If you obtain a judgment in Florida, you generally are entitled to interest on the amount of the judgment from the date the judgment is entered until the date it is paid. The rate of interest is controlled either by the terms of the contract between the parties, in which case the rate must be incorporated into the judgment, or by the statutory interest rate set forth in § 55.03, Florida Statutes.
Historically, § 55.03 required the Chief Financial Officer of the State of Florida to set forth the rate of interest by December 1 to begin on January 1 in the following year. Chapter 2011-169, Laws of Florida, amended § 55.03, Florida Statutes, to require the Chief Financial Officer to set the rate of interest each quarter, as opposed to the old routine of once a year. Specifically, § 55.03(1) provides that the rate of interest that is payable on judgments or decrees is adjusted on January 1st, April 1st, July 1st and October 1st of each year.
Thus, the effective rate for the quarter in which the judgment is entered governs at the time that the judgment is entered. Practitioners should ensure that they are aware of any changes in the statutory rates so that the proper statutory rate can be included in the judgment. The Florida Department of Financial Services posts the applicable interest rates on its website: link to http://www.myfloridacfo.com/aadir/interest.htm.
Further, § 55.03 previously stated that: “The interest rate established at the time a judgment is obtained shall remain the same until the judgment is paid.” This made the task of calculating the interest from an old judgment fairly simple because the effective interest rate survived for the life of the judgment. Effective July 1, 2011, subsection (3) of the statute was changed to provide that the interest rate established at the time a judgment is obtained is adjustedannually on January 1st of each year.
Now, we must calculate interest on judgments using a variety of rates. The following examples demonstrate the practical effect of the statutory change.
Example 1: On January 3, 2008, a court entered a monetary judgment against Corporation A and in favor of Corporation B in the amount of $250,000. At that time, the applicable statutory interest rate on judgments was 11%. On July 15, 2009, Corporation A wished to pay the judgment in full. Since the judgment was entered in January 2008, interest is to be calculated at the 2008 interest rate—11%—for the life of the debt, meaning from the date the judgment was entered until the date it is paid. Eleven percent interest on a $250,000 judgment amounts to a per diem of $75.34 per day ($250,000 x .11 = $27,500 / 365). There are 559 days between January 1, 2008 and July 15, 2009; thus, $42,115.06 in interest accrued ($75.34 x 559). On July 15, 2009, Corporation A must pay $292,115.06 to satisfy the judgment.
Example 2: On July 1, 2011, a court entered a monetary judgment against Corporation A and in favor of Corporation B in the amount of $250,000. At that time, the applicable statutory interest rate on judgments was 6%. On July 15, 2012, Corporation A wished to pay the judgment in full.
On December 1, 2011, the Chief Financial Officer set forth the interest rate on judgments to 4.75% beginning January 1, 2012. In accordance with revised § 55.03, creditors must now adjust the statutory interest rate annually on January 1 of each year. Thus, interest must be calculated at the 2011 interest rate of 6% from July 1, 2011 through December 31, 2011 ($6,288.30 in interest) and at the 2012 interest rate of 4.75% from January 1, 2012 through July 15, 2012 ($6,375.88 in interest). The total interest is $12,664.18. On July 15, 2012, Corporation A must pay $262,664.18 to satisfy the judgment.
It is important to note that the interest rate will fluctuate even if the judgment states that it will bear interest at the then-applicable statutory rate. Judgment creditors (e.g., lenders who obtain monetary judgments) should ensure that their internal tracking systems for judgments reflect the January 1st interest rate changes.