While prohibited in some religious traditions,1 interest is one of the most pervasive concepts in the American economy. Seemingly simple on its surface, it presents a bewildering amount of complexity as soon as one digs into its legal implications. Real Estate practitioners must know the rules of interest when negotiating a mortgage or charging rent to knowing the full monetary stakes of litigation.

When Interest Attaches

In New York litigation, there are three periods to consider regarding interest: the claim until verdict or decision, from then until judgment, and from judgment to payoff. CPLR 5004 dictates that all three time periods shall qualify for 9 percent simple annual interest unless the parties contract2 some other rate below usury.3 CPLR 5003 allows interest on any money obligation reduced to judgment, including judgments on claims that do not carry interest prior to judgment.4 Equitable claims can also garner interest, in the court’s discretion.5 28 USCA. §1961 does the same thing for federal claims. Such section sets interest at “a rate equal to the weekly average one-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the date of the judgment.” In federal litigation, the New York interest rate governs pre-judgment and the federal rate post-judgment, both “unless the parties in clear, unambiguous and unequivocal language, stipulate otherwise.”6

Computing Simple Interest

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