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Thinking of giving your adult child funds for a first family home? Be wary



It is common for parents to help their adult children to purchase a first home. In many families, the down payment for a child’s first home comes entirely from his or her parents. Many parents transfer funds to their children in this way without consulting with a lawyer. If your child is married or living with a common-law partner, you should be careful to ensure that your transaction is carefully documented so that you can protect your investment in the event of a marriage breakdown.


In many Ontario family law cases, disputes have arisen between a separated partner and his or her ex’s parents when, following separation, the separated partner argues that money advanced by the ex’s parents for a home should be equalized. The ex and his or her family usually argue that the parents advanced the money as a loan and that they expected to be paid back. The separated partner will usually argue that the funds were gifted and that there is no obligation to repay the debt. This sort of dispute is usually quite costly and difficult to resolve as the Court will look to the intention of the parties at the date of the transfer, which can be difficult to discern, particularly where no documentation is available.


If you are considering loaning money to your child for a down payment on a house and worry about what might happen should your child separate from his or her partner, it is best to consult with a family lawyer. A lawyer can draft legal documents that will clarify the intention of your transfer and protect your interest in the event of a separation.


If you reside in the Guelph or Kitchener-Waterloo area and have questions about matrimonial property and family law, please contact Purves-Smith Law for a consultation.