[Jack Gifford]

As a youngster on the farm, my dad would take me with him every spring, to borrow seed/fertilizer money from a well-to-do neighbor- on just a handshake. I never imagined that I would ever be on the other end of such a deal, but...

I've been extremely fortunate with some past ventures, so decided to help support local farming. On not much more than a handshake, I've struck a deal with a neighbor whom I've known all his life, for a $400k loan at slightly less interest than Farm Credit Bureau gets, and a little more than CDs would get me. A win/win situation!

[tempest1964]

Good on you Jack! Coming full circle. Your father would be very proud!

[sdbob]

Thank you Jack,for sharing.Very nice. My father use to build homes on a handshake. He felt that signed contracts can be challenged in court by lawyers. I built a home 40 yrs ago. In the contract I stated( boy did I learn a lesson!!!!) Kitchen cabinets to be supplied by the owners. In court their lawyer had the owners state they supplied them, the cabinets ,I had to pay for them,
$8000.00! I DID NOT SIGN FIR THEM.

[tigergto]

Originally Posted by Jack Gifford

As a youngster on the farm, my dad would take me with him every spring, to borrow seed/fertilizer money from a well-to-do neighbor- on just a handshake. I never imagined that I would ever be on the other end of such a deal, but...

I've been extremely fortunate with some past ventures, so decided to help support local farming. On not much more than a handshake, I've struck a deal with a neighbor whom I've known all his life, for a $400k loan at slightly less interest than Farm Credit Bureau gets, and a little more than CDs would get me. A win/win situation!

Although you didn’t ask for my advice. I strongly suggest you not do it. This a completely different time then your father’s. I would definitely advise you to have legal documents drawn up.

[jhein]

Originally Posted by tigergto

Although you didn’t ask for my advice. I strongly suggest you not do it. This a completely different time then your father’s. I would definitely advise you to have legal documents drawn up.

I generally agree with this but, on the other hand, this is a person who he states he has known their entire life. So it's not just a random person. But I also agree, these are different times, for sure.

If I were 85 and agreed to loan someone 400K, I'd expect to never see it again.

In other words, never gamble with money you can't afford to lose.

Sounds to me like Jack has reached the point where he can afford to lose it.

Good for him.

[Half-Inch Stud]

Originally Posted by Jack Gifford

As a youngster on a farm.....
I've been extremely fortunate with some past ventures, so decided to help support local farming. On not much more than a handshake, I've struck a deal with a neighbor whom I've known..... A win/win situation!

Our visits to the Finger lakes indicate that those folks got it that way. I barely recall a similar story about the Amish and locals doing great things.

[johns]

Originally Posted by Jack Gifford

As a youngster on the farm, my dad would take me with him every spring, to borrow seed/fertilizer money from a well-to-do neighbor- on just a handshake. I never imagined that I would ever be on the other end of such a deal, but...

I've been extremely fortunate with some past ventures, so decided to help support local farming. On not much more than a handshake, I've struck a deal with a neighbor whom I've known all his life, for a $400k loan at slightly less interest than Farm Credit Bureau gets, and a little more than CDs would get me. A win/win situation!

Nice to know that there are people like you still around.

[Elarson]

Originally Posted by tigergto

Although you didn’t ask for my advice. I strongly suggest you not do it. This a completely different time then your father’s. I would definitely advise you to have legal documents drawn up.

I agree about documents. Even if the person is 100% trustworthy, not having things in writing opens up the chance for misunderstandings and damaged friendships.

And if one or both of you passes, what happens to the outstanding balance that is owed to your heirs....and his heirs can claim ignorance of the agreement?

Eric

[muscle_collector]

being in numerous businesses, one was i built homes for 40+ years and i still remember the first time i had to sign a contract. a guy came to look at car parts and got to talking and told him i was a home builder. they were looking at building a new home but were uneasy with the builder that a realtor was pushing on them. after several talks they decided to go with me and his realtor told him that he was making a big mistake using a "car buddy" to build their home. well i had told him my father built homes for 35 years and i had been building and always did on a handshake and neither of us had had a lawsuit. the bank insisted on a contract so we drew one up and signed it. fast forward 30 years i cant begin to tell you how many commercial projects from buildings to tenant improvement and remodels, new homes over 10k sq ft i have built for him and we have never had a cross word with each other. we refer to my business as "car buddy construction co" and he is the only person i will still build for today.

[nas t eh]

I like everyone else here, love to hear that this kind of honesty and hand shake contracts still exist.

But while I’m now retired, I’m still a part time landlord, very few of my tenants have the integrity to keep their end of the contract both/either the written and the unwritten parts, when something in their life goes wrong. At least having the written part provides me with some relief when things go really bad. I have evicted enough people that I have lost count and they all still owe me money I will never get. Every one of them intended to be fair and honest at the start.

[Trulyvintage]

Plant seeds of Kindness …




Jim

[Jack Gifford]

Both of us have legitimate concerns for our heirs, so there will be a simple document prepared by a lawyer.

[Skidmark]

"On not much more than a handshake"

I figured "not much more" meant some kind if paper work.

You might have been born at night, but not last night. Lol

[Jack Gifford]

Why post this on the Pontiac forums? Because the guy's dad started me on my Pontiac engine hobby by selling me his '57 Tri-Power engine in 1959! He had replaced it when the 58's came out with forged cranks and rods. Before he died last year he was driving a G8 GT.

[Elarson]

Another thing to cover in your document...
If your friend suddenly deposits $400k, the IRS will find out about it and want to tax it as income. Your document needs to spell out loan terms. Check IRS rules....I think you have to specify some sort of interest and some specific repayment terms. Make sure your lawyer understands IRS rules.

You can do a little amateur research on irs.gov. Search "loans".

This isn't the same IRS as it used to be. Hope this helps..

Eric

[fyrffytr1]

Originally Posted by Elarson

I agree about documents. Even if the person is 100% trustworthy, not having things in writing opens up the chance for misunderstandings and damaged friendships.

And if one or both of you passes, what happens to the outstanding balance that is owed to your heirs....and his heirs can claim ignorance of the agreement?

Eric

I owe nothing to my heirs! I will give them out of my own choice, but as far as owing them something, that is another story.

[stevesbirds]

USDA FSA provides 25% below market cost loans for these young farmers.

Insurance annuity tables predict lifespan pretty accurately, so you put your descendents in a bind not having this formalized in legal binding contract with clauses for transfer, bankruptcy. Farmers are really in a spot today. 46% hike in bankruptcies. I self fund my farm, machinery, and am 10 years behind on my goals, so it's a lot like a race car hobby. Do it for love, a few may get near break even. Without getting into todays politics, much is stacked against a turnaround. Brazil got our markets. That is a crying shame. Good leadership should have foretold how bad policy would cause that to happen.

[Elarson]

Originally Posted by fyrffytr1

I owe nothing to my heirs! I will give them out of my own choice, but as far as owing them something, that is another story.

To clarify my statement, if Jack passes before the loan is repaid, the borrower would owe the balance to Jack's ESTATE. Then the estate distributes the assets to whatever heirs Jack has designated....to family members, to a pygmy goat rescue or dollar bills poured out of the side of a helicopter.

Eric

[Jack Gifford]

Thanks Eric for mentioning IRS considerations.

[NeighborsComplaint]

If a lending institution won’t loan him the money, on his own, in all likelihood they have no surety or collateral to collect in the event of forfeiture. If you’re a multi-millionaire and can afford to lose $400K, you are certainly taking the first step.