You decide to make a loan between individuals, family or friends. Some formalities are necessary. Example: in the event of a dispute, if the borrower does not repay the loan on time, two proofs are essential.
The first concerns the reality of the loan. The second is related to the terms of the borrower’s commitment to repay. A loan contract or a written acknowledgment of debt is essential.
What is a private deed?
The loan contract and the acknowledgment of debt can be drawn up and signed directly between individuals. It is, therefore, a simple exchange of writings and signatures between the lender and the borrower called “private deed”. This act is not subject to any formal obligation: a sheet, signed by the various parties, is sufficient. Each signatory must have a signed original too, if necessary, assert their rights.
Formalizing this document remains simple, but it is indeed a legal act. Mention any necessary details that prove the loan. Your document must indicate as precisely as possible the identities of the lender and the borrower, the sum lent, the reason for the loan, the date of delivery of the funds, the method of delivery of the money: order of transfer, number of the check … Without forgetting the application or not of an interest rate and the repayment terms.
It is all the more important that an informal loan, without writing and without real obligation of repayment can quickly be reclassified after manual donation or donation. In this case, the transaction is subject to very specific rules of the Civil Code, and to donation fees to be paid to the tax authorities.
Save the act
Another possibility is to bring in a notary or a lawyer. The act then takes on a much more substantial value of evidence. If the amount loaned is significant, this type of writing is strongly recommended.
At the notary’s, the deed is said to be “authentic”.
It is written by a public officer responsible for verifying the identity and ability of each to engage in the process of a loan between two serious individuals. The authentic instrument has three legal effects.
It is proof of the date, the content of the agreement and has “enforceability”: if the borrower does not repay the credit, the lender does not need to go to court to assert his rights, he can mandate a bailiff.
A loan contract between individuals with the tax authorities
It is also a way of giving the family or friendly loan legal value: a certain date and proof of credit. The form is free but forms are available online to simplify your work.
What happens in the event of the death of one of the parties?
In the event of the death of the lender or the borrower before the end of the credit, without proof, it will be difficult to assert the rights of the other party. With an authentic instrument or a declaration to the tax authorities, the heirs of the deceased can obtain the balance of the transaction.