Friend asked to borrow money
Discussion
A property developer I know is having problems securing a mortgage on a property and has asked me for a 5 figure loan so he can finish it off.
Just wondering the legal minds thoughts on the contract he sent me below, many thanks for any input.
BETWEEN:
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") dated this ______ day of ______________, (the "Lender")
OF THE FIRST PART
AND
(the "Borrower")
OF THE SECOND PART
IN CONSIDERATION OF the Lender loaning certain monies (the "Loan") to the Borrower, and the Borrower repaying the Loan to the Lender, the parties agree to keep, perform and fulfil the promises and conditions set out in this Agreement:
Loan Amount & Interest
1. The Lender promises to loan XYZ GBP to the Borrower and the Borrower promises to repay this principal amount to the Lender, with interest payable on the unpaid principal at the rate of 12.50 percent per annum, calculated monthly not in advance, beginning on 8 May 2023.
Payment
2. This Loan will be repaid in full on 7 May 2024.
3. At any time on or after 6 November 2023 while not in default under this Agreement, the Borrower may make lump sum payments or pay the outstanding balance then owing under this Agreement to the Lender without further bonus or penalty.
Default
4. Notwithstanding anything to the contrary in this Agreement, if the Borrower defaults in the performance of any obligation under this Agreement, then the Lender may declare the principal amount owing and interest due under this Agreement at that time to be immediately due and payable.
Page 1 of 4
Loan Agreement Page 2 of 4
5. Further, if the Lender declares the principal amount owing under this Agreement to be immediately due and payable, and the Borrower fails to provide full payment, interest at the rate of 30.00 percent per annum, calculated yearly not in advance, will be charged on the outstanding amount, commencing the day the principal amount is declared due and payable, until full payment is received by the Lender.
6. If the Borrower defaults in payment as required under this Agreement or after demand for ten (10) days, the Security will be immediately provided to the Lender and the Lender is granted all rights of repossession as a secured party.
Security
7. This Loan is secured by the following second charge security (the "Security"): XYZ property
8. The Borrower grants to the Lender a security interest in the Security until this Loan is paid in full. The Borrower will do everything necessary to assist the Lender in perfecting its security interest.
Governing Law
9. This Agreement will be construed in accordance with and governed by the laws of the Country of England.
Costs
10. The Borrower shall be liable for all costs, expenses and expenditures incurred including, without limitation, the complete legal costs of the Lender incurred by enforcing this Agreement as a result of any default by the Borrower and such costs will be added to the principal then outstanding and shall be due and payable by the Borrower to the Lender immediately upon demand of the Lender.
Binding Effect
11. This Agreement will pass to the benefit of and be binding upon the respective heirs, executors, administrators, successors and permitted assigns of the Borrower and Lender. The Borrower waives presentment for payment, notice of non-payment, protest, and notice of protest.
Amendments
12. This Agreement may only be amended or modified by a written instrument executed by both the Borrower and the Lender.
Severability
Loan Agreement Page 3 of 4
13. The clauses and paragraphs contained in this Agreement are intended to be read and construed independently of each other. If any term, covenant, condition or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, it is the parties' intent that such provision be reduced in scope by the court only to the extent deemed necessary by that court to render the provision reasonable and enforceable and the remainder of the provisions of this Agreement will in no way be affected, impaired or invalidated as a result.
General Provisions
14. Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa.
Entire Agreement
15. This Agreement constitutes the entire agreement between the parties and there are no further items or provisions, either oral or otherwise.
IN WITNESS WHEREOF, the parties have duly affixed their signatures on this ______ day of ________________, ______
EXECUTED AS A DEED
by xyz in the presence of the below named Solicitor, the effect of the above written loan agreement having been explained by me to XYZ before the execution of it, this ______ day of ______________, ______
____________________________ Solicitor of the Senior Courts of England and Wales
Solicitor's Name: ________________ Solicitor's Address: ____________________
_________________________
Loan Agreement
Page 4 of 4
EXECUTED AS A DEED
by XYZ in the presence of the below named Solicitor, the effect of the above written loan agreement having been explained by me to XYZ before the execution of it, this ______ day of ________________, ______
____________________________ Solicitor of the Senior Courts of England and Wales
Solicitor's Name
_________________________
Just wondering the legal minds thoughts on the contract he sent me below, many thanks for any input.
