Loan to family member

OneTrueScotsman

sourcrates

If the loan was made without any kind of credit agreement being signed or witnessed, then the money was a gift, its as simple as that.When lending money to anyone, you must have a written agreement, or at least a letter, setting out what has been lent, over what period, how much interest shall be paid, if any, and what the monthly payments are to be, this should be signed by both parties, and ideally witnessed by a solicitor, or someone else of good standing, lack of an agreement or letter to this effect will render the transaction unenforcable.

This isn't entirely accurate.

A verbal agreement is just as binding as a written agreement. The issue is enforceability because of lack of proof. But that doesn't turn a loan procured via a verbal agreement into a "gift."

sourcrates

OneTrueScotsman said:

sourcrates

If the loan was made without any kind of credit agreement being signed or witnessed, then the money was a gift, its as simple as that.When lending money to anyone, you must have a written agreement, or at least a letter, setting out what has been lent, over what period, how much interest shall be paid, if any, and what the monthly payments are to be, this should be signed by both parties, and ideally witnessed by a solicitor, or someone else of good standing, lack of an agreement or letter to this effect will render the transaction unenforcable.

This isn't entirely accurate.

A verbal agreement is just as binding as a written agreement. The issue is enforceability because of lack of proof. But that doesn't turn a loan procured via a verbal agreement into a "gift."

It would be impossible to make a more pointed remark than Goldwyn's, “A verbal contract isn't worth the paper it's written on.”

OneTrueScotsman

sourcrates said:

It would be impossible to make a more pointed remark than Goldwyn's, “A verbal contract isn't worth the paper it's written on.”

Well look, that's typically true. But a verbal contract is still a contract, it doesn't become a gift just because you can't enforce it b/c of lack of proof.  Even if you loan someone money and do have a written contract, and lose the contract, the loan doesn't suddenly become a gift because you've lost the signed paper.  Legally, it's still a loan.

And verbal contracts are in fact enforced in small claims court all the time. Yes, you need evidence (e.g. a witness, admission by the defendant), but they're still actionable in the event of breach.

sourcrates

I did say in another post i was not an expert in these matters, i think again, you are looking at the court route, which the OP does not want to take, they are willing to wait until the money can be recovered from the estate of the alleged debtor, i agree the more evidence you have to back up your claim the better, but of course the assets/capital must be there in the first place, as otherwise its a pointless excercise.

macman

If the debtor were prepared to make a written statement admitting the loan, or admit in court to agreeing the terms of the loan, then the matter wouldn't be in court anyway.
Without evidence to the contrary, the debtor can simply deny that the payment was a loan. And then it's their word against the representatives or executors of the OP's parent.

OneTrueScotsman

macman said:

If the debtor were prepared to make a written statement admitting the loan, or admit in court to agreeing the terms of the loan, then the matter wouldn't be in court anyway.
Without evidence to the contrary, the debtor can simply deny that the payment was a loan. And then it's their word against the representatives or executors of the OP's parent.

The debtor admitting to the loan, and making a written statement to that effect, even after the fact, is still very strong evidence and makes the loan that much more enforceable should the matter have to come to court as a last resort.

The OP would be advised to get a signed written statement ASAP, with witnesses if possible. And absent a signed statement, it would still be helpful to have witnesses to a verbal acknowledgement of the loan.

sourcrates

But it makes no difference what evidence he has, he was not the lender, unless he has POA or Deputyship, its non of the OP`s buisness.

OneTrueScotsman

Yes, that is correct.  I've just been operating on the assumption that since the OP's parent has dementia, they have some kind of POA. Without that of course, enforceability is moot. (unless as you point out, the OP's parent passes, in which case the executor could try to enforce note).

In any event, getting written acknowledgment of the loan is a smart first step. Given that the debtor is apparently developing dementia as well, sooner rather than later, as any statement that wasn't made in sound mind would be invalid. If I were OP, I'd consider taking the capital only, even in a reduced amount in exchange for immediate repayment, given the circumstances.

elsien

izoomzoom said:

Okay, I hear what is being said.
My relative is willing to put in writing that they owe this money. Surely a statement to that effect can be legal even if my parent is not a signatory to the statement. My relative is starting to forget things, but is in no way lacking capacity at this time.

Your relative has no memory of borrowing a very large sum of money but accepts that they potentially may have done. They may also have dementia, from your first post. You may find that attempts to enforce this further down the line (if as per other posts you have the legal authority to do so) hinges on arguments about how valid the agreement is in  these circumstances.  

jonesMUFCforever

If the debtor is not compos mentis they can write what they like but it is not admissible in a court.
They could be coerced for example. I agree with the existing posters - this is not going anywhere unless there is an existing contract to repay.