Co-Authors: Melissa Care, Grace Jolly & Tiffany Craig.
KEY INSIGHTS:
- If parents are helping their child with purchasing a property it needs to be clearly stated if it is a loan or a gift.
- A partner can claim a share of their ex-partners property after 2 years of living together.
- Courts will look at contributions of both parties not just whose name is on the title of property.
WHEN PARENTAL GIFTS COMPLICATE PROPERTY SETTLEMENTS
When a parent gives a large sum of money to help their child with purchasing property, it can often become difficult when the child goes through a separation with their partner, even if the partner is not named on the title. Take for example parents who have contributed a significant sum of money to their son to help with buying his first home, they assist with the deposit and the home is in their son’s sole name however, but his girlfriend has moved in and contributes financially to the mortgage.
DE-FACTO RELATIONSHIPS AND THE FAMILY LAW ACT
If this situation occurs, under Australian family law, if a couple is living together on a genuine domestic basis for at least two years then they may be considered a de-facto relationship under the Family Law Act 1975. If this can be proven, when the relationship ends a partner can apply for a property settlement.
WHAT THE COURT CONSIDERS:
Under section 4AA(2) of the Family Law Act there are several circumstances in which the court will consider, including:
- The duration of the relationship;
- The nature and extent of their common residence;
- Whether a sexual relationship exists;
- The degree of financial dependence or interdependence, and any arrangements for financial support, between them;
- The ownership, use and acquisition of their property;
- The degree of mutual commitment to a shared life; and
- The care and support of children.
The relationship must exist for a minimum period of 2 years however, for the court to entertain an action for a property settlement.
WAS IT A GIFT OR A LOAN? Protecting Parental Contributions
Thus, in terms of family law, the only available protections for the parents providing the money would ensure that the reason for the parents providing the money is clearly documented. If the money was a loan, then there may be legal recourse to recover it by the parents, however if it is classified as a gift, it may be treated as a part of the child’s property pool which may make it available for division with the de-facto partner.
If nothing is documented and the child separates with their partner, it will need to be worked out whether the money was a gift or a loan, whether the partner was aware of it, did the partner contribute financially and non-financially to the property and is there any evidence that the parents expected repayment. If there is limited documentation it is likely the money will be treated as a gift and could potentially be claimed by the de-facto partner during a property settlement.
ABOUT LUISA GAETANI:
Luisa is a distinguished Partner and Accredited Family Law Specialist at Coutts who proudly leads our esteemed Family Law team. Luisa started University in 2010 and commenced as a Paralegal and since her admission in 2014, Luisa has dedicated her practice exclusively to Family & Criminal Law, showcasing a deep commitment to providing comprehensive legal support.
Her unique blend of sensitivity and practicality sets Luisa apart, allowing her to forge a strong rapport and cultivate trust with her clients.
ABOUT MELISSA CARE:
Melissa is a Senior Associate at Coutts Lawyers & Conveyancers working from our Campbelltown Office and has extensive experience in the areas of Civil Disputes & Litigation, Building and Construction Disputes, Commercial Litigation & Employment Law for both corporate clients and individuals.
Melissa holds a Bachelor of Laws, Bachelor of Commerce (Majoring in Marketing), Graduate Law Diploma from the College of Law; and has been admitted to the Supreme Court of NSW and the High Court of Australia.
For further information please don’t hesitate to contact:
Luisa Gaetani
Partner
Accredited Specialist in Family Law
info@couttslegal.com.au
1300 268 887
…
Adriana Care
Managing Partner
adriana@couttslegal.com.au
1300 268 887
This blog is merely general and non-specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.
