Hi all,
I've recently exchanged contract to purchase my first property, initially to live in and later to convert into an investment property. My fiancee has agreed to help me out by transferring her savings and future pay into my offset account to help reduce my loan repayments. As we are planning to buy another property within 12 months under her name, this first property only have my name on it.
Since her name is not on the property title, how could I make sure that she won't lose out (ie she'll at least get back the money she put in) should anything happen to me or if our relationship goes pear shaped?
I'm also planning to increase my insurance cover through my super.
Any advice is very much appreciated. Thanks.
xya
If she has contributed to the ownership of the property then she has an equitable interest and can lodge a caveat. This notifies anyone dealing with the property her interest and it can't be sold or mortgages with the caveat in place.
If she is just lending you money, then she can't legally put a caveat – (unless maybe she can lodge for family law reasons), but she can take a 2nd mortgage or at the very least you should have a written loan agreement drawn up. Also leave a clear trail of the money going from her account to your account – ie no cash deposits.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks for the response, Terryw.
If anything should happen to me or the relationship, I would imagine it would be stressful time for my fiancee, so I wouldn't want her to spend time lodging a caveat or going through the money trail. Is there anything I can do on my end to ensure everything is arranged nicely right from the start? Should I write a will or perhaps make sure she would receive enough money from my insurance should anything happen to me, etc?
Since her name is not on the property title, how could I make sure that she won't lose out (ie she'll at least get back the money she put in) should anything happen to me or if our relationship goes pear shaped?
The best way to make sure that she won't lose out is to not try to shaft her if the relationship goes sour. The only reason that she would lose out is if, when things go pearshaped, you forget that once upon a time you cared about her financial position.
As an ex family law solicitor, I can say that this is the sole reason that property settlements become protracted and ugly.
If, on the other hand, what you are REALLY asking is how to protect yourself if things go wrong, then you need to see a lawyer and get an agreement drawn up.
Cheers
K
Thanks for the advice, Linar. What about the case where I was to pass away? Is the will the only way to make sure things are in order?
You can always create a binding nomination in your super ie you must nominate who is to recieve your super (& insurance payout) in the event of your death) – speak to your super fund manager about this.
Your friend can lodge a caveat now, or as soon as you settle. And you should certainly do a will too. And maybe have some sort of written agreement drawn up by a lawyer too which will specify how much she should get if you break up and how this can be calculated.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
2 ways of determining how much she has put in (if she has contributed to the deposit) either have a stipluated amount ie $xx,000 or a % of the value of the property (including all purchase costs – legals, sd, building & termite inspections etc) to be reimbursed to her upon dissolution of your relationship, the latter will need a valuer to determine the value of the property at the point that you break up (if ever) and you should also determine how you appoint the valuer (mutual appointment or each appoint their own valuer).
I think an acknowledgement of debt would be the way to go – because you are talking about a liability you can't make provision for it in your will. Your estate will collect all outstanding monies and pay back your fiancee as per the acknowledgement of debt.
Thank you for all the replies, they are very useful information.
Ben, how could I make an acknowledgement of debt? Is it just an IOU note that I write and keep somewhere?
It would need to be an agreement signed and dated by both parties, setting out the terms of the arrangement.
xya wrote:Hi all,I've recently exchanged contract to purchase my first property, initially to live in and later to convert into an investment property. My fiancee has agreed to help me out by transferring her savings and future pay into my offset account to help reduce my loan repayments. As we are planning to buy another property within 12 months under her name, this first property only have my name on it.
Since her name is not on the property title, how could I make sure that she won't lose out (ie she'll at least get back the money she put in) should anything happen to me or if our relationship goes pear shaped?
I'm also planning to increase my insurance cover through my super.
Any advice is very much appreciated. Thanks.
xya
As i work in financial planning i would be more than happy to review your insurance needs
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