Dilemma: Money lent to relatives for a house deposit but…

silvercar

Keep_pedalling said:

silvercar said:

saajan_12 said:

Nybster said:

So, this is where I think the differences between me and my wife lie. We had always just intended to  give them the money towards their deposit. Their insistence, at the time, to pay it back is where my ‘Informal’ loan description comes from (my wife still insists it was a gift). My gripe is that, even if it was a gift, it was for a house purchase which hasn’t materialised…

OK this is very different from the OP.. I think most peoples' interpretation of "informal" was not written down and no precise date & time for repayment with specific penalities, but still with a clear expectation of repayment based on some broad event. 

If you gifted them a deposit, they bought a house, and then x time later they sell / up the mortgage and have fun with the money, then would you still have an issue? The point you need to decide with the wife is whether you want to treat it as a loan or a gift. If its a loan, then the money comes back. If its a gift, then you don't get to tell them what to do with it. 

Don't agree with your last sentence. You can gift family money for a particular purpose, then it is gift with the condition it is used that way. I gifted my offspring money for deposit on a house, the gift was conditional on it being used that way. 

How exactly would you enforce that if they had done something else with it? Gifts are absolute, once given you no longer have control. I suppose you could alter you will to cut them out of it but there is nothing you can do to get it back if they refuse to give it back.

oldernonethewiser said:

silvercar said:

saajan_12 said:

Nybster said:

So, this is where I think the differences between me and my wife lie. We had always just intended to  give them the money towards their deposit. Their insistence, at the time, to pay it back is where my ‘Informal’ loan description comes from (my wife still insists it was a gift). My gripe is that, even if it was a gift, it was for a house purchase which hasn’t materialised…

OK this is very different from the OP.. I think most peoples' interpretation of "informal" was not written down and no precise date & time for repayment with specific penalities, but still with a clear expectation of repayment based on some broad event. 

If you gifted them a deposit, they bought a house, and then x time later they sell / up the mortgage and have fun with the money, then would you still have an issue? The point you need to decide with the wife is whether you want to treat it as a loan or a gift. If its a loan, then the money comes back. If its a gift, then you don't get to tell them what to do with it. 

Don't agree with your last sentence. You can gift family money for a particular purpose, then it is gift with the condition it is used that way. I gifted my offspring money for deposit on a house, the gift was conditional on it being used that way. 

As already asked, how did you enforce this condition and if the family member had chosen to buy something else what would you have been able to do?

You tell them your intentions in advance, they find a property including your gift in their budget, you pass the money to their solicitor in time for exchange/ completion. It’s not difficult, the solicitor will need to check source of funds for money laundering in any case, so it makes sense to pass it direct to solicitors.

Pollycat

silvercar said:

Keep_pedalling said:

silvercar said:

saajan_12 said:

Nybster said:

So, this is where I think the differences between me and my wife lie. We had always just intended to  give them the money towards their deposit. Their insistence, at the time, to pay it back is where my ‘Informal’ loan description comes from (my wife still insists it was a gift). My gripe is that, even if it was a gift, it was for a house purchase which hasn’t materialised…

OK this is very different from the OP.. I think most peoples' interpretation of "informal" was not written down and no precise date & time for repayment with specific penalities, but still with a clear expectation of repayment based on some broad event. 

If you gifted them a deposit, they bought a house, and then x time later they sell / up the mortgage and have fun with the money, then would you still have an issue? The point you need to decide with the wife is whether you want to treat it as a loan or a gift. If its a loan, then the money comes back. If its a gift, then you don't get to tell them what to do with it. 

Don't agree with your last sentence. You can gift family money for a particular purpose, then it is gift with the condition it is used that way. I gifted my offspring money for deposit on a house, the gift was conditional on it being used that way. 

How exactly would you enforce that if they had done something else with it? Gifts are absolute, once given you no longer have control. I suppose you could alter you will to cut them out of it but there is nothing you can do to get it back if they refuse to give it back.

oldernonethewiser said:

silvercar said:

saajan_12 said:

Nybster said:

So, this is where I think the differences between me and my wife lie. We had always just intended to  give them the money towards their deposit. Their insistence, at the time, to pay it back is where my ‘Informal’ loan description comes from (my wife still insists it was a gift). My gripe is that, even if it was a gift, it was for a house purchase which hasn’t materialised…

OK this is very different from the OP.. I think most peoples' interpretation of "informal" was not written down and no precise date & time for repayment with specific penalities, but still with a clear expectation of repayment based on some broad event. 

