Legal Question in Business Law in California

You'll find out when you get sued, which would happen when something goes wrong in your loans and you haven't complied with all rules and regulations. Family disputes can get ugly.

It is difficult to discern from the question presented the context required for the answer. However, California Civil Code sections 1916.12-1 et seq. govern the legal rate of interest that can be charged in a loan transaction. This section of the Civil Code makes references to "any person" when discussing the lending transaction. On this basis, a family member or friend who engages in lending money would be subject to these provisions.

It is always vital to get these types of agreements reduced to writing so that everyone has a crystal clear understanding of the terms of the loan, the interest rate, the maturity date; and other terms including how to handle a disagreement or breach of the loan agreement. For more information, feel free to contact our office at 415.655-6820.

Without disputing the previous answers, which are correct but assume you have a particular context in mind, I would say that in a truly abstract and pure sense one is not "engaged in the business of lending" if they make a one-time loan to a close friend or family member (and are not otherwise making loans). The words "engaged in the business of (whatever)" have to have some meaning or they would be unnecessary in the law or regulation in question.