A Release of Loan Agreement is a receipt given to a borrower by the lender once the terms of the loan agreement are satisfied.
This generally means that the borrower has finished paying the lender back the amount of money originally lent, plus any accumulated interest, if applicable.
The lender (a person who borrowed money) can also decide, at their discretion, to cancel the remainder of the loan owed by the borrower by providing them with a Release Loan Agreement. This receipt creates a written record of the release, which can be used in court in case of a later dispute if the document is sent via registered mail.
Once the document has been signed, the borrower is no longer bound by the terms of the loan agreement. Therefore, prior to making this document effective, the lender should be sure that they are satisfied with the repayment and timeliness of the loan. This document is used only to cancel a loan agreement. If the parties instead would like to modify the terms of agreement, they can use a Loan Agreement Modification document. For more information about collecting on a loan agreement so that a Release of Loan Agreement document becomes necessary, please see the guide How to Get your Debtor to Pay.
This document contains all of the information necessary to create a complete Release of Loan Agreement document. This document includes information such indentifying information for the intiial loan, including its amount and the terms of its repayment. The document also includes names and addresses for all involved parties. Finally, and most importantly, the document includes the date when the borrower will be released from the terms of the original loan agreement.
Once the lender has compelted the document, they should sign the bottom to finalize the release. It's common to get documents such as these notarized so as to limit potential challenges in the future, particularly those stemming from challenges of the signature's validity. The borrower and the lender should each keep a copy of this document in order to have a record of the release of any further liability under the original loan agreement.
Release of Loan Agreement is governed by federal law, specifically Article III of the Uniform Commercial Code (the "UCC").
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Country: United States