If you gifted them a deposit, they bought a house, and then x time later they sell / up the mortgage and have fun with the money, then would you still have an issue? The point you need to decide with the wife is whether you want to treat it as a loan or a gift. If its a loan, then the money comes back. If its a gift, then you don't get to tell them what to do with it. 

Don't agree with your last sentence. You can gift family money for a particular purpose, then it is gift with the condition it is used that way. I gifted my offspring money for deposit on a house, the gift was conditional on it being used that way. 

As already asked, how did you enforce this condition and if the family member had chosen to buy something else what would you have been able to do?

You tell them your intentions in advance, they find a property including your gift in their budget, you pass the money to their solicitor in time for exchange/ completion. It’s not difficult, the solicitor will need to check source of funds for money laundering in any case, so it makes sense to pass it direct to solicitors.

That's not my experience.
I gifted my sister some money towards her house purchase and the solicitor (conveyancer) said the money had to come from my sister's bank account.

silvercar

Pollycat said:

silvercar said:

Keep_pedalling said:

silvercar said:

saajan_12 said:

Nybster said:

So, this is where I think the differences between me and my wife lie. We had always just intended to  give them the money towards their deposit. Their insistence, at the time, to pay it back is where my ‘Informal’ loan description comes from (my wife still insists it was a gift). My gripe is that, even if it was a gift, it was for a house purchase which hasn’t materialised…

OK this is very different from the OP.. I think most peoples' interpretation of "informal" was not written down and no precise date & time for repayment with specific penalities, but still with a clear expectation of repayment based on some broad event. 

If you gifted them a deposit, they bought a house, and then x time later they sell / up the mortgage and have fun with the money, then would you still have an issue? The point you need to decide with the wife is whether you want to treat it as a loan or a gift. If its a loan, then the money comes back. If its a gift, then you don't get to tell them what to do with it. 

Don't agree with your last sentence. You can gift family money for a particular purpose, then it is gift with the condition it is used that way. I gifted my offspring money for deposit on a house, the gift was conditional on it being used that way. 

How exactly would you enforce that if they had done something else with it? Gifts are absolute, once given you no longer have control. I suppose you could alter you will to cut them out of it but there is nothing you can do to get it back if they refuse to give it back.

oldernonethewiser said:

silvercar said:

saajan_12 said:

Nybster said:

So, this is where I think the differences between me and my wife lie. We had always just intended to  give them the money towards their deposit. Their insistence, at the time, to pay it back is where my ‘Informal’ loan description comes from (my wife still insists it was a gift). My gripe is that, even if it was a gift, it was for a house purchase which hasn’t materialised…

OK this is very different from the OP.. I think most peoples' interpretation of "informal" was not written down and no precise date & time for repayment with specific penalities, but still with a clear expectation of repayment based on some broad event. 

If you gifted them a deposit, they bought a house, and then x time later they sell / up the mortgage and have fun with the money, then would you still have an issue? The point you need to decide with the wife is whether you want to treat it as a loan or a gift. If its a loan, then the money comes back. If its a gift, then you don't get to tell them what to do with it. 

Don't agree with your last sentence. You can gift family money for a particular purpose, then it is gift with the condition it is used that way. I gifted my offspring money for deposit on a house, the gift was conditional on it being used that way. 

As already asked, how did you enforce this condition and if the family member had chosen to buy something else what would you have been able to do?

You tell them your intentions in advance, they find a property including your gift in their budget, you pass the money to their solicitor in time for exchange/ completion. It’s not difficult, the solicitor will need to check source of funds for money laundering in any case, so it makes sense to pass it direct to solicitors.

That's not my experience.
I gifted my sister some money towards her house purchase and the solicitor (conveyancer) said the money had to come from my sister's bank account.

It’s what we’ve done, both 2 years ago and last week. If the solicitor has done all the ID checks and gifted deposit form, then they shouldn’t have any problem being transferred the money direct.

saajan_12

silvercar said:

saajan_12 said:

Nybster said:

So, this is where I think the differences between me and my wife lie. We had always just intended to  give them the money towards their deposit. Their insistence, at the time, to pay it back is where my ‘Informal’ loan description comes from (my wife still insists it was a gift). My gripe is that, even if it was a gift, it was for a house purchase which hasn’t materialised…

OK this is very different from the OP.. I think most peoples' interpretation of "informal" was not written down and no precise date & time for repayment with specific penalities, but still with a clear expectation of repayment based on some broad event. 

