My Dad is putting some money into the house my boyfriend and I are buying. What legal steps should I take?
These days it is very common for parents to help their children out when they buy their first home.
This is often in the form of a cash deposit. The parents need to think carefully about whether this is a gift or a loan. Obviously if it is a gift then they can have no future say over what happens to the money. Depending upon how the couple choose to hold the property this may have the effect of giving half the deposit to the boyfriend. Bear in mind that if the couple split up the boyfriend will walk away with a windfall.
As a result of this we would recommend that the deposit be protected in some way, thus keeping it ‘in the family’. There are various possibilities, and the one you choose will depend upon your personal circumstances. The following are some of the more common solutions:
- The parents may treat the deposit as a loan, with or without interest. The money will then be repayable on a sale.
- The parents may decide to own a share of the property, by having a Trust deed drawn up, or
- They may state that the money is a gift only to their child and not the partner. The couple should then be advised to draw up an agreement to record this. They will need to hold the property as tenants in common. One party would then own a greater share than the other. Again this is usually recorded in a separate trust deed.
Giving careful thought to these issues when you buy can avoid problems if things do not work out and the couple split up.
Claire Nunes
Cambridge Property News - Dec 2007
Cambridge Property News articles
Every week, Claire Nunes, head of our conveyancing departments writes in the Cambridge Property News magazine. Here is a selection of those articles: