Property and conveyancing
Helping family buy property: gift, loan or ownership contribution?
Record the arrangement before money changes hands. A contribution described casually as a gift may later be treated differently by family members, lenders, estates or courts. The documents should match the parties' actual intention.
Conflict clearance and written engagement are required before the firm acts.Quick answer
How can parents protect money lent to a child buying property in WA?
Record the arrangement in writing before money changes hands. A properly documented loan — covering repayment, interest, security and what happens on sale, separation, death or default — is far more likely to be recognised than an undocumented gift. The documents should match the parties' actual intention and be considered alongside wills and the lender's requirements.
- Decide clearly whether the contribution is a gift or a repayable loan.
- Document repayment, interest and any security before settlement.
- A loan owed to you is an asset of your estate; a gift is not.
- Whether it is a loan or gift can matter if the couple later separates.
- Security can protect a contributor but affects the borrower's lender and priorities.
Jurisdiction: Western Australia.
What to address
- Gift versus repayable loan.
- Repayment date and interest.
- Security or mortgage.
- What happens on sale, separation, death or default.
- Lender disclosure and priority.
- Independent advice and conflicts.
- Interaction with wills and estate planning.
COMMON QUESTIONS
Frequently asked questions
Is a family loan legally enforceable?+
A properly documented loan is more likely to be recognised than an undocumented one. Clear written terms recording the parties' intention help avoid later disputes.
Should the loan be secured?+
Security such as a mortgage or caveat can protect a contributor, but it affects the borrower's lender and priorities. This should be considered with advice before settlement.
How does a family loan affect a will?+
A loan owed to you is an asset of your estate; a gift is not. Documenting the arrangement helps your executor and keeps your estate plan consistent.
What if the couple later separates?+
Whether a contribution is treated as a loan or a gift can matter in a family-law property settlement. Clear documentation made at the time is far stronger than later recollection.