If you gifted them a deposit, they bought a house, and then x time later they sell / up the mortgage and have fun with the money, then would you still have an issue? The point you need to decide with the wife is whether you want to treat it as a loan or a gift. If its a loan, then the money comes back. If its a gift, then you don't get to tell them what to do with it. 

Don't agree with your last sentence. You can gift family money for a particular purpose, then it is gift with the condition it is used that way. I gifted my offspring money for deposit on a house, the gift was conditional on it being used that way. 

That's very hard to enforce after the fact though.
Beforehand, you can absolutely send in a way that's conducive to being used for a set purpose. Eg pay a bill directly for them, or transfer to the solicitor. 
After the fact, its very hard to control eg what if they buy and then want to move, so sell up and fritter it away before they can buy again. 

oldernonethewiser

I know someone who has the potential to be helped out by their prospective Father in Law.

The FiL has put a number of stipulations including type of property and general location.

The wedding, never mind the property purchase may now be in doubt.

silvercar

oldernonethewiser said:

I know someone who has the potential to be helped out by their prospective Father in Law.

The FiL has put a number of stipulations including type of property and general location.

The wedding, never mind the property purchase may now be in doubt.

They have the option of saying, ‘thanks but no thanks’. 

oldernonethewiser

silvercar said:

oldernonethewiser said:

I know someone who has the potential to be helped out by their prospective Father in Law.

The FiL has put a number of stipulations including type of property and general location.

The wedding, never mind the property purchase may now be in doubt.

They have the option of saying, ‘thanks but no thanks’. 

They do indeed which means they will have to stay in their current rental property and potentially put a strain on family relationships, but it is, as you suggest, an option.

silvercar

oldernonethewiser said:

silvercar said:

oldernonethewiser said:

I know someone who has the potential to be helped out by their prospective Father in Law.

The FiL has put a number of stipulations including type of property and general location.

The wedding, never mind the property purchase may now be in doubt.

They have the option of saying, ‘thanks but no thanks’. 

They do indeed which means they will have to stay in their current rental property and potentially put a strain on family relationships, but it is, as you suggest, an option.

Also gives the FIL an option to see that he can’t dictate (in this and future family issues) and come to his senses. He can wish he kept his mouth shut or still offer a deposit of an amount he wishes.

 Almost in the same situation, where we were going to offer help if the kids stayed near London, due to the high housing costs here, then realised it was unfair to dictate where they should live. In fact, DiL (who only had GF status at the time) always said she wouldn’t accept large gifts for any purchases because gifts come with ties. But she didn’t know us well at the time and is now more relaxed. 

Jemma01

@Nybster

It sounds like you gave it to them as a gift, they can say they'll pay it back, but you did not lend it to them. I appreciate your intention was to help with the house, I'm unsure how much that counts in court, esp as they can turn around and say "we are looking for a house and have been, but the prices went up and we haven't secured the deposit yet"...

The right thing would have been to give it through their solicitor and if things fail, you ask the solicitor to only hand the money to the mortgage lender (not sure how what that would be called in legal terms, probably not a gift but something else).

oldernonethewiser

silvercar said:

oldernonethewiser said:

silvercar said:

oldernonethewiser said:

I know someone who has the potential to be helped out by their prospective Father in Law.

The FiL has put a number of stipulations including type of property and general location.

The wedding, never mind the property purchase may now be in doubt.

They have the option of saying, ‘thanks but no thanks’. 

They do indeed which means they will have to stay in their current rental property and potentially put a strain on family relationships, but it is, as you suggest, an option.

Also gives the FIL an option to see that he can’t dictate (in this and future family issues) and come to his senses. He can wish he kept his mouth shut or still offer a deposit of an amount he wishes.

 Almost in the same situation, where we were going to offer help if the kids stayed near London, due to the high housing costs here, then realised it was unfair to dictate where they should live. In fact, DiL (who only had GF status at the time) always said she wouldn’t accept large gifts for any purchases because gifts come with ties. But she didn’t know us well at the time and is now more relaxed. 

That won't be happening any time soon I'm afraid.