Loan agreements

Why have a loan agreement?

If you're borrowing or lending money, particularly where family or friends are involved, it always makes sense to formalise your agreement.  A properly drafted agreement will protect your rights and help prevent a disagreement or relationship breakdown.

Matters to consider include:

• the loan amount (principal);

• manner of repayment of the principal;

• interest charges;

• payment of interest;

• consequences of the borrower's default; and

• security for the borrower's promises such as a mortgage, charge or guarantee.

Simple loans

There's a perception that legal agreements are tedious, lengthy and costsly; however, this need not be the case.

For simple loans a straightforward Deed of Acknowledgment of Debt may be all that's required to formalise the deal.  If required, security for the repayment of the loan can be added; for example in the form of a charge supported by a caveat over the borrower's real estate. 

More complex loans

For more complex loans we generally recommend you document the arrangements in a comprehensive Loan Agreement setting out all of the terms and conditions.

Further documents securing the loan may also be required; for example, real estate mortgages, good mortgages, company charges, caveats and guarantees.

Estate planning

In this context, it's important to consider the effect of your death on any lending arrangements.  If you need to make a new Will or alter your existing Will, we can help.  Visit Wills.

How we can help

If you're borrowing money or guaranteeing a loan and need independent legal advice on loan documents prepared by a bank or other lender, we can help.  Visit solicitor's certificates.

We offer a fixed price service for preparing straightforward deeds of acknowledgment of debt.  As with most of our fixed price services, we recommend a short consultation as the first step in assisting you.

	What we offer We will: take your instructions at a short consultation; prepare a draft deed of acknowledgment of debt and (where applicable) caveat over the borrower's real estate, based on the instructions you give us at the consultation; send the draft document to you and make any minor changes you may require; send the drafts to the other party and make any minor changes they may require; and arrange for the documents to be executed; where applicable, lodge the caveat at Landgate. The above includes a reasonable allowance for correspondence and telephone calls.
	Fixed prices  Short consultation $99 Deed of acknowledgement of debt        $660 Landgate search and filing fees     $185 Total $944
	Things you should know The above charges apply to straightforward loans.   If you require a more complex loan, we will give you a quote at an intial consultation. Additional services The following services are not included in the fixed-price; however, if you require them, we welcome the opportunity to give you a quote or estimate of charges: negotiating with the other party / parties or making substantial changes to the deed; preparing security or other documents required as part of the transaction.
	How to instruct us Arrange a short consultation:  use our online booking request  or telephone 9220 4437 (1800 018 845 freecall from regional Western Australia) during business hours.  If you're not booking online, you could save time at the consultation by completing our Initial Consultation Form (PDF document) and bringing it with you to the consultation.