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Lending £50k to a person I know, is there any legal template in place?

ileven1225
Posts: 176 Forumite

---------------Update 2022/02/09 ----------------------------------------------------------------------------------------------------
Hi everyone, thanks for the advices. Now I decided not to lend any money
to my friend as there is no way of protection as much as a licensed
approved lender. Even a licensed lender might have difficulty to get
money back, I do not think I got any higher chance if my friend decides
not to return the loan at all. Any piece of contract would not take any effect if no enforcement in place.
I got one more question, what if I am the part of his project and got shares proprotional to my input (e.g £50k)? In this way, i can control the process and work as a partner rather than a lender? What sort of paper work or contract I need to use and pay attention to?
What if we put agreement that the loan can be secured against an asset like their personal property?
Can we use the following form - Legal charges: registration (CH1) - to achieve this goal? BTW, he will purchase a property to add values and resell.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/808690/CH1__2019-06-17_.pdf
Thanks
Can we use the following form - Legal charges: registration (CH1) - to achieve this goal? BTW, he will purchase a property to add values and resell.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/808690/CH1__2019-06-17_.pdf
Thanks
---------------Orgianl Post ----------------------------------------------------------------------------------------------------
Hi everyone,
Would need some help. A person I know would like to borrow £50k from myself and promised 10% return over 1.5years. So 1.5 years later, I would get £55k. The reason I would like to help him (he got some good business ideas and I think it's gonna work but with some risks for sure) is that I have been watching him for some time and his performance gave me confidence. However, it doesn't mean the idea cann't be a crap but this is the risk I would like to take.
My question is that as this is the 1st time I lend money to people, I usually borrow money from banks/lenders and never be lender by myself, I would like some advices to protect myself and understand if there is any legal process/document I can use. For example, a loan form with legal effects states that he borrowed £50k from myself with 10% return in 1.5years. In case he refused to acknowledge the money he borrowed.
Thanks
0
Comments
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Any contract is only worth it if you're prepared to enforce it and if he has the means to repay it
As you clearly have doubts, simply don't lend it.5 -
Sounds as your friend has the ideas and wants you to bear all the risk. Run away.....5
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If his ideas are so great he'll have no problem convincing a bank to lend him the money.7
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If you plan on taking this on, then perhaps better to ask a lawyer to draft and ideally see if you can secure against an asset like their personal property.
The other one, is presumably these are business ideas. If they are being developed in a corporate then would you be better off taking a shareholding to support investment and benefit from future returns if it goes well.
If you are not risk averse at all and can afford to lose the money then you could document it yourself, get it signed and witnessed but as mentioned before it's only useful if you are enforcing.
I personally think lending to family, friends etc. is fine (can be very good) as long as you go in eyes open that you could be burnt. For many it works out very well, but there are also a lot of worst case stories as normally it's being requested as a bank won't lend.1 -
Any agreement you make will not be worth the paper that it is written on if your friend does not have the resources to pay you back. You cannot take what he does not have. Enter into this arrangement only if you are prepared to and can afford to write the money off.6
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ileven1225 said:My question is that as this is the 1st time I lend money to people, I usually borrow money from banks/lenders and never be lender by myself,ileven1225
I would like some advices to protect myself4 -
Just to reiterate all the above, you have no way of guaranteeing that you will see the money again, no way to enforce this if they run out. You could see it as a gift and if you get it back, great, but the whole thing could equally be a long game to scam you out of £50k, who knows2
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ileven1225 said:Hi everyone,My question is that as this is the 1st time I lend money to people, I usually borrow money from banks/lenders and never be lender by myself, I would like some advices to protect myself and understand if there is any legal process/document I can use. For example, a loan form with legal effects states that he borrowed £50k from myself with 10% return in 1.5years. In case he refused to acknowledge the money he borrowed.Thanks
It means absolutely nothing if the chap won`t or can`t pay you back.
Those who engage in these kind of activities are usually very good at covering their tracks, any money they do have will likely be squirreled away either in an off shore account, or a shell corporation somewhere, or even under different names, far out of reach of UK courts, bailiffs etc.
Basically you will have no recourse whatsoever if he won`t pay you back.I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter4 -
Deleted_User said:Any contract is only worth it if you're prepared to enforce it and if he has the means to repay it
As you clearly have doubts, simply don't lend it.Thanks. I believe what you meant is that any written document could be use as legal evidence to show he owned the money, is it correct?0 -
Thrugelmir said:Sounds as your friend has the ideas and wants you to bear all the risk. Run away.....
He would input £100k as well, but still need another £50k, let's put it this way
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