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Acknowledgement of Debt

Property law

Acknowledgement of debt is the act through which a person, the debtor, acknowledges their debt towards another person, the creditor. It must comply with a certain number of provisions.

The written act must be dated and signed by the debtor.
Acknowledgement of debt must include the identity of the debtor and creditor: last name, first name and date of birth.

Acknowledgement of debt must indicate the amount in figures and words (if there is a difference between the amount in figures and words, the amount in words will be used).

Article 1326 of the Civil Code stipulates that "the legal act by which a sole party agrees with a second party to pay them a sum of money or deliver a fungible asset must be identified in a deed which includes the signature of that who undertook this agreement as well as the sum or quantity in figures or words written by themselves. If there is a difference, the private deed is the evidence of the sum written in words".

The acknowledgement of debt may also :

01

Payment Term

Indicate the payment term, i.e. its due date (if this is not stipulated, the sum is due upon initial request);

02

Interest Rates

Indicate the interest rate (which cannot exceed the usury rate).

RESTRICTED to a particular form?

Acknowledgement of debt can be drafted as a notarised or private deed.

What is the benefit of acknowledgement of debt by notarised deed?

Preparation of a deed can prove very useful. It facilitates proof of repayment obligation.

If a written deed does not exist, the debtor may contest their obligation and refuse to repay; he/she may also, while acknowledging the actual transfer of funds to them, argue that it was simply a non-refundable donation.

If the lender requires greater security, he/she can have an acknowledgement of debt drafted by a notaire. This notaire:

01

Council

Will advise upon the preparation of the deed and ensure compliance with legal format obligations;

02

Signature Reality

Will certify the signature of the debtor which may only be contested through a procedure for forgery;

03

Enforceable Copy

Will deliver an executory copy to the creditor which dispenses them from a court appeal if the debtor defaults on payment;

04

Mandatory Formalities

Will complete all compulsory formalities and will notably prepare the tax declaration (for loans over 760 Euros, the drafting of a deed, specifying the repayment conditions, is compulsory and imposes tax returns - form 2062);

05

Recognition

Will provide, a notarised acknowledgement of debt between parents and children facilitates deduction during successions.