BETWEEN:
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") dated this ______ day of ______________, (the "Lender")
OF THE FIRST PART
AND
(the "Borrower")
OF THE SECOND PART
IN CONSIDERATION OF the Lender loaning certain monies (the "Loan") to the Borrower, and the Borrower repaying the Loan to the Lender, the parties agree to keep, perform and fulfil the promises and conditions set out in this Agreement:
Loan Amount & Interest
1. The Lender promises to loan XYZ GBP to the Borrower and the Borrower promises to repay this principal amount to the Lender, with interest payable on the unpaid principal at the rate of 12.50 percent per annum, calculated monthly not in advance, beginning on 8 May 2023.
Payment
2. This Loan will be repaid in full on 7 May 2024.
3. At any time on or after 6 November 2023 while not in default under this Agreement, the Borrower may make lump sum payments or pay the outstanding balance then owing under this Agreement to the Lender without further bonus or penalty.
Default
4. Notwithstanding anything to the contrary in this Agreement, if the Borrower defaults in the performance of any obligation under this Agreement, then the Lender may declare the principal amount owing and interest due under this Agreement at that time to be immediately due and payable.
Page 1 of 4
Loan Agreement Page 2 of 4
5. Further, if the Lender declares the principal amount owing under this Agreement to be immediately due and payable, and the Borrower fails to provide full payment, interest at the rate of 30.00 percent per annum, calculated yearly not in advance, will be charged on the outstanding amount, commencing the day the principal amount is declared due and payable, until full payment is received by the Lender.
6. If the Borrower defaults in payment as required under this Agreement or after demand for ten (10) days, the Security will be immediately provided to the Lender and the Lender is granted all rights of repossession as a secured party.
Security
7. This Loan is secured by the following second charge security (the "Security"): XYZ property
8. The Borrower grants to the Lender a security interest in the Security until this Loan is paid in full. The Borrower will do everything necessary to assist the Lender in perfecting its security interest.
Governing Law
9. This Agreement will be construed in accordance with and governed by the laws of the Country of England.
Costs
10. The Borrower shall be liable for all costs, expenses and expenditures incurred including, without limitation, the complete legal costs of the Lender incurred by enforcing this Agreement as a result of any default by the Borrower and such costs will be added to the principal then outstanding and shall be due and payable by the Borrower to the Lender immediately upon demand of the Lender.
Binding Effect
11. This Agreement will pass to the benefit of and be binding upon the respective heirs, executors, administrators, successors and permitted assigns of the Borrower and Lender. The Borrower waives presentment for payment, notice of non-payment, protest, and notice of protest.
Amendments
12. This Agreement may only be amended or modified by a written instrument executed by both the Borrower and the Lender.
Severability
Loan Agreement Page 3 of 4
13. The clauses and paragraphs contained in this Agreement are intended to be read and construed independently of each other. If any term, covenant, condition or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, it is the parties' intent that such provision be reduced in scope by the court only to the extent deemed necessary by that court to render the provision reasonable and enforceable and the remainder of the provisions of this Agreement will in no way be affected, impaired or invalidated as a result.
General Provisions
14. Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa.
Entire Agreement
15. This Agreement constitutes the entire agreement between the parties and there are no further items or provisions, either oral or otherwise.
