Parents advised to protect property assets
2nd August 2013
The increase in parents helping children onto the property ladder has added a new element to property transactions – legal documents to ensure financial loans or investments are protected.
Lorna Payne from Moore Blatch says that recent figures showing that parents in the UK are spending £2billion a year to help children buy their first home has highlighted the importance of ensuring that deals of this kind are clear from the start.
“For some parents help with a deposit is a straightforward gift but for many others it is a loan or an investment and that is where legal documents, called Declarations of Trust, are essential,’’ said Lorna.
“The figures involved can be quite substantial and what a child believes is a straightforward gift can easily become a legal minefield in the future,’’ she added. “In any financial matters it is vital that everyone involved is clear from the start and by having a Declaration of Trust there is no misunderstanding.’’
Her advice to parents follows a survey by housing charity Shelter which revealed that more than a quarter of first time buyers since 2009 have received help worth an average of £17,000.
“The message to all parents is to ensure they seek professional legal advice before parting with any money,’’ said Lorna. “Parents will have the best of intentions but no one can predict the future and cases have been ending up in court because of disputes over ownership and proceeds of sales.’’
A Declaration of Trust is a legally binding agreement between all parties and records the financial arrangements.