Friends are helped. However, friendship also ends with money. If you want to lend larger sums to friends or acquaintances, you shouldn’t just shake your hand.
“It is important to take some precautions when lending large sums to friends,” says lawyer Christian Solmecke. Oral contracts are in principle also valid. However, it is advantageous to draw up a written contract. “The word money lending is purely legally wrong, it is more about a friend granting the other a loan,” explains Hamburg lawyer Constantin von Piechowski.
The contract should also be overwritten as a loan agreement. This makes it clear that it is not a gift. A written loan agreement is also recommended for reasons of security of evidence. This can be done through a lawyer or notary. “It is not mandatory, a piece of paper and a pen are enough,” says von Piechowski.
Include important information in the contract
What belongs in the contract: Name and address of the parties, loan amount and purpose of loan, payment date, confirmation of receipt (e.g. in the case of cash payment). The repayment modalities are also to be listed, namely the “how” (cash or by transfer) and the “when” (approximately monthly or quarterly).
Further components of the contract: Interest – yes or no, the term of the loan and a provision in the event that no repayment takes place or is only paid irregularly. The contract also includes the aspect of whether the borrower offers security. Place, date and signatures on the contract. Such a loan agreement is considered to be legally binding.
<!–
In general, there is a legal so-called freedom of contract. This means that the parties can basically design the content as they wish. “It is important that the lender and the borrower both agree with the content,” said von Piechowski. He is a member of the general lawyer executive committee of the German Bar Association.
Interest is payable on repayment
The contracting parties can agree on interest – but they don’t have to. “The lender has to prove in a later process that these were agreed,” explains Solmecke. Otherwise he cannot enforce your payment in court.
If the contracting parties have not agreed on the amount of interest, the statutory interest rate of four percent applies for one year. Unless otherwise stipulated in the contract, the law requires the interest to be paid after one year. If the loan is to be repaid before the end of one year, the interest must be paid on repayment, as Solmecke further explains.
What if there are problems? “Then it is an advantage if you have received security that you can fall back on,” says von Piechowski. If there is no security and the friend does not pay, lenders should file claims within three years of the end of the repayment period. Otherwise these expire.
Beware of gift tax
Lenders also have to consider a number of things in terms of taxation. If the loan amount for a friend is above the gift allowance of 20,000 euros, you should agree on a market interest rate of around five percent. “Otherwise, the tax office often suspects a taxable gift and requires the borrower to pay the gift tax,” explains Solmecke.
Anyone who demands interest on their loan must state this in their income tax return. They are taxable by the lender. “Depending on whether the loan was granted privately or commercially, you should seek advice from a tax advisor,” says von Piechowski.
“In order to convince themselves of the friend’s creditworthiness, lenders should show pay slips, obtain Schufa information and think of a security – and discuss this with the friend,” recommends von Piechowski. Above all, one should be careful to avoid any misunderstandings. “Otherwise, the friendship will quickly end,” says Solmecke.
© dpa-infocom, dpa: 210112-99-997446 / 3
–
