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  • FIRST POST
    • marshalex
    • By marshalex 24th Jun 19, 5:52 PM
    • 23Posts
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    marshalex
    Claiming a loan as a gift
    • #1
    • 24th Jun 19, 5:52 PM
    Claiming a loan as a gift 24th Jun 19 at 5:52 PM
    Hi

    Not sure if this is the right forum for this but I came across a similar (now closed thread) on here and thought this might be right.

    A few years ago my in-laws loaned my brother in law and his then gf money to buy their house. They'd been together years, had already owned one house together and had agreed to live with the in-laws while the renovations were on going so they got nothing in writing (He's a tradesman and the house was unmortgagable due to the extensive renovations which needed doing to it and the previous bidders for the property pulled out after multiple lenders stated the above).

    To cut a long story short, the property is now finished by they have split up. The (now ex) gf will only acknowledged the existence of the original loan if she agrees to a 50/50 split in the proceeds of the house minus the original loan. This is despite doing minimal work on it since it was purchased and having lived with my in-laws for the 2 years (rent free) while the house was being renovated. The bro-in-law has invoices, spreadsheets etc. detailing ever hour spent on the property and should realistically be getting at least 80% of the value after the loan out for the time spent (and from time spent on a previous property they had and did the same thing on which funded the materials for this one, which again he has hours logged for).

    This ultimatum has been issue by her solicitors and (rightly) the in-laws don't agree with what she's doing but don't want to risk their original loan by (potentially) going to court and losing as even though we've got numerous witnesses to the agreement (backed up by me and my wife buying a house at the same time they did and not getting said "gift") there's obviously a risk in going down this route to ensure he get's what's rightfully his.

    I'm of the opinion (which is quite easy as it's not my money at stake) that if it were to go to court it should go in his favour because of the below
    • Precedent set when borrowed money from her parents to buy first house which was repayed
    • No money offered to ourselves when we purchased our house before they did (wife is the eldest, we have an excellent relationship with my in-laws and gifting the unmarried sibling the amount in question would have caused significant breakdown in our relationship)
    • Witnesses to state we all (her included) knew that it was a loan
    • Trackers and invoices for all the work he undertook at this property (and their previous one) to stake his claim
    • The original bank transfer for the amount of the loan
    • To now state that the loan is now a gift would constitute fraud by deception (attempting to obtain money she know's is not hers to obtain)

    I will admit that I will have an element of bias towards this, however on the balance of all probabilities I would like to think if it went to court (which is the only option left now after this ultimatum) he'd get what's rightfully his but I'd be interested to hear some impartial opinions on the subject and whether it's worth the original loan by going to court, or if there are other ways of securing the in-laws funds whilst ensuring he can get what's rightfully his for the time spent completing the renovations.
Page 1
    • zx81
    • By zx81 24th Jun 19, 5:59 PM
    • 22,898 Posts
    • 25,293 Thanks
    zx81
    • #2
    • 24th Jun 19, 5:59 PM
    • #2
    • 24th Jun 19, 5:59 PM
    None of your points provide any evidence this was a loan and a gift. Previous loans and whether or not you were given any money is irrelevant. And money would be equally transferred if it was a gift.

    Is there nothing in writing?
    • marshalex
    • By marshalex 24th Jun 19, 6:13 PM
    • 23 Posts
    • 6 Thanks
    marshalex
    • #3
    • 24th Jun 19, 6:13 PM
    • #3
    • 24th Jun 19, 6:13 PM
    No nothing in writing (first paragraph). It's our word (5 of us) against hers.
    We (and she) acknowledged at the time it was a loan. Now they've split up she's will only acknowledge it's a loan if the profit is split 50/50, leaving the bro in law significantly out of pocket for the time being spent renovating the house.
    • zx81
    • By zx81 24th Jun 19, 6:17 PM
    • 22,898 Posts
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    zx81
    • #4
    • 24th Jun 19, 6:17 PM
    • #4
    • 24th Jun 19, 6:17 PM
    It's very much going to look like 50/50 in court. It depends how much the in-laws feel like gambling their stake.
    • BrassicWoman
    • By BrassicWoman 24th Jun 19, 6:23 PM
    • 2,171 Posts
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    BrassicWoman
    • #5
    • 24th Jun 19, 6:23 PM
    • #5
    • 24th Jun 19, 6:23 PM
    I would not view living with my in-laws rent free as anything other than a penance.
    May 19 grocery challenge £100.79/ £200
    • marshalex
    • By marshalex 24th Jun 19, 6:27 PM
    • 23 Posts
    • 6 Thanks
    marshalex
    • #6
    • 24th Jun 19, 6:27 PM
    • #6
    • 24th Jun 19, 6:27 PM
    That’s what I was afraid of. I very much doubt they’d risk it but I begrudge her getting a penny more than she deserves on the house

    Surely there’s something that can be done somewhere, stating that money lent to you as a loan which, she acknowledged at the time (in front of witnesses) and now stating it’s a gift (for significant financial gain) constitutes fraud?

