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Loan from family member - Documentation needed


27-Apr-2025 (In Family Law)
I am giving a considerable amount of money via RTGS to a family member (blood relation). I want to draw a legally binding loan agreement for this. Would a regular notary be able to do this for me, or are there any other measures I need to take from a documentation perspective? I want this to be foolproof to avoid any defaults or issues in the future.
Answers (4)

Answer #1
625 votes
To ensure the loan agreement is legally binding and foolproof, you should draft a detailed loan agreement clearly mentioning the amount, mode of payment (RTGS details), repayment terms, interest (if any), and consequences of default. Although a notary can attest the document, for stronger legal validity, it is advisable to get it executed on a non-judicial stamp paper of appropriate value (based on your state's Stamp Act) and have it signed by both parties along with two witnesses. You can also optionally get it registered at the Sub-Registrar's office for added authenticity. Proper documentation will safeguard you in case of any future disputes.
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Advocate Adarsh Kumar

Adv. Adarsh Kumar

LawRato Delhi | 400+ Answers
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Answer #2
740 votes
Yes it’s always better to go for a formal agreement. You can enter into MOU and you can get it notarised from a notary. Rest all depends on what documentation you need. your mou will contain all the necessary valid things you need to get added like interest, duration , legal aspects if the loan is not paid in time then you have all the authority to take legal action etc
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Advocate Aditi Gupta

Adv. Aditi Gupta

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Answer #3
768 votes
As an advocate I will provide my honest suggestion in the matter. Money and documentation are two different things. Money recived by a person can be utilised but there is nothing called a legally binding documentation. However if you wish to get the legally binding documentation done, it can be done easily by any advocate or notary. Take care of your money though
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Answer #4
750 votes
It depends upon how much amount you are giving as a loan to your family person. If the loan is below taxable value then you can get the notarised stamp paper of value, otherwise, if the loan amount is taxable then you must do that with proper paper work. In General Family Loan agreements are being notarised with stamp duty.
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Advocate Dipanshu Sahu

Adv. Dipanshu Sahu

LawRatoDelhi | 25+ Answers
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