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how do I make a money loan 'legal'??

(15 Posts)
giftorloan Thu 25-Oct-12 21:26:07

xh has asked to borrow £ for a mortgage. i am prepared to do this, but wondered how I could make the repayment enforcible in the future. will a simple receipt (stating 'loan') be sufficient with retained bank statement as proof of transaction??

CunningPlan Thu 25-Oct-12 21:29:52

Yes.

But what are you going to do to make sure that he can pay it back or, if he doesn't, that you can somehow recover the money?

giftorloan Thu 25-Oct-12 21:33:20

er, don't know. any ideas???? smile

MissKeithLemon Thu 25-Oct-12 21:36:02

See a solicitor and have it all agreed and witnessed by a professional? I'd also seriously be wanting some sort of covenant which makes a forced sale of the property if he does not pay up. Not sure how, but I'm sure a decent solicitor could help!

mumblechum1 Thu 25-Oct-12 21:38:39

You do need to do it properly. A receipt marked "loan" would be a really crap idea.

You need a loan agreement setting out all the details. If it were me and it's a large amount of money I'd actually do a charge secured on his house so that you can be guaranteed to get it back and force a sale if he defaults.

But I'm a hard assed lawyer smile

Viperidae Thu 25-Oct-12 21:42:54

I have made some loans to my DB to help him through a tough time and used a loan agreement form that another mumsnetter shared with me.

Having said that, I know that DB will pay it back, are you sure of that with your ex? I would be tempted to do this properly through a solicitor.

CunningPlan Thu 25-Oct-12 21:44:32

Mumblechum is right about a charge on the house. But actually a loan that doesn't have terms specified is repayable on demand I.e. anytime you want him to repay, so as a lender that puts you in a better position than if you had a repayment schedule.

OP you need to see a solicitor. If XH is also getting a mortgage, the mortgage company will want you (probably) to agree that he won't repay you until they have been repaid in full. Is that what you want?

LulaPalooza Thu 25-Oct-12 21:44:40

You need, at the very least, a loan agreement which incorporates a Declaration of Trust and you need a solicitor to draw it up for you. I did my own for the loan DStepDad gave me, based on a precedent a friend gave me but I'm a lawyer and it is/ was a simple transaction.

mumble - (caveat - am not a property lawyer) I doubt the mortgage co would be very happy about a second charge, these days. Can you still register an interest and prevent/ force a sale?

<remembers land/ property law days with faint sense of horror and nausea>

mumblechum1 Thu 25-Oct-12 21:48:31

Thing is without a charge, the OP would have to sue, get a judgement then apply for a charging order then an order for sale. All very expensive and time consuming.

As to whether the lender would agree to a second charge I guess that depends on their having priority.

giftorloan Thu 25-Oct-12 21:51:27

thanks for all the responses, everyone!
erm, how about if ostensibly it was a loan, but in reality i was prepared to write it off, as long as in the future i could call on it as proof that i had given him money? we have not got a financial settlement in place.

mumblechum1 Thu 25-Oct-12 21:55:11

Ah, well in that case it would be sensible to include provision for the loan in the consent order within the divorce proceedings on the basis that if you didn't feel like enforcing it it's entirely up to you not to do so.

But you do need to have an enforceable agreement in place. Whether you let him off the hook is up to you but you have no way of knowing whether you may need that money in the future if your circs change.

MrsHoarder Thu 25-Oct-12 22:25:29

I'd be surprised if the mortgage company would let him use a loan tbh.

We bought a house 6 months ago and in order to get the mortgage with a gift for some of the deposit we had to give them a letter starting that the money was given with no expectation of repayment. So a loan with legal footing would have Ben impossible.

evilkitten Fri 26-Oct-12 23:23:37

Key point is to ensure that the point of repayment is clear, otherwise it isn't recoverable until death. Practically, if it's a reasonable amount,you should get legal advice. You should also consider a charge over the property if its for a mortgage.

Assuming xh = ex husband, why wo us you want to do this?

reddemonsinthegarden Sat 27-Oct-12 12:05:31

i think i will need to get solicitor's advice on all of this!
EvilKitten, we share the dc's and it'll give them further security. they won't have the threat of having to move into more rented accommodation in the future.

missmehalia Wed 31-Oct-12 08:20:46

Definitely go the official route with a solicitor writing up your agreement. Make sure he's told you everything as well regarding his finances and any other lenders and debt so it can be taken into account. Are you sure he's told you everything?

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