[WSBARP] Minimum interest rate, seller financed

Tue Jul 29 16:15:50 PDT 2025

Timothy,
I'll just add that, although you didn't ask about it, I always recommend reviewing the DFI rules on lending to see if a waiver is required. https://dfi.wa.gov/residential-seller-financing
[https://dfi.wa.gov/sites/default/files/dfi-web-og-image.png]<https://dfi.wa.gov/residential-seller-financing>
Residential Seller Financing and Third-Party Lending<https://dfi.wa.gov/residential-seller-financing>
Consumer lending is regulated at both the state and federal levels. In Washington, the lending of money or extension of credit for family, personal, or household use, including the financing of residential mortgages, and secured or unsecured consumer loans, is regulated under the Consumer Loan Act, chapters 31.04 RCW and 208-620 WAC and requires a licensed unless otherwise exempt. Regulation ...
dfi.wa.gov

Best,
Nick

Nicholas Pleasants | Shareholder

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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> on behalf of Eric Nelsen <eric at sayrelawoffices.com>
Sent: Tuesday, July 29, 2025 1:52 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Minimum interest rate, seller financed

What Mark said. I have to re-research this every time I handle one. Start by searching for explainers on “imputed interest.”

https://www.irs.gov/applicable-federal-rates

https://turbotax.intuit.com/tax-tips/tax-payments/irs-tax-rules-for-imputed-interest/L7UbulHpC<https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fturbotax.intuit.com%2ftax-tips%2ftax-payments%2firs-tax-rules-for-imputed-interest%2fL7UbulHpC&c=E,1,IMEuajJoYBqdWyInASsElFNWNoNZWs6_geSdPelr9lhxQNpIpdk2FiRre5HdXBbSHuqD_JoLXYhWZVJIuS2YP_As-9qCHiBdvpIwoTB3OiM,&typo=1>

Sincerely,

Eric

Eric C. Nelsen

Sayre Law Offices, PLLC

1417 31st Ave South

Seattle WA 98144-3909

206-625-0092

eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Mark Anderson
Sent: Tuesday, July 29, 2025 1:34 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Minimum interest rate, seller financed

They can contract for any rate to which the parties agree.  However, if the interest rate is below the Applicable Federal Rate (AFR) for the month in which the loan is extended, the discount on the interest rate could be seen by the IRS as a gift that could perhaps affect the sellers lifetime gift exemptions, etc.

Mark B. Anderson
ANDERSON LAW FIRM PLLC
821 Dock Street, Suite 209, PMB 4-12
Tacoma, Washington 98402
+1 253-327-1750
+1 253-327-1751 (fax)
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From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Timothy Lehr
Sent: Tuesday, July 29, 2025 1:26 PM
To: wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] Minimum interest rate, seller financed

All,

Is there a minimum interest rate that is required by the state or other agency if a client is selling a property to a family member or third party and carrying a note as a seller financed deal? Or can they contract to any rate the parties agree?

Thanks,

Timothy C. Lehr

Attorney & Partner

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