IN WITNESS WHEREOF, the parties have duly affixed their signatures on this ______ day of ________________, ______
EXECUTED AS A DEED
by xyz in the presence of the below named Solicitor, the effect of the above written loan agreement having been explained by me to XYZ before the execution of it, this ______ day of ______________, ______
____________________________ Solicitor of the Senior Courts of England and Wales
Solicitor's Name: ________________ Solicitor's Address: ____________________
_________________________
Loan Agreement
Page 4 of 4
EXECUTED AS A DEED
by XYZ in the presence of the below named Solicitor, the effect of the above written loan agreement having been explained by me to XYZ before the execution of it, this ______ day of ________________, ______
____________________________ Solicitor of the Senior Courts of England and Wales
Solicitor's Name
_________________________
Edited by skilly1 on Tuesday 9th May 21:09
I know a bridging loan company owner and do some work for him. This is exactly the sort of scenario he works with. His loan is protected very securely as first charge against the asset. It is also loaned as a maximum proportion of the assets value. It’s not cheap (circa 20% p.a.) but that is the way he should go. I would personally not lend the money.
Forget all the terms and conditions etc and ask yourself what sort of mess must the bloke be in to request a loan from you? A pretty serious one I'd imagine.
Whatever you do don't lend him a 5-figure sum. Can't you say you simply don't have the money to lend? Make up a cock-and-bull story if you have to.
Whatever you do don't lend him a 5-figure sum. Can't you say you simply don't have the money to lend? Make up a cock-and-bull story if you have to.
skilly1 said:
A property developer I know is having problems securing a mortgage on a property and has asked me for a 5 figure loan so he can finish it off.
Just wondering the legal minds thoughts on the contract he sent me below, many thanks for any input.
BETWEEN:
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") dated this ______ day of ______________, (the "Lender")
OF THE FIRST PART
AND
(the "Borrower")
OF THE SECOND PART
IN CONSIDERATION OF the Lender loaning certain monies (the "Loan") to the Borrower, and the Borrower repaying the Loan to the Lender, the parties agree to keep, perform and fulfil the promises and conditions set out in this Agreement:
Loan Amount & Interest
1. The Lender promises to loan XYZ GBP to the Borrower and the Borrower promises to repay this principal amount to the Lender, with interest payable on the unpaid principal at the rate of 12.50 percent per annum, calculated monthly not in advance, beginning on 8 May 2023.
Payment
2. This Loan will be repaid in full on 7 May 2024.
3. At any time on or after 6 November 2023 while not in default under this Agreement, the Borrower may make lump sum payments or pay the outstanding balance then owing under this Agreement to the Lender without further bonus or penalty.
Default
4. Notwithstanding anything to the contrary in this Agreement, if the Borrower defaults in the performance of any obligation under this Agreement, then the Lender may declare the principal amount owing and interest due under this Agreement at that time to be immediately due and payable.
Page 1 of 4
Loan Agreement Page 2 of 4
5. Further, if the Lender declares the principal amount owing under this Agreement to be immediately due and payable, and the Borrower fails to provide full payment, interest at the rate of 30.00 percent per annum, calculated yearly not in advance, will be charged on the outstanding amount, commencing the day the principal amount is declared due and payable, until full payment is received by the Lender.
6. If the Borrower defaults in payment as required under this Agreement or after demand for ten (10) days, the Security will be immediately provided to the Lender and the Lender is granted all rights of repossession as a secured party.
Security
7. This Loan is secured by the following second charge security (the "Security"): XYZ property
8. The Borrower grants to the Lender a security interest in the Security until this Loan is paid in full. The Borrower will do everything necessary to assist the Lender in perfecting its security interest.
Governing Law
9. This Agreement will be construed in accordance with and governed by the laws of the Country of England.
Costs
10. The Borrower shall be liable for all costs, expenses and expenditures incurred including, without limitation, the complete legal costs of the Lender incurred by enforcing this Agreement as a result of any default by the Borrower and such costs will be added to the principal then outstanding and shall be due and payable by the Borrower to the Lender immediately upon demand of the Lender.
Binding Effect
11. This Agreement will pass to the benefit of and be binding upon the respective heirs, executors, administrators, successors and permitted assigns of the Borrower and Lender. The Borrower waives presentment for payment, notice of non-payment, protest, and notice of protest.
