A reader, who has been asked to assist her son and his partner to obtain a bond for a property, where she will also live, is concerned that the couple’s volatile relationship could result in a breakdown which could negatively affect her situation.
The plan in acquiring the property is fairly straightforward. It includes a flatlet where the reader would reside while the couple would occupy the main dwelling.
She would be required to make a substantial contribution to the purchase price, thus making it possible for her son and partner to qualify for a bond for the balance.
See the reader’s question here.
They have not yet taken occupation of the property but she is concerned about having no place to live, as well as losing the money she contributes, should the relationship break down.
It would appear that the intention between the parties is for the reader to have rights to the extent of her contribution.
It would, however, seem that the situation and intention of the parties have neither been properly discussed nor reduced to writing.
With the registered owners of the property being her son and partner, the reader’s rights in respect of the property are somewhat tenuous.
In the event of the bond instalment not being paid, the reader’s occupation of the flatlet could be jeopardised.
In considering the situation, a few obvious problems could arise.
Firstly, either the son or the partner refuse or are otherwise unable to make their contribution to the bond instalment.
Secondly, the couple decide to sell the property.
And, thirdly, the reader wishes to move elsewhere and recover her contribution to date to do so.
Accordingly, it is extremely important prior to embarking on an arrangement such as this to discuss the various options.
To try to provide the reader with some security, the parties could agree that the money paid by the reader is a loan that must be repaid over a period or in specific circumstances.
The problem, however, with such an arrangement is that the couple may never be in a position to repay the loan, which would lead to obvious frustration.
One could also consider the registration of a right of our reader over the property, for example a usufruct.
However, the possibility and implications of such a registration would have to be examined before proceeding.
An interim solution could be for the parties to enter into an agreement of lease.
This will secure the right of occupation of our reader in the short term.
However, this is not an ideal situation as a lease is a contractual arrangement which may have negative consequences for the reader, as the tenant, or the couple, as landlord.
Should, for example, the reader wish to vacate the premises, the lease may prevent her from doing so.
Similarly, should it be necessary for the couple to make swift arrangements to sell the property, the sale would be subject to the lease, assuming the reader refuses to vacate at that point.
This may potentially prevent the sale of the property due to it being encumbered by both lease and tenant.
This type of arrangement is regularly entered into by parents and their children as it is often mutually beneficial.
It may be sensible for both parties to have a registered share in the property to provide them with equal rights over it.
It is possible for a parent to bequeath her share in a property to a child to ensure he ends up owning the entire property in the future.”
Together with the registered ownership, and regardless of family relationships, the parties should consider an agreement that regulates the various scenarios and others that may arise.
The parties are essentially co-owners of the property.
Due to the sums of money involved and the importance of ensuring an ageing parent a place to stay, it is not overkill for the parties to consider taking formal legal advice in this particular situation.
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