    It was her idea to live with the in-laws to save more money, he wanted to rent somewhere so they had their own space!
    • Onemanandtwolittleladies
    • By Onemanandtwolittleladies 24th Jun 19, 6:27 PM
    • 18 Posts
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    Onemanandtwolittleladies
    • #7
    • 24th Jun 19, 6:27 PM
    • #7
    • 24th Jun 19, 6:27 PM
    Your BIL should probably count himself lucky that she is acknowledging the loan if split 50/50. She could easily just demand a straight 50/50 split which would leave your in laws without their money back.

    My advice is put it down to experience. Agree to her offer and move on. Anything else will be costly, time consuming and drag on for a long time.

    With no official agreements on any of the money, a court will almost certainly rule 50/50.
    • zx81
    • By zx81 24th Jun 19, 6:28 PM
    • 22,898 Posts
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    zx81
    • #8
    • 24th Jun 19, 6:28 PM
    • #8
    • 24th Jun 19, 6:28 PM
    Surely there’s something that can be done somewhere, stating that money lent to you as a loan which, she acknowledged at the time (in front of witnesses) and now stating it’s a gift (for significant financial gain) constitutes fraud?
    Originally posted by marshalex
    There surely is - you just need to prove it. Or at least provide compelling evidence.

    But a few people who no longer like her saying it was a loan is flimsy at best.
    • marshalex
    • By marshalex 24th Jun 19, 6:38 PM
    • 23 Posts
    • 6 Thanks
    marshalex
    • #9
    • 24th Jun 19, 6:38 PM
    • #9
    • 24th Jun 19, 6:38 PM
    There surely is - you just need to prove it. Or at least provide compelling evidence.

    But a few people who no longer like her saying it was a loan is flimsy at best.
    Originally posted by zx81
    I had feared as much for them and was looking at it through rose tinted goggles in convincing myself the arguments we’d thought of would see it in his favour.
    • BrassicWoman
    • By BrassicWoman 24th Jun 19, 7:04 PM
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    BrassicWoman
    How much is it worth to never see her again? is the real question here.
    May 19 grocery challenge £100.79/ £200
    • bris
    • By bris 24th Jun 19, 7:17 PM
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    bris
    Are you seriously looking to claim hours worked on the house should be payable? Will the GF be paid for the hours spent cooking and cleaning in any of the houses they have lived in?


    It doesn't work like that, this looks like a 50/50 split to me, the courts aren't going to accept a payment arrangement for work carried out on what is the family home.


    They will look at the years they spent together as a cohabitating couple and not allow any old excuse to deny a fair split.


    As for the loan if nothing is in writing it's their word against hers and their word isn't exactly unbiased so that could go ether way with the probability not looking good without any agreement in writing signed by all parties concerned.


    To me it does look like the GF is being shafted and doesn't deserved to be after all the years together.
    Last edited by bris; 24-06-2019 at 7:19 PM.
    • marshalex
    • By marshalex 24th Jun 19, 7:32 PM
    • 23 Posts
    • 6 Thanks
    marshalex
    Are you seriously looking to claim hours worked on the house should be payable? Will the GF be paid for the hours spent cooking and cleaning in any of the houses they have lived in?


    It doesn't work like that, this looks like a 50/50 split to me, the courts aren't going to accept a payment arrangement for work carried out on what is the family home.


    They will look at the years they spent together as a cohabitating couple and not allow any old excuse to deny a fair split.


    As for the loan if nothing is in writing it's their word against hers and their word isn't exactly unbiased so that could go ether way with the probability not looking good without any agreement in writing sighrn by all parties concerned.
    Originally posted by bris
    What a sexist argument! Why do you assume she did all the cooking and cleaning (they had a cleaner and split the cooking FYI, as most modern couples do).

    If it wasn’t for her dumping him on the day they moved in I’d be inclined to take the offer and run for the hills, but why should she profit from his hard work? He put the hours in making the house habitable, he’s the one who sacrificed his earnings, why shouldn’t he be compensated now it’s effectively now a business transaction. If they paid someone to do the renovations it would have been split fairly, why shouldn’t it be in this case?
    Last edited by marshalex; 24-06-2019 at 7:37 PM.
    • shortcrust
    • By shortcrust 24th Jun 19, 7:49 PM
    • 2,359 Posts
    • 3,742 Thanks
    shortcrust
    I agree that her recognising the loan for a 50/50 split is a really good outcome, considering the worst case scenario. In my unbiased opinion it’s also fair.

