Notarize every personal loan?!!

[RAMd®d]

But for $25,000, I'd probably have a legal contract drawn up.

Or arrange for a third-party to draw it up and administer a payment schedule. For awhile the local new/traffic/weather radio stations here were running ads for company that provided just such a service. I haven't heard those ads for quite awhile now.


For $500, if I felt the potential need for legal documentation, I'd never loan the money in the first place. *I* would think if it as a gift, and if it was repaid, that would be a plus.



I've never had a company notarize a loan agreement when I signed it. Maybe that's just Ohio.

That may be because a company is part of the transaction. A credit card account is a loan, and you're legally obligated to pay back what you "borrow" without the action of a notary.

In the case of a personal loan between private parties, an "outside" witness is a good idea, if not just a legal requirement.

[ztirffritz]

I guess when you have large sums of money, the definitions start ot blur also. For me, $500 would be a large personal loan. I'd consider it a gift as mentioned above, and if repaid, count my blessings. $25k would be a life altering business investment that would require lawyers and blessings in triplicate from my wife.

[anonymouse1]

This sounds like your relative had a bad lawyer--was there any evidence introduced that this was the borrower's signature? Handwriting expert? Was there any other evidence of the transaction? Hard to say without more info, but this just sounds wrong.

And, I agree with the point that the borrower is a scumbag.

kap wrote:
Relative and I are both in CA. The judge dismissed the hand-written promise to pay letter even though the borrower's signature was on it. He denied outright he ever signed it. I know the loaner and the borrower very well so I can say with utmost certainty that the latter is a total jackass!

[cbelt3]

Totally agree on the lawyer problem. It should have been very easy to show a chain of money.... "Here I have a cancelled check for $25,000 from the loaner to you. Your signature is on the back. What was that ? "

"A gift".

"Did you pay gift tax on it ? (aside) we should probably let the IRS know."

"It was a loan ! Not a gift !"

Also, did the loaner declare the interest on the loan in their taxes to the IRS ?

My mother has done family loans. Substantial ones... angel investments, mortgages, etc.. She writes an agreement, gets it notarized, files it with her lawyer. And pays taxes on the interest at the official 'minimum interest loan rate' that the IRS requires.

[testcase]

Was the word "LOAN" written on the Memo line of the check when it was presented to the borrower? If so, the bank would have a picture of both sides of the check showing that. If the person loaning the money did not do that, it would be harder to prove it was a loan and not a gift, a repayment or something else but, still not impossible to prove it was a loan. What is the "borrower" claiming now?

[Bill in NC]

checks will clear all the day long even w/o a signature.

JoeH wrote:
Think of it another way, a check is not notarized. But absent it being contested on grounds of forgery or coercion, just a signature is all that is needed to establish that the recipient is owed money by the check writer.

[JoeH]

Bill in NC wrote:
checks will clear all the day long even w/o a signature.

[quote=JoeH]
Think of it another way, a check is not notarized. But absent it being contested on grounds of forgery or coercion, just a signature is all that is needed to establish that the recipient is owed money by the check writer.

True, but that is the fault of the check clearance operation. That they are accepting and clearing an unsigned check is not related to my statement. You can even challenge a check transfer if you can show it was unsigned.

[kap]

More info:
1 > The borrower didn't sign letter. Only initialed after a payment is made.
2 > The transactions were sometimes in cash. Other times checks whereas memo was left blank.

Now I understand why the judge dismissed the whole deal. Oh, well, moving forward...