If you are loaning someone money, it is prudent to have a loan agreement prepared that provides evidence of what has been agreed.
That way there is no room for argument later on once time has elapsed and memories have faded.
Having a loan agreement in place also ensures that you have proof that you loaned the money if the arrangement turns sour and you end up having to apply to the court for an order to recover the debt.
The terms of a loan agreement could include:
- How much money is being loaned and when
- Whether interest is being paid and if so how much
- When repayments commence and whether they incorporate repayments of principal and interest
- How often repayments are to be made
- How long the full amount will take to be repaid
- What happens if the borrower defaults on the loan
If the amount that you are loaning is substantial, then we strongly suggest that you consider obtaining some security for your loan.
You could obtain security by having us prepare a mortgage to be registered over the real estate owned by the borrower.
If the borrower defaulted and you had a registered mortgage over their property, you would have priority in terms of repayment of your debt over other people that might be owed money by the borrower.
Contact us today if you are considering loaning money to someone so that you can get some safety measures in place that strongly encourage repayment of the debt by the borrower, even if their memory of the debt has faded.