Property Purchasing Below Market Value from Parents, they want a divorce agreement. 6 June 2021 at 6:58AM in Marriage, relationships & families 10 replies 521 views

strevor

Hi,
I am looking for advise on a never nice situation, but my wife and myself are purchasing a property from my parents for BMV. They would like an agreement to say that if we split up then my wife will only be entitled to 50% of the value that we purchased it for, or the difference to Market Value is excluded from this. I can understand this as it is quite a large sum. Is this type of agreement normal, is it possible?, what is the best way to address this, for example solicitors? or will personally signed agreement letters suffice? Is it also fair to say that its only the sum of money should only be based on difference at the point of purchase, and not a fixed amount, as property value goes up as we know.
Its not a nice conversation to have as already there is uncomfortableness between the in laws and my partner and I fear this will cause more friction but I can understand how they are wanting to protect their interests and myself. Any advice would be most appreciated. Thank you.

Martin_the_Unjust

Stand by your wife and tell your parents it’s not on.

maisie_cat

Once they've sold the house they no longer have any interests to protect, they are wanting to protect you.
You have two options, refuse their gift or go with an unequal ownership, you both benefit from living in a house you would otherwise have been unable to afford.
These things are not uncommon and can simply be structured legally. If you did divorce in the future your assets and your wife's assets would be joint assets for the purposes of a financial settlement.
What does your wife think? and are your parents likely to constantly remind you that they gave you a substantial gift?
We got a £5k gift from my FIL in 2006 and were reminded of it constantly to the point that we seriously considered paying it back.

Keep_pedalling

Once you have purchased the property it becomes a marital asset. Yes you can get a declaration of trust drawn up, but unless the marriage ends up being a very short one a divorce court are unlikely take it into account. 

https://www.harrowells.co.uk/site/blog/divorce-blog/does-marriage-affect-my-declaration-of-trust

If they insist you could alway draw up the document and rip it up once you have ownership.

[Deleted User]

strevor said:

Hi,
I am looking for advise on a never nice situation, but my wife and myself are purchasing a property from my parents for BMV. They would like an agreement to say that if we split up then my wife will only be entitled to 50% of the value that we purchased it for, or the difference to Market Value is excluded from this. I can understand this as it is quite a large sum. Is this type of agreement normal, is it possible?, what is the best way to address this, for example solicitors? or will personally signed agreement letters suffice? Is it also fair to say that its only the sum of money should only be based on difference at the point of purchase, and not a fixed amount, as property value goes up as we know.
Its not a nice conversation to have as already there is uncomfortableness between the in laws and my partner and I fear this will cause more friction but I can understand how they are wanting to protect their interests and myself. Any advice would be most appreciated. Thank you.

Where does the splitting of marital assets and contributions end if you start with the house?  What has your wife said about the proposal? 

If there is already friction between your wife and your parents I would decline the offer to buy the property if it comes with these strings. 

comeandgo

I can’t believe you are entering into this agreement.  Your first loyalty should be to your wife.

strevor

Hello thank you all for your responses. i haven’t entered into anything and i’m 100% with my wife. The offer will be declined based on this, this is all new to me, so a pause to think has been most helpful. My fear is as well, i will be reminded of this constantly for years to come, something i am not prepared to live by. i could just rip it after purchase but i believe in honesty from the start. I will explain this is not acceptable and based on this we will not proceed. Thank you again for all
your thoughts and time to respond to me

Pollycat

strevor said:

Hello thank you all for your responses. i haven’t entered into anything and i’m 100% with my wife. The offer will be declined based on this, this is all new to me, so a pause to think has been most helpful. My fear is as well, i will be reminded of this constantly for years to come, something i am not prepared to live by. i could just rip it after purchase but i believe in honesty from the start. I will explain this is not acceptable and based on this we will not proceed. Thank you again for all
your thoughts and time to respond to me

It would be really nice if after you make your stand against your parents in support of your wife, your parents reconsider and still made you the offer.

Of course, there would still be the potential for them to remind you that they helped you financially and if things do go wrong with your relationship, they may be "We told you so. You should have listened to us".

Only you can gauge the likelihood of that happening.

At the end of last year you posted that after advice on the tax implications of the owner selling the property BMV it was too much of a loss for the business and it would be best if the property was sold to someone at full market value.

Have things changed since then?

noitsnotme

Sounds like a good decision.  My parents gifted my sibling various large sums over the years but I have always declined the same offers from them.  My sibling has had it thrown in their face on many occasions since and it has caused all sorts of friction.  I have seen many times what a lucky escape I’ve had!

pphillips

I think you need to explain to your parents that the courts are not bound by such an agreement if you and your wife split up. If they want to protect their assets, they ought not to gift them in the first place (unless the gift is held in a discretionary trust).

strevor

Pollycat said:

strevor said:

Hello thank you all for your responses. i haven’t entered into anything and i’m 100% with my wife. The offer will be declined based on this, this is all new to me, so a pause to think has been most helpful. My fear is as well, i will be reminded of this constantly for years to come, something i am not prepared to live by. i could just rip it after purchase but i believe in honesty from the start. I will explain this is not acceptable and based on this we will not proceed. Thank you again for all
your thoughts and time to respond to me

It would be really nice if after you make your stand against your parents in support of your wife, your parents reconsider and still made you the offer.

Of course, there would still be the potential for them to remind you that they helped you financially and if things do go wrong with your relationship, they may be "We told you so. You should have listened to us".

Only you can gauge the likelihood of that happening.

At the end of last year you posted that after advice on the tax implications of the owner selling the property BMV it was too much of a loss for the business and it would be best if the property was sold to someone at full market value.

Have things changed since then?

Thank you, yes, the owner reconsidered and was happy with the tax implications and amounts to pay after an independant accountant was able to calculate this estimate for them. However in recent light with more strings suddenly appearing, i was left at a loss yesterday and needed to sleep on it and this place has helped. Thank you again. They may reconsider after i make my stand but like you say we would want to enjoy the our first home fully without this hanging over us. Many thanks