Interesting article in Mortgage Strategy:
The legal pitfall for the Bank of Mum and Dad
Parents that want to help their children jointly buy a house should also prepare legally for their offspring splitting up, according to property lawyers Goldsmith Williams.
The law firm says that parents should set up a declaration of trust if their child buys a home jointly with another.
Goldsmith Williams senior partner Eddie Goldsmith says: “We know from dealing with so many cases involving mums and dads that lenders are not happy for any advance to be repayable.
“Whilst mum and dad are gifting this money to their offspring and therefore are not expecting this to be repayable to them in the event of a sale, nevertheless they will be uncomfortable in the partner of their offspring receiving an unexpected and undeserved windfall in the event of a split.”
Goldsmith says that a declaration of trust will ensure any such payment goes back to their child after the mortgage is paid.
He says: “Mum and dad won’t get their money back – it was a gift, so they shouldn’t be expecting it, but at least they can take comfort that whatever they gave will go back to their son and daughter rather than be split with the joint owner who did not contribute to the generous gift.”
The legal pitfall for the Bank of Mum and Dad
Parents that want to help their children jointly buy a house should also prepare legally for their offspring splitting up, according to property lawyers Goldsmith Williams.
The law firm says that parents should set up a declaration of trust if their child buys a home jointly with another.
Goldsmith Williams senior partner Eddie Goldsmith says: “We know from dealing with so many cases involving mums and dads that lenders are not happy for any advance to be repayable.
“Whilst mum and dad are gifting this money to their offspring and therefore are not expecting this to be repayable to them in the event of a sale, nevertheless they will be uncomfortable in the partner of their offspring receiving an unexpected and undeserved windfall in the event of a split.”
Goldsmith says that a declaration of trust will ensure any such payment goes back to their child after the mortgage is paid.
He says: “Mum and dad won’t get their money back – it was a gift, so they shouldn’t be expecting it, but at least they can take comfort that whatever they gave will go back to their son and daughter rather than be split with the joint owner who did not contribute to the generous gift.”
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