conspicuously stating that:
“THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES.”
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
The notice set forth above, which must be signed by both the borrower and the
financial institution, can be in a separate document or incorporated in one or more of
the documents constituting the loan agreement. The notice must be in type that is
boldfaced, capitalized, underlined or otherwise set out from surrounding written
material so as to be conspicuous.
