Parents taking legal action to recover money loaned to children

More and more parents are taking legal action to recover money they lent to their children to buy a home, according to research by the Times newspaper.

It says there are now up to 15 cases a month compared with only 3 cases a month five years ago. Many of the disputes involve parents trying to get their money back after their child’s marriage ends in divorce.

In one case, a couple tried to prevent their estranged daughter-in-law getting a half share of the £2m they provided to buy a house. They argued that the money they put forward while the couple were still together was an investment, not a gift.

They lost their case, however, which meant they not only lost their money but had to pay their daughter-in-law’s costs as well.

An increasing number of young adults now rely on their parents to help them buy a home or to fund other large transactions, yet very few families draw up legal agreements outlining crucial issues such as whether money provided by the parents is a gift, a loan, an investment or some other arrangement.

This is despite the fact that such agreements are easy to draw up with the help of a solicitor and can help protect what, for many people, could amount to their life savings.

Please contact Dipak Odedra or Jess Theara if you would like more information about the legal aspects of buying and selling a home.