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UKSolicitorJA, Solicitor
Category: Law
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Experience:  English solicitor with over 12 years experience
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Girlfriends mum and step-dad kindly gave us £lots towards

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Girlfriend's mum and step-dad kindly gave us £lots towards the purchase of our new property. We and they signed and filed, with lawyers and with the mortgage lender, papers indicating this money was a gift with no strings attached and no repayment. This was a strict condition of the mortgage being granted.

However since we've taken money they would otherwise have profitably invested, we want to thank them by repaying it with some interest. Working out how to make this a binding obligation, particularly so that their other heirs do not lose out if they pass away before the money is repaid (which is quite possible due to the amount involved), is turning out to be harder than expected.

They want us to write a new contract describing the original money as having been a loan all along. I'm pretty sure this is legally unacceptable, correct? Even if they successfully contested the original statement (i.e. if they claimed we misled them somehow?), I'm pretty sure it would invalidate the mortgage, which nobody wants.

The problem is that they do not want a peppercorn contract either; apparently step-grandfather lost substantial property to one (in the USA). He is going to be very hard to budge on this, if it's possible at all.

Are there any other options?

Thank you for your question and welcome.

My name is XXXXX XXXXX I will assist you.

The first point to note is it wont invalidate the mortgage if you could reclassify it as a loan. What would cause an issue with the mortgage is if you tried to secure the loan against the property.

Potentially the gift could be revoked if you could prove that it was conditional some how. What did you actually sign in relation to the gift?

I look forward to hearing from you.

Kind regards

Customer: replied 4 years ago.

Hi AJ,


Firstly, thanks for the prompt response - much faster than I expected!


I'm confused that you say "it wont invalidate the mortgage if you could reclassify it as a loan". The lender very explicitly stated that the deposit money could not be a loan and had already refused an earlier application where the deposit was borrowed.


Subsequent to that, and realising that our house purchase would otherwise fall through at the last hurdle, the parents agreed to make the money a gift (cancelling the prior agreement to borrow the money from them), and signed a declaration to that effect (the exact words were supplied by our conveyancer) -


"I [stepfather]
And I [mother]

confirm as follows:-

1. The sum of £100,000 is being paid to [I and my fiancée] by way of gift and is not repayable.
2. I will not be seeking to hold a second charge or restriction against the property.
3. I will not be living at the property nor hold any beneficial interest in the property."


I believe that pretty much rules out claiming it was conditional but would love to be proved wrong...


Surely, if we were now to claim the funds were intended as a loan all along, we would be implicitly stating we had been dishonest to the lender at the time the above was signed?


I don't know if it's relevant, but wanted to also note that the gift was the whole of our deposit - we did not ourselves pay in to the purchase price (our own funds are being used for renovation).


I would also consider this question answered if you can provide a reference that my stepfather will accept, stating that a peppercorn consideration on their behalf would be sufficient to secure a contract creating (effectively) a new debt - I'll be seeing him this evening and will be trying to sway him on this. I'm not optimistic, but a solid and up-to-date reference would definitely help.





Customer: replied 4 years ago.
Relist: Incomplete answer.
Need a response today and the original solicitor is now showing as offline.

I will try and assist seeing the urgency here.

It would be fraudulent to now go back to the mortgage company and say that the money was a loan and not a gift, as they signed declarations confirming that it was a gift and not a loan.

However, as far as you, girlfriend (GF) and GF's mum and stepfather are concerned, there is nothing wrong with you and GF executing a Deed (so no consideration required, including a peppercorn) in favour of them saying that you will repay them the sum of 100K plus interest (specify interest rate and terms of repayment e.g. over how many years and in what instalments). This Deed does not need to refer to the 100K "gift" as it would be an entirely separate matter between you and GF and her parents.

Hope this helps
Customer: replied 4 years ago.

Hello - thanks for picking up the question :)


Regarding the original money - thanks for the confirmation; that's what I thought.


Is it possible for us to write such a deed ourselves or is there a specific legal mechanism for creating/filing such a document? Can you provide a reference or guidance as to the form of words that should be used to ensure the deed is binding?


Thanks in advance.



Hello again,

I am afraid we do not undertake drafting here on this Q &A site but it would name the parties I.e. You and GF and contain covenants to pay her mother and stepfather the sum of xxxx etc.

At the end, the document should say executed as a deed in the presence of xxxx witness.

The date should be stated.

You may get a lawyer to draft it for you.

Hope this helps

UKSolicitorJA, Solicitor
Category: Law
Satisfied Customers: 4312
Experience: English solicitor with over 12 years experience
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