    Absolute madness to loan anyone that sort of money with nothing to document it.
    • Lover of Lycra
    • By Lover of Lycra 24th Jun 19, 8:04 PM
    • 230 Posts
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    Lover of Lycra
    How is the property owned? Tenants in common, if yes, what split, or joint tenants? Is there a mortgage involved, if yes, what did the mortgage lender think the money was, a loan or a gift?

    The fact that you were gifted or loaned any money when you bought your property is not evidence of the money received by your BIL and his GF being a loan.

    I also agree that 2 years spent living with in-laws would be a penance.
    • marshalex
    • By marshalex 24th Jun 19, 8:16 PM
    • 23 Posts
    • 6 Thanks
    marshalex
    How is the property owned? Tenants in common, if yes, what split, or joint tenants? Is there a mortgage involved, if yes, what did the mortgage lender think the money was, a loan or a gift?

    The fact that you were gifted or loaned any money when you bought your property is not evidence of the money received by your BIL and his GF being a loan.

    I also agree that 2 years spent living with in-laws would be a penance.
    Originally posted by Lover of Lycra
    No mortgage (bought cash as property wasn’t able to be mortgaged due to the extensive renovations needed), hence the offer. Tenants in common I believe.

    Why is it a penance? I would have thought saving thousands on rent/bills at their expense (again) is hardly a penance?

    My logic (flawed or not) was that why would a gift be given to one sibling over another without any form of discussion, acknowledgement?
    • zx81
    • By zx81 24th Jun 19, 8:18 PM
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    zx81
    My logic (flawed or not) was that why would a gift be given to one sibling over another without any form of discussion, acknowledgement?
    Originally posted by marshalex
    It's very common. Need, preference, favouritism, pity, begging.

    Families have all sorts of peculiarities.
    • Lover of Lycra
    • By Lover of Lycra 24th Jun 19, 8:23 PM
    • 230 Posts
    • 848 Thanks
    Lover of Lycra
    No mortgage (bought cash as property wasn’t able to be mortgaged due to the extensive renovations needed), hence the offer. Tenants in common I believe.

    Why is it a penance? I would have thought saving thousands on rent/bills at their expense (again) is hardly a penance?

    My logic (flawed or not) was that why would a gift be given to one sibling over another without any form of discussion, acknowledgement?
    Originally posted by marshalex
    There's more to life than money and saving a few thousand pounds would not entice me to give up my own space to move into the in-laws house for years. The inconvenience would not be worth the savings.

    Your logic makes not one jot of difference when it comes to proving whether this money was a loan or a gift. Lots of parents don't treat their offspring equally when it comes to financial matters.

    Your in-laws could easily have formalised the loan, taken a charge out against the property even, but all they have now is a case of she said/he said, and the ex gf is willing to pay them back out of the equity. As a tenant in common she is entitled to whatever equity share she owns so if they own it 50/50 she is legally entitled to 50% of the equity. Your in-laws should bite her hand off and accept the offer.
    • marshalex
    • By marshalex 24th Jun 19, 8:26 PM
    • 23 Posts
    • 6 Thanks
    marshalex
    There's more to life than money and saving a few thousand pounds would not entice me to give up my own space to move into the in-laws house for years. The inconvenience would not be worth the savings.

    Your logic makes not one jot of difference when it comes to proving whether this money was a loan or a gift. Lots of parents don't treat their offspring equally when it comes to financial matters.

    Your in-laws could easily have formalised the loan, taken a charge out against the property even, but all they have now is a case of she said/he said, and the ex gf is willing to pay them back out of the equity. As a tenant in common she is entitled to whatever equity share she owns so if they own it 50/50 she is legally entitled to 50% of the equity. Your in-laws should bite her hand off and accept the offer.
    Originally posted by Lover of Lycra
    I’m assuming the charge would need to have been made at the time of purchase?
    • Lover of Lycra
    • By Lover of Lycra 24th Jun 19, 8:30 PM
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    Lover of Lycra
    I’m assuming the charge would need to have been made at the time of purchase?
    Originally posted by marshalex
    Not necessarily but you would need the owners to agree to it being a secured loan and I don't see the ex-gf agreeing to that, do you? Why even go to the bother when she is offering to return the in-laws money to them?
    • marshalex
    • By marshalex 24th Jun 19, 8:42 PM
    • 23 Posts
    • 6 Thanks
    marshalex
    More intrigued than anything. Know there’d be no agreement from her. Cut losses live and learn it seems!
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