By Richard McCullagh -
Snapshot
- There has been a recent trend in parents helping their adult children by providing money to go towards purchasing a home or co-owning a home with them.
- If circumstances change, the parent or their estate may want to retrieve their funds or realise their investment.
- It is often problematic for parents to retrieve such funds, but the humble old deed of loan will help if the family can be persuaded to use it.
Sackville AJA recently observed in Chaudhary v Chaudhary [2017] NSWCA 222 (‘Chaudhary’) that:
‘There has been discussion in recent times about the affordability of housing, particularly for young people, in many parts of Australia. One consequence of declining housing affordability is that young adults very often need and sometimes receive assistance from parents (or other benefactors) to enter the housing market’ (at [7]).
Parents advancing money to their children, or co-purchasing property with them, are on the legal back foot should those funds be needed later. In the absence of independent legal advice and documentation at the outset, the most common characterisation of these arrangements is a ‘resulting trust’. Obtaining legal advice for such a family matter is often seen as unwarranted, if not embarrassing. However, it is very important as the presumption of advancement is likely to apply so as to deem a gift by parent to child. This may be galling, to the parent and, on his or her death, any siblings.
What is a resulting trust?
A resulting trust is a form of equitable relief that may bypass the strictures of contract, and the parol evidence rule in relation to land.
