Novation of a debt into a loan obligation - a procedure carried out upon conclusion of an agreement on the replacement of old debts affecting the sale, lease or property rights. The process is governed by article 414 and is documented taking into account article 808 of the Civil Code.
Features of debt obligations
Under a debt obligation understand the occurrence of debt to the creditor. The debtor undertakes to provide services or property to the creditor in the process. At the same time, the borrower fulfills its obligations on pre-agreed conditions. Parties to the agreements may be both individuals and legal entities. A mandatory requirement for a debt novation agreement is proper execution.
The subject of the transaction is the main part of the agreement, which plays an important role in the context of the replacement procedure. In most cases, the subject of the transaction is money, but other options are allowed:
- Participation in the shared construction agreement, according to which the debtor receives property.
- Purchase and sale.
- Provision of property for rent.
Novation is allowed in all of the above cases, if both parties are satisfied with its conditions.
Novation of debt in a loan obligation
It is performed only in cases where the debtor has unsecured obligations to the creditor. There is a need to change the subject of the transaction: the service or thing acting as the subject of the previous contract is replaced by another.
The procedure for novation of a debt into a loan obligation is carried out in accordance with Article 818 of the Civil Code. The agreement is made in writing in cases approved by law:
- The legal entity acts as a creditor.
- The amount of debt exceeds 1000 rubles.
Obligations of the debtor specified in the previous contract are leveled after the replacement, being replaced by the debts specified in the agreement. The conditions for its execution are also prescribed. Debts to creditors are written off after the person copes with his new obligations.
Legal recognition of the transaction
The concluded transaction is recognized as legitimate only if the subject and form of fulfillment of obligations are changed in the contract. Novation is considered legal if the creditor receives a bill of exchange for a certain amount from the debtor. In this case, the form of obligations is replaced, which makes the transaction legitimate.
An indicator of legality is the participation of certain individuals. The new contract at the conclusion is signed by the parties involved in the previous transaction, the form of which is changing. A document will lose its legal force if it does not bear at least one of the previous signatures.
The transaction is executed at the will of both parties. It is not possible to initiate a procedure unilaterally. The condition for legitimacy is the voluntary signing of an agreement.
The Novation Law regulates various operations, but has its limitations: the subject of the contract should not affect the identity of one of the parties. The following factors are considered limiting:
- Compensation for physical or moral harm.
- Alimony debts.
It is possible to replace an item legally if it does not concern the parties to the case, which should be indicated in the documentation.
Terms of an agreement
The old contract and the terms of debt repayment lose their legal force after drawing up a contract for novation of a debt into a loan obligation. They are replaced by new conditions: for example, as part of an old transaction, the creditor could obtain the debtor's property on bail. Novation without collateral obligations does not require the lender to return the property.
To recognize the legitimacy of the new contract, the terms of a previously executed transaction are prescribed. The correctness of the drafting of the agreement is determined not only by the legal subtleties, but also by the nuances of the financial statements. Such documentation is provided if one of the parties is a legal entity. Contracts for obligations are amended in the reporting period for the time spent on renewal.
The subject of the new transaction should be equivalent to the subject of the old. For example, rental costs that were the subject of a previous transaction should correspond to the amount of money under the novation agreement.
The debt novation procedure is universal and can be carried out in any transactions. Such agreements are concluded only on a voluntary basis and are the will of the parties who consider this option profitable. Property is replaced by its equivalent cash amount. The paper has legal force if it is correctly drawn up and the new terms of the contract and the subject of the transaction are indicated in it.
Novation is one of the most sought after legal procedures to update the transaction and make it profitable for both parties. Its conduct is regulated by the code of the Russian Federation. The nuances of registration and conclusion of the contract, the conditions under which it is considered legitimate, are specified in the laws.
Contract execution
An agreement on debt novation, in accordance with Article 818 of the Civil Code of the Russian Federation, is drawn up in the same form as a loan agreement. In writing, a document is executed if the lender is a legal entity.
The contract is drawn up by mutual agreement of the parties, since it is impossible to unilaterally sign a debt novation in a loan.
The sample novation agreement contains the following information:
- place and date of compilation;
- personal information about the debtor and creditor;
- subject of the contract;
- data on initial liabilities;
- dispute resolution procedure;
- details of the new obligation;
- duties, rights and responsibilities of the parties;
- the procedure and terms for fulfillment of the obligation;
- bank details and addresses of the parties to the agreement;
- the procedure for terminating or changing the terms of the transaction;
- signatures of the parties.
The debt novation agreement is made in duplicate, equal in legal force.
