TAS Mother & Daughter Mortgage and Title

[bridgyguy]

Hi, i hope this is not too complicated, but i will try to explain as best as i can.

Ok so my wife and i sold our family home last year, we traveled overseas for 3 months, returned home and bought a brand new 3 bedroom townhouse for $270,000 in cash (appraised value is now $350,000) and we have $50,000 left from the sale of our old house, but the title for this new townhouse is in my wifes name, as i have a unit of my own in another state that i bought before i met my wife, and i have been renting that out for the past 25 years.

There are 3 more brand new 2 bedroom townhouses for sale over the road in a new complex just completed, selling for around $270,000 and we thought that it might be a good idea to help our 20y/o daughter get into the property market by helping her to buy one of those 3 properties, seeing as they are brand new, and selling for such a great price.

Our idea was to have my wife put in $20,000 and our daughter put in $10,000 plus the $20,000 first home owners grant, making it a $50,000 deposit, and then my wife and daughter would apply to our bank (a small community based bank) for a joint home loan for around $220,000 as my daughter would probably not yet qualify for her own home loan as she has not had a long stable work history yet, and the repayments would be too high for her, unless she stayed living with us and she rented the unit to a couple of her friends for a few years so the rent would contribute to the loan repayments, or she would live in the new townhouse and have a friend rent a room and share it with her.

My wife is 56 and works full time, been employed at the same place for 27 years, she earns $55,000 p/a so her capacity to pay a loan would be no longer than 10 years, but my daughter has been with her current employer for almost 1 year and is now assistant manager to the owner of the business, and she is earning a salary of around $45,000 and she has $20,000 in savings, and owns her $12,000 car.

I am 63 and i do not work any more so i will not be included in this plan, however we are prepared to offer our new townhouse as security against a home loan if it will help their chances.

Here is the issue we have right now, our daughter has had the same boyfriend for 4 years, he is 22 but he has no stable work history and changes jobs a lot, although he is usually very good when it comes to saving money, but because my wife will need to be involved in this (paying part of the deposit and taking out a loan with our daughter) we do not want him to be involved in this plan, so we need to set this up in such a way that the boyfriend cannot quit the relationship with our daughter sometime in the future and then try to gain financially from the property as a de-facto partner.

If they can get a loan and proceed to buy a property, can we have the Title put into my wifes name only (and leave our daughter as the beneficiary in my wifes will) or does it have to be in both wife and daughters names given it would be a shared mortgage.

If the Title must be in both names, what entitlement would the boyfriend have should he depart company with our daughter in the near future, given my wife would be sharing the mortgage with our daughter, as well as us having contributed $20,000 towards the deposit.

We just want to protect our investment so our daughter gets everything that we have, but we do appreciate that at some time in the future our daughter will get our assets, and titles will need to be transferred to her name, so by then she and the boyfriend may be married and he will end up with half of what she has without having contributed a cent.

To me, the only time a boyfriend or husband should get 50% of any property is if he has contributed 50% of the deposit and has helped pay at least 50% of the loan payment, but we all know that things are not always fair when it comes to relationships and the law.

Cheers

 

[Atticus]

Just some thoughts....

Our idea was to have my wife put in $20,000 and our daughter put in $10,000 plus the $20,000 first home owners grant, making it a $50,000 deposit,

May be a problem (or two) with that plan.... Things *may* have changed, but I don't think your daughter would be eligible for the FHG if the property is co- owned with a person who already has purchased a property ..... Also I don't think the FHG gets paid until after the purcahse, so you would need to advance her that & have her pay it back to you

If they can get a loan and proceed to buy a property, can we have the Title put into my wifes name only (and leave our daughter as the beneficiary in my wife's will) or does it have to be in both wife and daughters names given it would be a shared mortgage.

Yes. The title can be in just your wifes name ... You need to fully explore the tax & or pension consequences that may have for you going in

if the Title must be in both names, what entitlement would the boyfriend have should he depart company with our daughter in the near future, given my wife would be sharing the mortgage with our daughter, as well as us having contributed $20,000 towards the deposit

Are they already living de facto? ...... As a general rule, a couple need to be living together in a genuine de facto relationship for 2 years before they are treated in family law as a married couple, ie, a party can apply for property/financial orders after separation.... In that event, he would have some equitable interest in the property because all assets owned by both parties are normally included in the joint asset pool for division.... That said... Initial contributions count, & the length of relationship count.

Again, as a general rule, a short relationship (less than approx 5 years) would see most assets (or value of) retained by the initial contributor. After that, the weight given those initial contributions begin to erode, so that after about 10 years, it's accepted that both parties have contributed more or less equally to the preservation, financial & non financial upkeep of property, savings etc

We just want to protect our investment so our daughter gets everything that we have, but we do appreciate that at some time in the future our daughter will get our assets, and titles will need to be transferred to her name, so by then she and the boyfriend may be married and he will end up with half of what she has without having contributed a cent.

