Section 5-18-16

Duties of licensees as to making and payment of loans.

(a) Copy of contract or statement; receipts; payment in advance; release of obligation and security. - Every licensee shall:

(1) At the time a loan is made deliver to the borrower or, if there are two or more borrowers, to one of them a copy of the loan contract, executed by the borrower, in the English language showing in clear and distinct terms:

a. The name and address of the lender and one of the primary obligors on the loan.

b. The date of the loan contract.

c. Schedule of installments or description thereof.

d. The cash advance.

e. The face amount of the note evidencing the loan.

f. The amount collected or paid for insurance, if any.

g. The amount collected or paid for filing or other fees allowed by this chapter.

h. The collateral or security for the loan.

(2) Give to the person making any cash payment on account of any loan a receipt at the time the payment is made which receipt need only show the total amount of the cash payment. No receipt shall be required in the case of payments made by the borrower's check or money order, and the use of a coupon book system shall be deemed in compliance with this section.

(3) Permit the payment to be made in advance in any amount on any contract of loan at any time during a licensee's regular business hours.

(4) Upon repayment of the loan in full, mark plainly every obligation and security signed by any obligor with the word "Paid" or "Cancelled," and release any mortgage, restore any pledge, and cancel and return any note and any assignment given to the licensee.

(b) Confessions of judgment; incomplete instruments. -No licensee shall:

(1) Take any confession of judgment or any power of attorney running to himself or herself or to any third person to confess judgment or to appear for the borrower in a judicial proceeding; nor

(2) Take any note or promise to pay that does not disclose the total amount to be repaid, a schedule of payments or a description thereof and the agreed rate or aggregate amount of charge, nor any instrument in which blanks are left to be filled in after execution.

(c) Installments. - Every loan contract shall provide for repayment of principal and charges at approximately equal periodic intervals of time, which shall be so arranged that no installment is substantially greater in amount than any preceding installment.

(d) Confidential relationship or fiduciary duty not created by loan transaction. - Absent other factors, a loan transaction does not create a confidential relationship between the borrower and the licensee nor does it give rise to or create a fiduciary duty on the part of the licensee.

(Acts 1959, No. 374, p. 966, §15; Acts 1996, No. 96-757, p. 1331, §1.)