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Aston Lawyer
Aston Lawyer, Solicitor
Category: Law
Satisfied Customers: 10451
Experience:  Solicitor LLB (Hons) 23 years of experience in Conveyancing and Property Law
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I am gifting my son £14k to help purchase his home with his

Customer Question

I am gifting my son £14k to help purchase his home with his girlfriend. I am being asked to sign a doc confirming this gift not only to him but his girlfriend too (named). It also states that this is a true gift that is non repayable . I am also being asked to confirm that I have no interest in the property now or at any time in the future" I have not signed this doc.. Can i have this amended to reflect that the gift is ONLY for my son and in the event they sell the home due to separation for whatever reason, I could recover this non secured sum from the proceeds of the sale. If so, could you recommend some wording. What are the legal / tax implications to my son and or myself in taking this action? Clearly what I am trying to do is to protect my son and our interests. An early response will be very much appreciated. Thanks.
Submitted: 3 years ago.
Category: Law
Expert:  Aston Lawyer replied 3 years ago.
Hello and thanks for using Just Answer.

My name is Al and am happy to assist you with your enquiry.

I assume that it is your son and girlfriend's Mortgage Lender is requesting this letter be signed by you. Basically, whenever a party is applying for a Mortgage and part of the purchase monies is coming from a third party, the Lender will not grant any Mortgage unless they are content that that money is indeed a gift and is not a loan, as the Lender wishes to make sure that there is no possible danger of them not getting their "money back" were your son and girlfriend were to default on the Mortgage and repossession proceedings were taken.

Most Lenders have a standard letter that parents/third arties have to sign in this regard and if no signed letter is forthcoming, they will refuse to offer the Mortgage. Therefore, I'm afraid that although you are of course not under any duty to sign the letter, if you don't, your son will not be able to proceed with his Mortgage.

Likewise, if your son's Solicitor becomes aware that your "gift" is in some way repayable at a later date, he is under a duty to report this to the Lender and they are unlikely to allow the Mortgage to proceed. You are therefore unable to amend the letter to say it is a gift only as far as it relates to your son.

In order to get round the above issue, it would be normal you your son and his girlfriend to enter into a separate Declaration of Trust to say that were the property to be sold at a later date, that your son is entitled to the first £14,000 (or appropriate percentage of the house value) from any Sale. This then indirectly protects the money you have invested, so that were they to split up, you know that his girlfriend isn't going to be walking away with part of your money.
Your son will need to discuss this with his girlfriend and ask his Solicitor to prepare the Declaration.

Please note that although this provides a solution to the couple separating/selling at a later date, it doesn't mean that your money is protected were the Mortgage Lender to repossess the property in the future, in that there is nothing you can register to show that the £14,000 belongs to you, for the reasons I have set out above. So, if the property were repossessed and in the unlikely and unfortunate event of the property only being sold for whatever is owed to the Lender, they would walk away with their money and you would be left with nothing. I would hope this would never happen, but thought I would mention it.

I hope this assists you and sets out the legal position.

Kind Regards
AL
Expert:  Aston Lawyer replied 3 years ago.

Hi Mandy,

Can I be of any more assistance to you?

Kind Regards

AL

Expert:  Aston Lawyer replied 3 years ago.

Hi Mandy,

Please let me know if I can help further?

Kind Regards

AL