Lending money for a friend for 5% per month
Glad son
(Querist) 11 January 2016
This query is : Resolved
Hi,
my name is Glad Son. Actually am lending 3lks rs to my friend against mortgage deed for 5%.
My question is actually I don't have a lenders licence so I can lend money for interest.
shall I mention about the monthly interest details in mortgage deed.
Is it safe or its not safe to mention interest amount in mortgage deed and just collect intrest amount every month in a mutual understanding?
Later if he refuse to give interest it would be waste of giving money without interest if I didn't mention in deed. Please help me for this confusion....?
Thanks in advance
Glad son
Anirudh
(Expert) 11 January 2016
First, One need not be a money lender to enter into a Mortgage Deed.
Second, without registering the mortgage deed, with the sub-registrar's office, the Mortgage has no meaning and will not be accepted as evidence by any Court of Law.
Thirdly, without mentioning the interest rate in the mortgage deed, you will not be able to recover any interest from the mortgagor.
Fourthly, the interest rate of 5% is abnormally high and will attract the provisions of Usurious Loans Act. The object of the Act is to prevent the Civil Courts being used for the purpose of enforcing harsh and unconscionable loans carrying interest at usurious rates. Therefore the Courts will not allow such exorbitant interest rates even if you mention it in the mortgage deed, as such rates are considered as 'extortionate'.
Therefore try to be reasonable. Charging 24% p.a. itself is quite high. So if you try to be greedy, beware you will loose heavily as you will not be able to enforce it through court of law.
Sudhir Kumar, Advocate
(Expert) 11 January 2016
why you frind cannot get a lpoan from bank?
because
either
the project is not legally tenable
or
the project is not commercially viable
or
he himself is not loan worthy.
So the loan has to sink.
Sudhir Kumar, Advocate
(Expert) 11 January 2016
further, as observed by Mr Anirudh you are going to charge heavy and illegal interest from someone in dire need and you claim to be his friend.
No doubt you are greedy and your friend is clever.
you may not agree but I repeat what I say in such threads (most after the loan has sunk)
"Money given to friends and relatives is always a charity in the garb of loan which is given in expectation of refund but always taken with intention of non-refund."
Sudhir Kumar, Advocate
(Expert) 13 January 2016
REPEATED AT
http://www.lawyersclubindia.com/experts/Lending-money-to-a-friend-in-security-of-his-Plot-sale-deed-which-deed-would-be-better--579166.asp#.VpWsrk-njww
K.S.Srinivas
(Expert) 23 January 2016
I go with the expert Sri Anirudh.
