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

ileven1225

porkisnotmeat said:

If his ideas are so great he'll have no problem convincing a bank to lend him the money.

I believe you are certinaly right in a way but he has already borrowed money from bank for other businesses so he wouldn't be able to borrow more.... at least I was told that. He also told me he prefers borrowing from friends other than banks which I think it's a bit dogy, however, I decided to trust him for some reasons.

ileven1225

pjcox2005 said:

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.

Thanks that's helpful. I personally trust my friend and that's why i would rather lend him the money. You are right that I shall be prepared for losing them all, however, what he suggested is to use the following form, Legal charges: registration (CH1) , to legally document the loan. BTW he is doing property business so I think the following form could be valid to use even it can be a bear minimum.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/808690/CH1__2019-06-17_.pdf

Do you know if this form is OK to use?

ileven1225

Deleted_User said:

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 knows

what if we put agreement that the loan can be secured against an asset like their personal property?

payless

Equates to 6.5%pa .. honestly this sound like more risk than the reward would indicate .

a watertight charge ( security) would make it better. 

Sncjw

ileven1225 said:

porkisnotmeat said:

If his ideas are so great he'll have no problem convincing a bank to lend him the money.

I believe you are certinaly right in a way but he has already borrowed money from bank for other businesses so he wouldn't be able to borrow more.... at least I was told that. He also told me he prefers borrowing from friends other than banks which I think it's a bit dogy, however, I decided to trust him for some reasons.

This is dodgy. Why would you trust him with 50k if other lenders arw not lending. 

Big kalxon warning sign. He could try other vanks
 

SidJ

Tell you what. Give me 20K and I'll flush it down the toilet for you. That way you only lose 20K and you still remain friends

MalMonroe

You said this : "he has already borrowed money from bank for other businesses so he wouldn't be able to borrow more.... at least I was told that. He also told me he prefers borrowing from friends other than banks which I think it's a bit dodgy, however, I decided to trust him for some reasons."

And then you said this : "I personally trust my friend and that's why i would rather lend him the money." 

WHY do you trust this person???  He is not trustworthy.

And as sourcrates (a very wise forumite), above, has said, "You can have all the legal paperwork you want, signed, sealed, documented, witnessed, whatever you insist on. It means absolutely nothing if the chap won`t or can`t pay you back" I totally agree with that.

People on here are trying to warn you NOT to lend this person such a large sum of money but you seem determined to do it all the same.

You can have a mountain of forms and letters and agreements but once your money has gone, it's gone. If you are prepared to lose £50k, then go ahead.  I just think it's a lot of money to lose - especially when you have been advised by everyone in this thread not to do it. 

MalMonroe

ileven1225 said:

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?

No. What zx81 is saying is that you won't get a penny back if he does not have any money left. Doesn't matter how many 'legal' or otherwise documents he and you have signed. Once he has spent your money, you won't see it again. That is what we are ALL trying to tell you. A document will NOT guarantee you repayment. Even if it is a LEGAL document. He won't be able to give what he hasn't got. And you have to consider the fact that he might even go bankrupt once he's spent your money.

Thrugelmir

ileven1225 said:

Deleted_User said:

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 knows

what if we put agreement that the loan can be secured against an asset like their personal property?

You'll need the agreement of any existing charge holders. Highly possible that this will be declined. 

ileven1225

MalMonroe said:

ileven1225 said:

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?

No. What zx81 is saying is that you won't get a penny back if he does not have any money left. Doesn't matter how many 'legal' or otherwise documents he and you have signed. Once he has spent your money, you won't see it again. That is what we are ALL trying to tell you. A document will NOT guarantee you repayment. Even if it is a LEGAL document. He won't be able to give what he hasn't got. And you have to consider the fact that he might even go bankrupt once he's spent your money.

what if we put agreement that the loan can be secured against an asset like their personal property?