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Parent trap: the risks of mum and dad lending

We are noticing an increase in parents seeking our assistance to recover deposits they have paid towards their child’s first home (the bank of mum and dad).  Our assistance is increasingly sought because the child is in the process of selling the property to cash out a substantial capital gain, or resolving marriage breakups, but they do not wish to pay the deposit back to mum and dad.

In some cases, mum and dad are not receiving their deposits paid back because the arrangements are usually unclear, have been left undocumented and without any security interests.

These types of arrangements are problematic should things go wrong and may result in complex legal proceedings against family members.

Best practice is to take steps to document a loan or security arrangement because that creates certainty of the agreement and sets out the rights of the parties. That gives the parties something to enforce should things go wrong.

McNamara Law can assist by providing expert advice in respect to your rights and help prepare simple cost-effective documentation to acknowledge the terms of the loan and any security. We can also help if you end up in court.

Please contact McNamara Law on 1300 285 888 should you require assistance.

Nick

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Date Published - March 13, 2025

The Content and links referenced in this article were valid at the date of publishing.

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