cpc

lending money to a friend


Hi,

I am going to lend money (10 lakhs) for my friend in order to purchase a property. Though we are good on terms I want to have a written bond that can be legally valid. But my friend says - don't need an bond - owing to stamp duty and other charges. He insists on a simple written agreement.

What sort of an agreement should I go with that can be legally valid if there is going to be any dispute? 

PS: We both are investing money to buy that property. Apart from that my friend with his mom has taken a bank loan. Hence the property is registered to his name. Our purpose is to sell after 4- 5 years and divide the profit.

Kindly suggest me with suitable advise and suggestions.

 
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Retired Manager

Appears to be dangerous proposition as your Friend does not want a bond. You may back out. That's my advice.

 

If yours and your friend's intention is to purchase a property with your respective investment for resale at a later date for higher amount and sharing profits, why your friend alone went to Bank and obtained loan alongwith his mother. It raises doubts.

 

If your plans are as above, the property should have been purchased in joint name of both of you with an agreement therein that if sale happens at a future date, the sale proceeds shall be shared in so and so proportion or in the proportion of your respective initial investment.

 

Giving an amount of Rs. 10.00 lakhs even to a present day friend,  without any bond or proof is unwise

 
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LEGAL CONSULTANT

UR query illustrates that U R not confident about UR friend,hence better do the transaction in the presence of an advocate and he will assist U with all the necessary documents.

 
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Logical and Legal Advisor at Family Court

Better back off now, dont go with people who advice you to take lawyer with you etc, lawyers credibility everybody knows, better to back off and dont pay 1 re to friend, or lend 1 naya paisa to any friend, you will either have to forget the money or forget friendship.

 

Dont say that nobody advised you !

 
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Dy Director

whehn you are gooing to donate money in charity whetn why do you insist on any type of bond.

 

remember

"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."

"company of a fool and his money doe snot last long"

 

 
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Dy Director

point wise reply to your query is as under :-

I am going to lend money (10 lakhs) for my friend in order to purchase a property. “

 

Good. Go ahead, Your money his property and later inability to pay back.  No mortgage of property in your favour no pawning of jewellery.

 

Why he cannot borrow from bank (i) either bank does not find him in paying capacity (ii) or he is not credit worthy (iii) or property is not with marketable title ; and finally (iv) Bank officials are not stupid. (v) Bank will recover back the money with interesst you you will not get even the principle.

 

Later on  you keep begging behind him and receive threats from him.

रखना बजुर्गों का यह कौल सीख

पहले दे उधार फिर मांग भीख

 
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Dy Director

"Though we are good on terms"

No problem.  The day you demand your own money(or even hint at expecting refund) you will be worst enemies.

 
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Dy Director

" I want to have a written bond that can be legally valid. But my friend says - don't need an bond - owing to stamp duty and other charges. He insists on a simple written agreement."

 

Still you are not understanding intention and going for pay him money and will be irritated when I call it charity.

 

He is not a fool that he will borrow money on a legally tenable pronote.  Even if you have that well stamped document still recovery is not so easy.  A lot of suffering and feeding of lawyers will be involved.

 

At this point he just have to convince you to part with money at friendship cost.

 
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Dy Director

"What sort of an agreement should I go with that can be legally valid if there is going to be any dispute? "

 

Fierce dispute is certain and guaranteed in which in all circumstances you are going to be the loser and he gain immensely.  You lose money and friendship both.

 

If the agreement is wellstampted and drafted by lawyer then you may get some part of money or elese you will buy wisdom only.

 
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Dy Director

"We both are investing money to buy that property. Apart from that my friend with his mom has taken a bank loan. Hence the property is registered to his name. Our purpose is to sell after 4- 5 years and divide the profit."

 

No game (whether tiger or fish or even a domestic rat) can be hunted/caught/trapped  without a bait.  Bait has been given to you and you have started moving towards bait.

 

You cannot cheat someone unless you develop a greed in him which they have created in you.

 

You have been told that bank has given them loan still they need your money. They are asking for money based on a promise which will not be fulfilled.

Either

  • There is no bank loan
  • Loan is for other purpose
  • They have already exhausted repaying capacity in the said loan

When property is in his name then how on earth you can expect that :-

  1. It will be sold in promised time.
  2. You will get even a single penny from that sale.

If the property is sold then why should you be invited for free lunch when your friend (so far friend)  is taking care (right at this stage)to leave you with no legal alternative.

 
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