Amendments
12. This Agreement may only be amended or modified by a written instrument executed by both the Borrower and the Lender.
Severability
Loan Agreement Page 3 of 4
13. The clauses and paragraphs contained in this Agreement are intended to be read and construed independently of each other. If any term, covenant, condition or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, it is the parties' intent that such provision be reduced in scope by the court only to the extent deemed necessary by that court to render the provision reasonable and enforceable and the remainder of the provisions of this Agreement will in no way be affected, impaired or invalidated as a result.
General Provisions
14. Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa.
Entire Agreement
15. This Agreement constitutes the entire agreement between the parties and there are no further items or provisions, either oral or otherwise.
IN WITNESS WHEREOF, the parties have duly affixed their signatures on this ______ day of ________________, ______
EXECUTED AS A DEED
by xyz in the presence of the below named Solicitor, the effect of the above written loan agreement having been explained by me to XYZ before the execution of it, this ______ day of ______________, ______
____________________________ Solicitor of the Senior Courts of England and Wales
Solicitor's Name: ________________ Solicitor's Address: ____________________
_________________________
Loan Agreement
Page 4 of 4
EXECUTED AS A DEED
by XYZ in the presence of the below named Solicitor, the effect of the above written loan agreement having been explained by me to XYZ before the execution of it, this ______ day of ________________, ______
____________________________ Solicitor of the Senior Courts of England and Wales
Solicitor's Name
_________________________
The first charge lender will need to give permission, I'd have thought.Just wondering the legal minds thoughts on the contract he sent me below, many thanks for any input.
BETWEEN:
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") dated this ______ day of ______________, (the "Lender")
OF THE FIRST PART
AND
(the "Borrower")
OF THE SECOND PART
IN CONSIDERATION OF the Lender loaning certain monies (the "Loan") to the Borrower, and the Borrower repaying the Loan to the Lender, the parties agree to keep, perform and fulfil the promises and conditions set out in this Agreement:
Loan Amount & Interest
1. The Lender promises to loan XYZ GBP to the Borrower and the Borrower promises to repay this principal amount to the Lender, with interest payable on the unpaid principal at the rate of 12.50 percent per annum, calculated monthly not in advance, beginning on 8 May 2023.
Payment
2. This Loan will be repaid in full on 7 May 2024.
3. At any time on or after 6 November 2023 while not in default under this Agreement, the Borrower may make lump sum payments or pay the outstanding balance then owing under this Agreement to the Lender without further bonus or penalty.
Default
4. Notwithstanding anything to the contrary in this Agreement, if the Borrower defaults in the performance of any obligation under this Agreement, then the Lender may declare the principal amount owing and interest due under this Agreement at that time to be immediately due and payable.
Page 1 of 4
Loan Agreement Page 2 of 4
5. Further, if the Lender declares the principal amount owing under this Agreement to be immediately due and payable, and the Borrower fails to provide full payment, interest at the rate of 30.00 percent per annum, calculated yearly not in advance, will be charged on the outstanding amount, commencing the day the principal amount is declared due and payable, until full payment is received by the Lender.
6. If the Borrower defaults in payment as required under this Agreement or after demand for ten (10) days, the Security will be immediately provided to the Lender and the Lender is granted all rights of repossession as a secured party.
Security
7. This Loan is secured by the following second charge security (the "Security"): XYZ property
8. The Borrower grants to the Lender a security interest in the Security until this Loan is paid in full. The Borrower will do everything necessary to assist the Lender in perfecting its security interest.
Governing Law
9. This Agreement will be construed in accordance with and governed by the laws of the Country of England.
Costs
10. The Borrower shall be liable for all costs, expenses and expenditures incurred including, without limitation, the complete legal costs of the Lender incurred by enforcing this Agreement as a result of any default by the Borrower and such costs will be added to the principal then outstanding and shall be due and payable by the Borrower to the Lender immediately upon demand of the Lender.
Binding Effect
11. This Agreement will pass to the benefit of and be binding upon the respective heirs, executors, administrators, successors and permitted assigns of the Borrower and Lender. The Borrower waives presentment for payment, notice of non-payment, protest, and notice of protest.
