If a family member gifts money towards my house deposit - how should it be documented?
It is not uncommon for family members to assist one another with the funds for a house deposit. However, it is important for this to be documented properly to ensure that the ‘gift’ of funds is not construed as a loan that needs to be repaid in the future.
Whatever your family member’s intentions are when assisting you with the transaction, you should ensure these intentions are recorded and documented clearly. This will prevent disputes at a later date. Whether the money is an outright gift with no conditions, or it may be a loan at a favourable rate, you should evidence this with an enforceable contract.
The purpose of properly documenting the gift is to establish that the money is not a debt that you need to repay. Both you and the family member should sign the contract to acknowledge your mutual understanding.
A solicitor acting for you in the transaction will also need to verify the source of the funds being donated to you, to comply with Money Laundering regulations. Therefore the family member donating the funds may need to discuss this with your solicitor before the funds are used.
If you would like any further information or advice in relation to buying or selling a property, please contact our specialist residential conveyancing lawyers: Karen Grimshaw on 01902 796934 (email@example.com) or Nabjit Dubb on 01902 328358 (Ndubb@georgegreen.co.uk) at our Wolverhampton office; or Kevin Gilbert on 01384 340 561 (Kgilbert@georgegreen,co.uk) at our Cradley Heath office.