Family loans, written terms and repayment expectations

Decide together whether the money is a gift or a loan

Money provided by a relative or friend should be clearly identified as a gift or a repayable loan before it is transferred. If repayment is expected, record the amount, any interest, instalment dates and final due date. Discuss how you will communicate if circumstances change. A written record helps avoid a situation in which one person expects prompt repayment while the other believes the money was offered without conditions.

Put the shared understanding into writing

People’s Law School provides practical guidance on lending to someone, including written agreements in a British Columbia legal context. A credit counsellor can help the borrower calculate a realistic contribution without making the family member responsible for the entire budget. The person supplying funds should also consider their own essential expenses and ability to tolerate delayed repayment. Larger, secured or complicated arrangements may warrant independent advice so both parties understand the consequences before relying on a personal promise.