The text of the agreement contains a list of attached documents required to transfer the debt into a loan obligation. The contract may also spell out a debt repayment schedule, a form of guarantee and other nuances.
The conclusion of the contract is not possible when it comes to paying alimony or paying compensation for damage to the health or life of a citizen. The agreement, the subject of which are the payments listed, is invalidated, because it contradicts the laws of the Russian Federation.
How is the contract made
The previous version of the contract of novation of a debt into a bill obligation when drawing up a new one loses legal force. Subject to the terms of the contract. Proper preparation of the document requires some rules:
- The debt is not repaid by goods or specific property, but by a certain amount of money.
- A pledge may be indicated prior to the return of the debt.
- To preserve the legitimacy of the new treaty, it sets out the important terms of the previous agreement.
- Information about each document is entered in the financial statements of the organization, which is one of the parties to the contract. Information is entered during the reporting period when drawing up agreements on obligations.
- The new subject of the agreement should be equivalent to the old specified in the previous contract.
- Documents are prepared in accordance with the requirements for business papers.
- Changes to the basic conditions must be made to the contract.
The demand for debt innovation is explained by the possibility of mutually beneficial resolution of issues between the borrower and the debtor.
Mandatory Items
Novation is recognized as legitimate only in writing documentation - a bilateral contract. The implementation of innovations unilaterally or by court decision is not allowed in accordance with paragraph 1 of Article 452 of the Civil Code of the Russian Federation.
An exact sample of this document is absent in the legislation, and therefore its execution is allowed in any form with the obligatory indication of important information to give legal force to the contract. The following conditions must be met:
- Description of the original obligation.
- Entering data on the amount of debt.
- Indication of a new obligation and its amount.
Other material conditions are duplicated in two copies of documents and bind both contracts.
Key Points
- Title page. It indicates the date of execution of the agreement, signatures of the parties, information about each of the parties, details.
- The subject of the contract is registered.
- The parties cannot disclose information, as evidenced by the instruction to maintain confidentiality.
- The responsibility and obligations of the parties are registered.
- The methods of resolving disputes and conflicts in pre-trial and judicial order are indicated.
- The deadlines for the performance by the debtor of his obligations to the creditor are entered.
- A new subject of the contract is registered, equivalent to the old.
Properly written and executed document has full legal force and contains information about the transaction.
Required documents
Various documents are required to draw up a contract for novation of a bill debt or a loan obligation, but in most cases the following papers are used:
- The previous agreement, which loses its legitimacy after the registration and signing of a new one.
- Documents confirming the identity of individuals, or constituent documents of organizations for entering information about the parties.
- Title documents for property pledged.
The subject of a new transaction affects the number of documents required to draw up a contract.
Conclusion procedure
The contract of novation (or debt forgiveness) greatly facilitates the functioning of organizations. Most often they resort to drafting it in force majeure situations, for example, when counterparties miss deadlines.
Any company at some point in its existence is faced with a shortage of funds and inability to fulfill obligations. Debt novation in such cases is the best option and is accompanied by the following actions:
- the presence of mutual consent of the parties;
- a new agreement is drawn up in which property or the amount transferred instead of the subject of the contract is prescribed;
- claims on the original debt cease.
To recognize a transaction as legal and legitimate, it must comply with all legal requirements.
Novation in bill obligations
Debt obligations of the parties may be expressed in the issuance of a bill - a security debt. Under the bill understand long-term borrowed obligations. Debt obligation in a bill obligation is said to be in the event that the term of the loan is extended indefinitely.
Long-term bill loans have a final validity period, after which the security bearer must obtain a loan, which is not always beneficial for one of the parties. Debt obligations can be extended in such situations, however, the decision on this remains at the discretion of the parties.
To confirm the relations of the parties, a security is issued - a bill of exchange, which expires due to the expiration of the document. Issue of a new security is required, which is included in the procedure for novation of a bill.
The procedure of bill innovation
- As a result of the negotiations, the parties must conclude that promissory notes cannot be terminated within the agreed time frame. Since the extension of the relationship is beneficial to both parties, disputes should not arise.
- The current bill and the previous contract, by agreement of the parties, lose their legal force. Instead, a new contract is drawn up and new securities are issued with similar previous obligations, but with a different maturity. Novation in this case is an updated contract with recounted obligations of the parties.
- Novation of a bill involves the revision or addition of interest, the amount of debt and other conditions and is defined as an independent legal procedure.
- Bills of exchange are resorted to in the event that the fulfillment of a loan obligation is carried out not by money, but by part of a debt or by restructuring a loan into securities.
Conclusion
Debt novation is possible subject to certain conditions and proper preparation of the contract. The procedure is the best solution for companies faced with the inability to pay debts.