Parents and grandparents are increasingly being called on to step in to help younger family members buy their first home due to todays house prices and the ability of the younger generation to get on to the property ladder.
It was predicted that parents would lend £6.5 billion to help children purchase a property in 2017. This has increased from the £5 billion lent in 2016. Meaning parents will be involved in more than 25% of UK property transactions.
In a recent case a couple who lent their daughter £90,000 to help her secure a home, have been left shocked by the court ruling which said they could not have the sum back as they failed to draw up a contract.
David and Glenda Joy loaned the sum to their daughter, Lucy in 2009 after David’s mother left Lucy a £200,000 property in Slough. However, following her grandmother’s gift, David’s two siblings challenged the Will saying that Lucy had unduly influenced her grandmother who had dementia prior to her death.
At the time David agreed to help Lucy with her legal battle which eventually cost the couple £73,650 in legal fees. An out of court settlement was reached and required Lucy to pay £90,000 for the property which she asked her parents for help in paying.
David and Glenda covered the settlement figure and agreed to Lucy’s suggestion that she could repay them by signing the house over to Glenda and paying rent until the loan was repaid and then the house would be returned to her. Lucy denied this later in court.
The couple insist they took out a mortgage on their property in Cornwall following the verbal agreement. However, a few months after the money was paid to Lucy she refused to sign the house over and left. The family haven’t spoken since.
Lucy insisted the sum, which helped her secure the house was a gift, and a judge has ruled in her favour.
David and Glenda say their lives have been left in ruins by their manipulative daughters behaviour. Mr Joy suffered a nervous breakdown during the dispute and has said that he doesn’t have a daughter any more. The dispute has ripped the family apart.
David commented that ‘You trust your children, why would you get them to write an IOU? But its cost us everything’.
Unfortunately, it is imperative to protect your interest in circumstances such as these in case something goes wrong. Putting some form of written agreement in place will certainly provide you with the protection you need.
A declaration of trust can provide an agreement where there is a discrepancy between the person who holds the legal title to a property and the person who owns the underlying beneficial interest in the property.
Ensuring you get thorough advice relating to your interest and recording it property in a binding agreement will help prevent disputes and matters whereby one party tries to withdraw from the verbal agreement.
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Author: Samantha Kennedy