§ 6-27-5 - Consumer notes.
SECTION 6-27-5
§ 6-27-5 Consumer notes. – (a) If any contract between a retail seller and a retail buyer for the sale ofconsumer goods and services requires or involves the execution of a promissorynote by a retail buyer in connection with an extension of credit by the retailseller, or by a creditor to whom the retail buyer was referred by the retailseller and to whom the retail seller regularly, as part of the ordinary conductof its business, and with the actual knowledge of the creditor, refers retailbuyers for credit, the words "nonnegotiable consumer note" shall be placedprominently on the note, and an assignee of a note with the words"nonnegotiable consumer note" appearing prominently on the note shall take thenote subject to the claims and defenses permitted under § 6A-3-306,irrespective of whether or not the assignee qualifies as a "holder in duecourse" as defined in § 6A-3-302. For the purposes of this section"consumer goods" means tangible personal property used or bought for useprimarily for personal, family, or household purposes.
(b) A creditor who obtains a note from the maker in violationof this section shall be punished by a fine of not less than one hundreddollars ($100) nor more than five hundred dollars ($500).
(c) If a note is obtained by a creditor from a maker inviolation of this section, no finance, delinquency, collection, repossession,or refinancing charges may be recovered in any action or proceeding based onthe contract for sale by the creditor, and if the charges are recovered from amaker by a holder in due course, the maker may recover the charges from thecreditor who violated the provisions of this section.
(d) The provisions of this section shall not apply to anynotes executed in connection with any financing which is insured under federalhousing administration regulations.