Question: Three years ago my husband and I lent our son and his wife £50,000 to buy a house for their family. Now my son is getting divorced can we get our money back?

Answer: With house prices making it really difficult for the first time buyer to get on the housing ladder more and more parents are helping their children set up home but often the parents are helping not just their own child but also their child’s partner or spouse.

Sadly too the rate of separation and divorce continues to rise and so when making the investment parents should carefully consider the nature of the support they are offering and how they should protect themselves if at a later date they want to get their money (or perhaps a percentage share in the value of the property) back.

If there is no documentary record the Court may have to ultimately have to decide whether the investment was a loan which would be recoverable or a gift which would not be. If the investment is a loan what are the terms of the loan, is interest payable, do the parents have a share in the equity of the property and if they do how is that share to be calculated?

In most cases generous parents wanting to help their children seem not to consider the consequences if things go wrong and this will often mean that the investment is treated as a gift to the child and his partner which cannot be recovered. All too often this will not have been in the contemplation of the parents when making the investment.

If any readers are planning to help their children in this way it is vital that proper legal agreements are put in so that all parties know where they stand and unhappiness, uncertainty and the cost of expensive court proceedings are avoided.

CAPTION: Richard Thornton. Senior Partner, Dispute Resolution Team

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