Legal Question in Credit and Debt Law in California
Loan Note
My uncle borrowed money from his boss and he wrote a loan note saying that he will pay the boss back at a certain time if not his boss will get 25% of the ownership of his house. The note says that he still owes $15,000, but this amount was not given all at once it was cumulative amount of small loans ($500-$2,000). He is currently unemployed so he is unable to pay back the loan. The boss wants to take legal action. So with this note does the boss have the rights to control 25% ownership of the house?
3 Answers from Attorneys
Re: Loan Note
To start with, I am assuming that 25% of the home value is more than $15,000. Off the top of my head, one argument may be that the loan note does not entitle the boss to an ownership interest in 25% of the house, rather the 25% only represented a security interest so that if the loan defaults, the boss could recover only his 15,000 (plus interest presumably) by exercising his security interest in the home -up to 25%.
Also, although tenuous, you may be able to argue the contract defense of unconscionability.
-Bryan
619.400.4929
Re: Loan Note
No. The boss would have to get a court judgment first. The contract as stated is patently unfair which raises several defenses. Contact me directly.
Re: Loan Note
I haven't read the contract, but why wouldn't the boss be able to sue for 25 percent of the house? Am I missing something?
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