I loaned someone $3000. Upon the loan there is a clause that states that there the money must be used for a certain purpose, though there is no purpose listed in the agreement. Verbally, we agreed the money was purposed for earnest money. In any event, since lending the money I have heard nothing from the person and am not sure what they used the money for. Can I demand proof that the money was used for the intended purpose or demand full payment or should I wait until the note becomes due and then just demand payment. It is a 2 month note?

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Originally Posted by talmadger

I loaned someone $3000. Upon the loan there is a clause that states that there the money must be used for a certain purpose, though there is no purpose listed in the agreement. Verbally, we agreed the money was purposed for earnest money. In any event, since lending the money I have heard nothing from the person and am not sure what they used the money for. Can I demand proof that the money was used for the intended purpose or demand full payment or should I wait until the note becomes due and then just demand payment. It is a 2 month note?

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I have no idea what you mean - there is a clause one place but not in another? Two documents?

The verbal agreement is unenforceable - this appears to be a contract which can only be modified in writing and also all the enforceable provisons are within the margins of the paper. No side arrangements/agreements.

So, no, you can't enforce the "intended purpose" clause UNLESS it's part of the written agreement, and I don't see that it is.

If the note did not specifiy a specific purpose, then no, it had to list it in detail, the verbal at this point ended when the written was done, it should have said exactly what it was for.

Even then, does the note say it is in default if not used for"that purpose "