Loan agreement between individuals in Georgia

Under the Civil Code a loan can be made verbally, but a verbal loan cannot be proven by witness testimony alone (Article 624). So when you lend money, sign a written agreement or a receipt, and preferably transfer the money through a bank.

The parties agree on interest, but the annual effective interest rate must not exceed 50% — this applies to all kinds of loans (Article 625).

What it must include

• Lender and borrower — with personal details
• Amount and currency
• How the money was handed over — cash or transfer
• Repayment date or schedule
• Interest (if any) and a penalty for late payment
• Security — a mortgage, pledge or guarantor

Loans secured by a mortgage

If the loan is secured by a flat or other real estate, the mortgage agreement must be notarised and registered with the Public Registry — the mortgage takes effect on registration (Article 289). Such an agreement must state the monthly interest rate, which has a legal cap.

Common mistakes

• Lending money without a receipt
• A receipt with no amount or repayment date
• Excessive interest or penalties — a court can reduce them
• A mortgage without a notary and registration
• Signing a sale of a flat as "security" for a loan — this is dangerous

If the money isn't returned

First demand repayment in writing. If that fails, go to court; with a notarised agreement a notary may be able to issue a writ of execution. More on our page "Debt recovery".

Will a template do?

A template is written for a general case and doesn't reflect your risks — often it lacks exactly the clause you'll need in a dispute. It's better to fit the contract to your deal. We draft the contract or review the other side's text before you sign.