Is there a maximum late fee for commercial loans in Oklahoma?

There is no Oklahoma statute that sets a cap on late fees for commercial loans (as there is for consumer loans). However, "excessive" late fees may be deemed by a court to be an unenforceable "penalty". See LaSalle Bank v. Shepherd Mall Partners, LLC, 140 P.3d 559 (Ok Civ App 2005). In this case the agreement between the parties provided for a 5% late payment fee on "sums due". The debtor defaulted and the creditor accelerated the note (calling the entire balance of the debt immediately due and payable).

The creditor the sought a late fee of $1,375,000. The court ruled that application of the 5% late fee to the entire amount due after acceleration constitutes an unenforceable penalty. Here's a quote from the case:

We are persuaded by the legal reasoning of the cases that hold late fees serve the limited purpose of compensating lenders "for administration of late payments prior to acceleration . . ." TMG Life Ins. Co. v. Ashner, 898 P.2d 1145, 1162 (Kan.App.1995). Further, disallowing excessive compensation for late payments is consistent with the law in Oklahoma. 4 Sun Ridge Investors, Ltd. v. Parker, 1998 OK 22, 956 P.2d 876.

Note, this case does not address the situation were the late fee is simply applied to a missed regular installment (as opposed to the entire balance of the loan) and when there is no default on the loan. For example, assume a $100,000 note with $10,000 installment payments. If a 5% late fee were imposed on a late installment, the fee would be $500.00. I would think that could be successfully defended as a legitimate late fee and not a penalty. You should study the LaSalle Bank case and the cases it cites for a full discussion of the legal principals applied by the courts.

Hope this helps.