TAKE CARE when buying a property for your child, writes Philippa Cunniff
With the new university year officially under way, many lucky students and young couples are waking up in their newly-acquired flats or houses, having been helped to buy these by their parents.
For parents who have bought a property outright for their children, amidst the excitement it’s important to consider how to ensure both your child’s interests and your own investment are protected in the event that a child’s partner moves into the new home.
It is increasingly common for young couples to meet and move in together during, or just after, university. Parents will want nothing but happiness-ever-after for their children’s significant relationships, but what will happen down the line if that relationship fails, and your son or daughter’s partner has been paying for property maintenance or contributing to the mortgage for any length of time?
Without an agreement in place, the former partner might then be entitled to claim payment from your child based on the argument that the value of the property has been enhanced as a result of the partner’s contributions.
Since May 2006 it has been possible for couples in Scotland who live together as if they were husband and wife to make financial claims against one another in the event the relationship breaks down, or if a cohabiting partner dies without a valid will in place. Unless there is a legal agreement in place detailing the financial arrangements during the course of cohabitation, it is likely there will be grounds for a dispute after a relationship breakdown.
If your child dies without leaving a proper will behind while cohabitating with another in the home you’ve bought and put into his or her name, you will have no automatic claim to the property, and the surviving cohabiting partner may ask the court to transfer the property to them.
While giving the home to your child’s surviving partner might be something you would happily do anyway, it is still worth considering and being aware of these factors as you help your child acquire one of the most valuable assets he or she is ever likely to own.
My experience shows me that quite often people fail to think of their property as an asset, and overlooking basic arrangements can be very easy. Yet, by taking all eventualities into consideration and spending a small sum of money in the beginning to protect our children’s long-term interests, a lot of unnecessary dispute and uncertainty can be avoided if the relationship with your child’s partner doesn’t end up going to plan, or the very worst thing happens and you are required to pick up the pieces after a death.
Agreements can be changed and adapted as time unfolds and the needs of the couple living together develop. If your child’s relationship develops to the point that the couple have children or decide to move into another property together, these will be opportune times to review the agreements in place, as well as any wills. Agreements are also tailored to individual situations, such as when a couple buys a property together but one partner puts in more of a deposit than the other. It is useful to approach the topic as early as possible. This will not only reduce the risk of financial exposure, but will also help to avoid an awkward conversation that may arise further down the line if things ever do start to go sour.
Not every property, couple or situation will require a legal agreement, but it should be part of your overall assessments as you gift your child with such a valuable asset. By addressing the topic sooner than later, you will be safeguarding your child’s welfare for the long-term.
• Philippa Cunniff is partner and head of family law at law firm HBJ Gateley