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Bank of Mum and Dad · HouseMe Legal

Gift or loan?

How family money is recorded decides who gets it back.

If a parent's contribution is not documented, the law treats it as a gift to the relationship. On a separation it is split equally, whichever side it came from. That is the default, not the worst case. Five questions below tell you which document fits, what your bank will want to see, and what the money does if the house is ever sold after a split.

Brokers — the bank's gift letter and the lawyer's deed are different documents. Clients need both sorted before settlement.
The HouseMe Legal Sherpa, your guide up the mountain
Undocumented means giftNo deed, no paper trail: the law treats it as a gift to the relationship and relationship property.
A deed of debt sits outside the poolA Deed of Acknowledgement of Debt records it as money owed. It is repaid first if the house is sold.
Both partners sign, voluntarilyNo pressure, a genuine debt, signed before or at settlement. A deed drawn up afterwards to mislead can be set aside.
The bank has its own formLenders usually want a gift declaration saying the money is not repayable. A loan changes your borrowing power.
1

Your situation

Five questions. Nothing is saved.

Who is buying?

How much are they putting in?

Do they want it back?

Does the bank know the money is coming from family?

2

What to sign

The document that fits your answers, and the two it beat.

3

If you ever split up and sell

The same sale, with and without a deed of debt. Change the numbers to match a future you can imagine.

Simplified on purpose: it assumes everything else was shared equally and ignores other separate property, children and trusts. Those change the answer, and they are exactly when to get specific advice.

Get the deed signed before settlement, not after

A Deed of Acknowledgement of Debt is $575 including GST and is signed alongside your purchase documents. Book a free call and tell us who is helping and how; we'll tell you which document and what the bank will need.

Book a free 15-minute call

Or call 09 918 9404  ·  angus@housemelegal.co.nz