Can I be sued for a cash gift without a promissory note?
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Can I be sued for a cash gift without a promissory note?
My girlfriend and I were trying to buy a house. She did not have a job and I did. When we applied for the home loan, I had $19,000 on a debt I owed for a car that needed to be paid off in order for me to qualify. She paid off the loan but I never signed a note saying any portion of it was to be paid back. We bought the house, with a significant down payment from her. We have now broken up and the house is not going to sell for what we paid for it. it will however sell for enough to pay off the loan. She wants me to now pay her the $19,000 that she used to pay off my car. Am I legally obligated to pay her without promissory note?
Asked on March 13, 2011 under Bankruptcy Law, Oregon
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
An oral or verbal loan agreement can be enforced--a loan does not need to be formalized by a promissory note in order for someone to seek repayment. (While Oregon law requires certain agreements to be in writing to be enforceable, it does not appear that this situation would fall under them; I'll include a link below to the relevant law, in case you are interested--it's called the "statute of frauds" in common parlance.) Obviously, proving the existince of an oral agreement or its specific terms can be difficult if it's just two people's differing recollections, but under the law, an oral loan may be enforced.
However, if the money was a gift at the time it was made, then the gift giver can't get it back. The issue is intention at the time the money was provided: if the intention was that it was a loan to be repaid, it must be repaid; or if it was intended then as a gift, it does not need to be repaid.
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