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I take it that your son will be taking out a Mortgage from a High Street Lender to finance his purchase, but could you confirm?
I look forward to hearing from you.
Mortgage with Nationwide. We have their form 'Confirmation of Gifted Deposit' to complete and this gives the option to state that the gift is to a family member and that the property is subject to a charge, where the only condition is repayment of the gift, on the sale of the property.
Thanks for your reply.
I may be wrong, but most Lenders will require a letter from the parents to confirm the deposit is a gift and is not repayable full stop. Are you saying they are happy to accept a letter from you to say it is a gift, but is repayable in the event of any future Sale?
That's what is indicated on the form we have been asked to complete. We have not spoken with the Nationwide direct. Obviously, we would not wish to jeopardise the mortgage offer in any way.
Thanks- well, my view is that if you tell the Nationwide that the "gift" is repayable on any Sale, they will refuse to grant the Mortgage. I have never heard of a Lender agreeing to lend on the basis that a third party is entitled to recoup their "gifted deposit" on any subsequent Sale.
If your son has a Mortgage broker, you may want him to speak to him to clarify, but I would be most surprised if the Nationwide were prepared to proceed on this basis.
On the basis that you do write back to the Nationwide saying it is a pure gift, your options for registering any type of Charge are nil. Basically, whenever a client is purchasing a property with the assistance of a Mortgage, us Solicitors have to notify the Lender if we become aware that a third party is going to have a
second Charge over the property. If the Lender is notified of such a Charge, they will normally refuse to lend.
Likewise, if your Son's Solicitor gets wind of any sort of agreement he has to repay you a certian amount of money sometime in the future/upon any subsequent Sale, he is under a duty to notify Nationwide.
The best you can therefore hope for, is that a Declaration of Trust is drawn up (possibly after completion of the purchase) by an indepenedent Solicitor, which document can stipulate that the deposit is repayable on any Sale.The document is signed by you and your son. You could then instruct your Solicitor to register a Restriction on the Deeds, meaning that before any Sale can be completed, your son would have to notify you (not that he would, but this will prevent him from selling without your knowledge). This would then give you some protection- you wouldn't have to enforce the terms of the Declaration of Trust, but
it would be there if so required.
I hope this helps and sets out the legal position.
If so, I would be grateful if you could rate my answer.