• Shall I lend the money over promissory note & documents of land?

Hi sir,

        My friend constructing apartments ,he ask me 1500000 rs for that construction and told me that he will give the cheques ,promossory note and original documents of his land ,will repay the amount in 6 months .Please give me suggestion shall i lend or not .how can i make agreement with him?
Asked 6 months ago in Civil Law from Guntur, Andhra Pradesh
1) if you trust your friend then you can advance him money on basis of original documents of land , post dated cheques and promissory note 

2) agreement should mention period of loan , interest to be charged , date of repayment of loan , arbitration clause for resolution of disputes etc 

3) loan agreement should also contain clauses as to penal rate of interest to be charged on failure to repay the loan 

4) equitable mortgage has to be registered 
Ajay Sethi
Advocate, Mumbai
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This depends on his trustworthiness in your eyes. As part of due diligence you should secure your loan through promissory note or a flawless agreement with him. Take PDCs for the amount to be repaid. Get the agreement drafted by a lawyer.
Ashish Davessar
Advocate, Jaipur
18158 Answers
449 Consultations
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15,00,000/- is a huge amount.
You can lend the money by bank transaction or by cheque transfer or any other mode which creates an evidence for advancing the loan.
Just promissory note or loan agreement or obtaining blank cheques may not suffice the conditions guaranteeing the loan repayment.
If the property documents have been deposited as collateral then you may get it mortgaged by a registered deed on your name , this will enable you to recover your loan amount with interest if any easily.
T Kalaiselvan
Advocate, Vellore
14069 Answers
127 Consultations
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1) original documents are sufficient security for your loan but registration of equitable mortgage would be necessary 

2) as far as cheques  are concerned it would depend upon period for which you are advancing money and period within which your friend is repaying the loan 

3) take 3 cheques of Rs 5 lakhs each for loan repayment 

4) promissory note can be for the amount agreed to between the parties 
Ajay Sethi
Advocate, Mumbai
23291 Answers
1220 Consultations
5.0 on 5.0
1.  How many cheques depends on by how many installments would he repay the loan amount and you can get the post dated cheque (not blank cheques), If you have lent the amount by single transaction one promissory note with a signature on one rupee revenue stamp and two witnesses shall do for that transaction.


2.  It depends on the nature  of loan and the terms of repayment and interests etc.


3.  By keeping the original documents you cannot do anything to recover the loan, you should get a sale agreement executed in your favor on the basis of the original title document held for collateral security purpose.



4. You have to decide about this aspect based on the prevailing circumstances.
T Kalaiselvan
Advocate, Vellore
14069 Answers
127 Consultations
5.0 on 5.0
1. One cheque is sufficient.
2. Any amount of money can be lent.
3. The original documents are sufficient.
4. You will be secured if a promissory note or agreement is executed,
Ashish Davessar
Advocate, Jaipur
18158 Answers
449 Consultations
5.0 on 5.0

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