# Loan agreement between individuals in Georgia Lending money to a relative or friend is often done verbally — and the trouble starts when the money isn't returned. A properly documented loan makes recovery much easier. We draft loan and mortgage agreements and protect both lenders and borrowers. - Confidential - Georgian · English · Russian - Free first consultation - Courts of all instances 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. ## Our services - Drafting a loan agreement or receipt - Mortgage or pledge agreements and registration - Reviewing the other side's agreement - Checking interest and penalties against the law - Demanding repayment and filing a claim - Defence against inflated interest and penalties ## Questions & answers ### Is a verbal loan valid? Yes, but it can't be proven by witnesses alone. You need a receipt, messages or a transfer record. ### What is the maximum interest? The annual effective rate must not exceed 50%. Loans secured by a mortgage have a stricter cap. ### Does a loan agreement have to be notarised? Not if there is no mortgage. A mortgage agreement, however, must be notarised and registered. ### Can I use a template from the internet? You can, but a template is written for a general case and often lacks exactly the clause you'll need in a dispute. It's better to fit the contract to your deal or have a lawyer review it before you sign. ## Legal basis - [Civil Code of Georgia](https://matsne.gov.ge/ka/document/view/31702) Official texts (in Georgian) — Legislative Herald of Georgia, matsne.gov.ge. ## Related topics - [#Court cases](https://mmlaw.ge/en/civil-litigation-lawyer/) - [#Property](https://mmlaw.ge/en/real-estate-lawyer/) - - [Civil litigation lawyer](https://mmlaw.ge/en/civil-litigation-lawyer/) - - [Debt recovery](https://mmlaw.ge/en/debt-recovery-georgia/) - - [Mortgage](https://mmlaw.ge/en/mortgage-georgia/) - - [Who is a judge? Courts and judges in Georgia](https://mmlaw.ge/en/blog/who-is-a-judge-in-georgia/) - - [Disputes with developers · For foreigners](https://mmlaw.ge/en/foreigners/disputes-with-developers/) - - [Time-barred loans in Georgia: limitation period and defence](https://mmlaw.ge/en/time-barred-loans/) - - [Removing a seizure on bank accounts and property](https://mmlaw.ge/en/removing-seizure-on-account/) - - [Compensation for moral damage](https://mmlaw.ge/en/moral-damage-compensation/) Practice areas ## Other practice areas - [Criminal defense](https://mmlaw.ge/en/criminal-defense-lawyer/) — Defense at every stage — from investigation and arrest to trial and appeal. - [Drug offences](https://mmlaw.ge/en/drug-crime-lawyer/) — Defence in cases of buying, possessing, selling and importing drugs — and against fines and administrative detention. - [Cybercrime](https://mmlaw.ge/en/cybercrime-lawyer/) — Defense in cybercrime cases and help for victims of online fraud, hacked accounts and blackmail. - [Property crimes](https://mmlaw.ge/en/property-crime-lawyer/) — Defence in theft, robbery, fraud, extortion, embezzlement and misappropriation cases. - [Economic crimes](https://mmlaw.ge/en/economic-crime-lawyer/) — Defence against tax evasion, money laundering, customs and other economic charges. - [Corruption and official crimes](https://mmlaw.ge/en/corruption-crime-lawyer/) — Defence in bribery, trading in influence and abuse of official power cases. - [Violent crimes](https://mmlaw.ge/en/violent-crime-lawyer/) — Defence in assault, bodily injury, threats and homicide cases — including self-defence. - [Juvenile justice](https://mmlaw.ge/en/juvenile-justice-lawyer/) — Specialised representation of minors, focused on their rights and future. - [Civil litigation](https://mmlaw.ge/en/civil-litigation-lawyer/) — Contract, property and damages disputes — negotiated or argued in court. - [Administrative law](https://mmlaw.ge/en/administrative-law-lawyer/) — Challenging decisions of public bodies, fines, permits and licences. - [Labor disputes](https://mmlaw.ge/en/employment-lawyer/) — Unlawful dismissal, unpaid wages and employment contracts — for employees and employers. - [Corporate law](https://mmlaw.ge/en/corporate-lawyer/) — Company formation, contracts, compliance and shareholder matters. - [Real estate](https://mmlaw.ge/en/real-estate-lawyer/) — Due diligence, purchase agreements, registration and property disputes. - [Family law](https://mmlaw.ge/en/family-lawyer/) — Divorce, custody, alimony and division of property — handled with discretion. - [Inheritance](https://mmlaw.ge/en/inheritance-lawyer/) — Accepting an inheritance, the certificate of inheritance, wills and disputes between heirs. - [Intellectual property](https://mmlaw.ge/en/intellectual-property-lawyer/) — Trademarks, copyright and protection of your creative and business assets. --- Source: https://mmlaw.ge/en/loan-agreement-georgia/ · MMLAW · +995 551 00 43 00 · info@mmlaw.ge