When Your Parents Help You Buy a Home

Last year, Rebecca bought the home that she and her partner of 5 years, Alvin, live in. She and Alvin are excitedly looking forward to becoming parents for the first time in a few months. However, a shadow is sitting over this happy time. Rebecca's parents have raised a concern about whether Rebecca "protected" a gift they gave her. They want to be sure that Rebecca and their future grandchildren, not Alvin, get the benefit of their gift if Rebecca and Alvin ever separated.

A year ago, Rebecca's parents generously gifted her $150,000 towards the purchase of the home that she and Alvin live in (they’d done the same for her older brother). Rebecca also used $80,000 of her own savings. Until she recently took maternity leave, she was earning more than Alvin so she had paid more income towards the home’s mortgage and expenses.

Urged on by her parents, Rebecca wanted to check that her contributions to buying the home and her parents' gift were safely hers alone if she and Alvin ever separated. She was pretty confident they were and she proudly told me she had safeguarded things by ensuring she purchased the home alone in her own name. She had also borrowed the mortgage in her name alone. Alvin’s payments to her for the home were purely thought of by them as “board” for living in the home although they had no written agreement about this. She was feeling happy and confident that she’d set things up so that Alvin had no claim over her home and couldn’t walk away with any of her parents’ gift if they separated, not that she saw this ever happening.

Sometimes as family lawyers we must rain on people’s parade. We can’t always tell clients what they want to hear. This was one of those times.

Despite the fact the home and mortgage were in Rebecca’s sole name, she was dismayed to learn that, by law, the home was relationship property. The principal family residence is given special status in law as the “family home”. Given their de facto relationship had existed for more than three years, the law says the family home is to be shared equally between her and Alvin if they separated.

Rebecca challenged me on this - What about the fact she had contributed more financially to the home and its expenses? This is a common situation where one party earns more than the other in a relationship. Unfortunately for Rebecca, it does not give rise to a legal basis for unequal sharing of the family home. The equal division of the family home applies irrespective of how or when the home was acquired.

Rebecca’s savings that she contributed to the purchase of the home were saved during the relationship so, even though they came from her income, these would be regarded as a contribution of relationship property, not her own property, to the acquisition of the home.

Rebecca was beside herself but felt she had one last hope - what about her parents’ gift? I questioned her further about the intention behind her parents’ contribution to the purchase of the home. She was very clear it was a gift and that they had gifted a similar amount to her brother when he bought his home some years ago. She indicated there was never any intention of it being repaid to them. There also was no intention that they would have any interest in the home. There was no loan document completed. In all the documents provided to the Bank for the mortgage, the monies from her parents were stated to be a gift.

While one view could be that her parents only ever wanted Rebecca to benefit from the gift if her relationship with Alvin broke down, this hasn’t prevented the Court finding in other cases that the family home gets divided equally even though gifts have been used to purchase it.

Understandably, this was not the news Rebecca had expected. Rebecca felt resigned to her only hope being that Alvin may “do the right thing” and agree to the gift from her parents being treated as hers alone.

What could Rebecca have done to avoid this when she bought the home?

Most importantly she should have been open with her conveyancing lawyer about her relationship with Alvin and that he would be living with her in the home. Taking legal advice, and acting on that advice, at the time the home was purchased would have prevented her being left in this predicament. Some of the things that she could have done at that time were:

• entered into a Contracting Out Agreement with Alvin to preserve the gift as her separate property and to set out how the home was to be treated if they separated; or

• put the home in a family trust and completed a Contracting Out Agreement to set out that any interests or property rights she may have in the trust are her separate property. This may be more than what is needed for Rebecca’s circumstances and having a Trust does come with ongoing costs and administration;

• entered into a loan agreement with her parents so that on separation, the monies would be treated as a debt owed to her parents, reducing the value of the relationship property to be divided. (Her parents could then choose to advance the funds to Rebecca alone again). A Contracting Out Agreement with Alvin would still have been prudent if Rebecca didn’t want to be in a situation where the home, after repayment of the loan to her parents, had to be shared equally with Alvin.

  
  

All was not lost for Rebecca – Contracting Out Agreements can be entered into at any time during a relationship, not just the start of the relationship. Rebecca said Alvin had always taken the view that the monies from her parents was “hers”. Therefore, she believed that Alvin would consider entering into a Contracting Out Agreement to confirm that the gift from her parents should be preserved as her separate property and she should receive this if they were to separate in the future.

Worried about what may happen to your property if you separate? Going to gift money to your child to purchase his or her home? Looking to have your partner or spouse live in a home you are buying? Book a free, 15 minute initial consultation so we can help you ensure things are set up correctly in order to avoid shocks like Rebecca had!

Names and any identifying information have been altered to protect the privacy of individuals. The information in this blog is current at 1 August 2025 The information in this blog is general, educative information only. As such, it should not be relied on in place of getting your own legal advice.