Q: Is this personal loan contract between friends 'legally binding'?
My friend is loaning me money via a home equity loan to pay off my student loans (~$85k) that I have been paying on for 10 years. We have a contract that is written up that I will pay him $2000 a month (what I pay now) over the next 4 years (which is way shorter than the current payoff approach), or less if I am able to pay more. We have a default clause in there as well. If both of us sign this agreement, have it notarized (may be not required from what I read), is it enforceable should I default? I obviously do not plan on defaulting, but I want to make sure he is covered.
A: There is no "friends" exception to contract. You received value and promised in return to repay. That suffices as consideration for an enforceable contact.
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A: Contracts do not have to be in writing or notarized, generally, to be valid. Without reviewing the terms of the actual contract, there is no reason that you have disclosed that this would not be a valid contract in all respects.
1 user found this answer helpful
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