Amendments
12. This Agreement may only be amended or modified by a written instrument executed by both the Borrower and the Lender.
Severability
Loan Agreement Page 3 of 4
13. The clauses and paragraphs contained in this Agreement are intended to be read and construed independently of each other. If any term, covenant, condition or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, it is the parties' intent that such provision be reduced in scope by the court only to the extent deemed necessary by that court to render the provision reasonable and enforceable and the remainder of the provisions of this Agreement will in no way be affected, impaired or invalidated as a result.
General Provisions
14. Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa.
Entire Agreement
15. This Agreement constitutes the entire agreement between the parties and there are no further items or provisions, either oral or otherwise.
IN WITNESS WHEREOF, the parties have duly affixed their signatures on this ______ day of ________________, ______
EXECUTED AS A DEED
by xyz in the presence of the below named Solicitor, the effect of the above written loan agreement having been explained by me to XYZ before the execution of it, this ______ day of ______________, ______
____________________________ Solicitor of the Senior Courts of England and Wales
Solicitor's Name: ________________ Solicitor's Address: ____________________
_________________________
Loan Agreement
Page 4 of 4
EXECUTED AS A DEED
by XYZ in the presence of the below named Solicitor, the effect of the above written loan agreement having been explained by me to XYZ before the execution of it, this ______ day of ________________, ______
____________________________ Solicitor of the Senior Courts of England and Wales
Solicitor's Name
_________________________
Edited by skilly1 on Tuesday 9th May 21:09
How big a five-figure loan are we talking about?
Personally I wouldn't be doing this, unless it was family. There is a reason why he cannot raise the funds through conventional channels.
Wheatsheaf said:
Forget all the terms and conditions etc and ask yourself what sort of mess must the bloke be in to request a loan from you? A pretty serious one I'd imagine.
Whatever you do don't lend him a 5-figure sum. Can't you say you simply don't have the money to lend? Make up a cock-and-bull story if you have to.
Fair point ! Whatever you do don't lend him a 5-figure sum. Can't you say you simply don't have the money to lend? Make up a cock-and-bull story if you have to.
Doofus said:
The second charge is the killer.
Who has the first charge, and how much does he owe them?
The answer is irrelevant, BTW; it's a second charge.
Mortgage company. £400k mortgage on property that was bought for £700k. Expects it to be. £1m valuation when work done. He was hoping to get a bigger mortgage once some work was done but can’t get it. Who has the first charge, and how much does he owe them?
The answer is irrelevant, BTW; it's a second charge.
skilly1 said:
Doofus said:
The second charge is the killer.
Who has the first charge, and how much does he owe them?
The answer is irrelevant, BTW; it's a second charge.
Mortgage company. £400k mortgage on property that was bought for £700k. Expects it to be. £1m valuation when work done. He was hoping to get a bigger mortgage once some work was done but can’t get it. Who has the first charge, and how much does he owe them?
The answer is irrelevant, BTW; it's a second charge.
skilly1 said:
Doofus said:
The second charge is the killer.
Who has the first charge, and how much does he owe them?
The answer is irrelevant, BTW; it's a second charge.
Mortgage company. £400k mortgage on property that was bought for £700k. Expects it to be. £1m valuation when work done. He was hoping to get a bigger mortgage once some work was done but can’t get it. Who has the first charge, and how much does he owe them?
The answer is irrelevant, BTW; it's a second charge.
I'm not saying it's a bad idea, but it needs more DD than we have.
A property developer is only going to be asking mates for loans if he's in pretty deep?
Either he can't raise the money secured on his own house or other assets, or he's choosing not to.
Is this 'developer' a sole trader or Ltd Co or what?
Does the entity you'd be lending to actually own the property?
Either he can't raise the money secured on his own house or other assets, or he's choosing not to.
Is this 'developer' a sole trader or Ltd Co or what?
Does the entity you'd be lending to actually own the property?
skilly1 said:
Louis Balfour said:
His loan is around 60% LTV before works. How much is the value of the work completed?
Around £100k spent so far. Gassing Station | Finance | Top of Page | What's New | My Stuff