Property · Family loans
Family loan agreements and independent legal advice in Gawler.
Parents help children into homes. Partners lend each other money. It usually works out, until a separation, a death or a falling-out asks what the money actually was. A short, properly drafted agreement answers that before anyone has to.
What we handle
Put it in writing while everyone still agrees.
Money moving inside a family is often handled on trust: a transfer from the parents' account and a promise to pay it back one day. If nothing is written down, a court, or the other side of a separation, can treat that money as a gift. A loan agreement records the amount, whether interest is charged, when and how it is repaid, and what happens if the borrower separates, sells or dies.
Where the amount matters, the loan can be secured with a registered mortgage over the property, so it is repaid from a sale before anything else is divided. Parents should also think about their own position: a loan can count as an asset for the Age Pension, and how your Will treats it (repaid, forgiven, or deducted from that child's share) decides whether your other children are treated fairly. We deal with the loan and the Wills together.
Lenders often need a certificate that you have had independent legal advice before you sign a guarantee, a private mortgage or a loan for someone else's benefit. We read the documents with you, explain what you are agreeing to and what could happen if the borrower does not pay, and sign the certificate. We act for you alone, not for the lender or the borrower.
If you are here because…
Three conversations that bring families in.
You are helping a child buy a home.
Decide first whether the money is a gift or a loan, and say so in writing. If it is a loan, we draw up the agreement and, where it makes sense, register a mortgage so the money comes back if the house is sold or the relationship ends.
You are lending money to a partner.
Married, de facto or living apart, a written agreement is the only reliable record of what was a loan and on what terms. Without one, a court may decide the money was a gift, or simply part of the shared property.
A lender has asked for an independent advice certificate.
Bring the documents and your photo ID. We go through them with you, explain in clear terms what you are taking on and what happens if the borrower does not pay, and sign the certificate if you are comfortable to go ahead. If you are not, we say so.
Common questions
What lenders and borrowers ask us first.
Not automatically, but it is much harder to show it was a loan. Courts look at what was said and done at the time, and in a separation an undocumented family loan is often treated as part of the shared property. A signed agreement made at the time removes most of the argument.
Not always. For a smaller amount a written, unsecured agreement may be enough. For a large sum, or where the borrower is in a relationship, a registered mortgage gives the lender a claim on the property itself. If a bank already holds the first mortgage, a second one usually needs the bank's consent, and we arrange that.
It can be. Stamp duty is generally worked out on the market value when that is higher than the price, and the difference may count as a gift for other purposes, such as the Age Pension. We look at the whole picture, including your Wills, before anything is signed.
Usually not on the same loan, because their interests differ if things go wrong. We act for one side, normally the lender, and recommend the other gets their own advice. We tell you at the start if that applies to you.
It becomes an asset of your estate, and your executor can call it in unless your Will says otherwise. Many parents forgive the loan in their Will, or deduct it from that child's share so everyone is treated evenly. Either way, it needs to be written into the Will.
It can. Centrelink generally counts money you have lent as one of your assets. Check with Centrelink or your financial adviser before you lend, and we can work with them on the paperwork.
We quote a fixed fee once we have seen the documents, before the appointment, so you know the cost before you come in.
We'll call you back the same business day.
Tell us briefly what's happening. Steven will call you back for a free 15-minute conversation, the same business day. No obligation, no pressure to engage us afterwards.
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