Understand your wishes ..... Not possible to fully protect her though... perhaps wait until she is a bit older.... 20 is still quite young. Her relationship may change if you are particularly concerned about her current BF...

Other option is to have her consider a binding financial agreement (often referred to as a pre nuptial agreement) between herself & BF

 

[bridgyguy]

Thanks for all those replies, i won't quote any of them specifically but only to post the following.

Here in Tasmania the Grant is not issued to the home buyer.
When you intend buying a first home you should apply for the FHG first, and if successful, then apply for your home loan, and you put the Grant on the loan application which is to form part of your initial deposit, and if the loan is approved, and a property is found and a contract made, the bank will make arrangements to have the grant paid directly into the sellers agents trust fund when the deposit is required to be paid, the bank then pays the agents the final balance, to become the actual mortgage.
This was how it worked as of June last year.

Our Daughter lives with us in our new townhouse, she has the 2 smaller bedroom at the other end of the unit, one bedroom and the other is her lounge/living space so she is away from the main living areas.
Her boyfriend has been living here on and off for the past 7 months, 3 months last year, then 6 weeks at his father, then back with us for the past 2.5 months, however he has started working for his father now, which is a long way from us, so i believe that he will be moving into a house with his father closer to where they will be working, which we are very happy about.
I am keeping notes of when he has lived with us (i stress US because he is not technically living with our Daughter he is living with us, he just shares the 2 rooms with our daughter, and they both pay us $50 a week each for utilities, and they buy their own food and do their own cooking.

There is no way that i am going to help our daughter out with buying a property (regardless who the title belongs to) if he has a remote chance of getting his hands on any of the property or our money, and if we was to help out by getting a joint mortgage and paying part of the deposit, we will be asking our lawyer to include some type of caveat in place that stipulates that if he did try to make a claim of any kind, we get our deposit portion paid back from a sale of the property (after the mortgage is paid out) the Daughter gets her deposit plus the home owners grant, and we also get back any portion paid by us towards the mortgage repayments.

This would mean that if he tried to gain financially from this, the bank gets their money, we get our deposit, plus funds paid towards the mortgage, and she gets her money back, then he can have 50% of what is left over if this was to be the case.

He is a nice guy, but he is unstable regarding his work, and will contribute nothing up front towards our Daughter getting herself a property.

If she does buy a place, and he lives with her, he will have to contribute 50% of the loan payments, and offer my Daughter at least $10,000 towards her initial deposit, or paid off the mortgage in a lump sum.

Actually, the bank will own the Title until the property is paid off anyway.

 

[sammy01]

ok so while boyfriend isn't living permenently with you guys it is all good.
If he moved into this new place you could look at having some sort of rental agreement so it is clear he is a tennant.
So let's look at family law. 2 yrs living together = defacto. Does that mean he has a 50/50 claim on the property? HELL NO.
He could make a claim - but after 2 yrs living together, he will find he isn't entitled to anything.
What about after 7 years. Yup. 50/50? nope.
After 10 years? and a child? different story.

You wrote
"If she does buy a place, and he lives with her, he will have to contribute 50% of the loan payments, and offer my Daughter at least $10,000 towards her initial deposit, or paid off the mortgage in a lump sum. "
I reckon you're better off keeping him as a tennant. Once you do what your suggesting it invites him to think he is a co-owner. Let him just pay rent.

You can't plan for everything. If he lived there for 10 years, did some work on maintenace. Contributed towards the finances? paid bills. Then he'd have a claim and rightly so because it would be the equivalent of them being married for 10 years. If for example your daughter chose to let him stay there even if he couldn't afford rent, then it is a defacto relationship and family law will apply. BUT again, that doesn't mean he automatically gets 50/50. Especially if you can establish that his contributions have mostly been towards keeping the couch company
Have a read

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[Atticus]

If she does buy a place, and he lives with her, he will have to contribute 50% of the loan payments, and offer my Daughter at least $10,000 towards her initial deposit, or paid off the mortgage in a lump sum.

Sorry, but that is just NOT the way the family law court views financial & non financial contributions in a relationship.... As I explained in first post, the wieght given to initial (and overall) financial contributions erode over time..... The best a person can do to minimize the impact of a relationship breakdown if they have significant initial assets is to enter into a very thoroughly thought out binding financial agreement, & even that needs to be amended during the relationship as significant events come along (children for example)

Actually, the bank will own the Title until the property is paid off anyway.

It doesn't matter who is holding the title... What matters is the equity in that asset, because that is what gets divided ..... Suggest as a starting point you read the link Sammy has provided. Then if you really want to look at ways of possibly *minimizing* the fallout of any future relationship breakdown, you make an appointment with a family law solicitor to go over options.... But as a parent, lending/gifting money to a child, there is only so much you can do to protect that investment going forward, & that gets less the longer the time..