N.Y. General Obligations Law § 5-527: Enforceability of compound interest

§ 5-527. Enforceability of compound interest. 1. A loan or other

agreement providing for compound interest shall be enforceable

notwithstanding the date that such loan or other agreement providing for

such compound interest shall have been executed; provided, however, that

such compound interest shall begin to accrue and become due and payable

on the later to occur of (a) June twenty-fourth, nineteen hundred

eighty-nine or (b) the date that any obligation to pay such compound

interest may have arisen, including, but not limited to, the date of any

default or event of default under such loan or other agreement. For

purposes of this subdivision, the term "compound interest" shall mean

the accruing of interest upon unpaid interest irrespective of whether

such unpaid interest is added to the principal debt.

2. The provisions of this section shall not be applicable to any loan

or other financing agreement where the original principal debt is in an

amount of two hundred fifty thousand dollars or less, or to any loan or

other financing agreement secured primarily by a one or two family

owner-occupied residence. For purposes of this subdivision the term

"residence" shall include a lessee's interest in a proprietary lease

granted by a cooperative housing corporation.

3. Notwithstanding the provisions of subdivision two of this section,

nothing in this section shall affect the maximum rate of interest which

may be charged, taken or received as provided by law, or be construed to

limit, impair or otherwise affect any loan or other agreement which is,

or would be, enforceable without reference to this section, including

but not limited to an agreement made pursuant to section six-f of the

banking law.