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Lucy, Esq.
Lucy, Esq., Attorney
Category: Legal
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Experience:  Lawyer
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My son and s girlfriend are planning to buy a house in New

Customer Question

My son and his girlfriend are planning to buy a house in New Jersey for approximately $ 500,000. They asked me and my wife to lend them $100,000 for down payment. Our son can not be on the mortgage because he had a bankruptcy. They are asking us to give them a paper that $100,000 is a gift to them for the down payment.
How we can make sure that we will get our money back in case they will split up? If they will be together, then our son will pay us back the loan and his girlfriend will pay approximately the same amount into the mortgage and then they will start paying mortgage together.
Submitted: 10 months ago.
Category: Legal
Expert:  Lucy, Esq. replied 10 months ago.

Hi,

I'm Lucy, and I'd be happy to answer your questions today.

If you sign something stating that you are giving them a gift, they have zero legal obligation to repay you. Gifts are forever and cannot be revoked. Only a loan needs to be repaid. When you loan someone money to buy a house, you can have them sign a piece of paper giving you a lien on the house, which you would then record - that stops them from selling the house, and gives you the right to sue if payments are missed. You would also be able to stipulate that if they break up, the loan becomes due and payable in full within, say, 90 days (to give them time to find a buyer) or some other amount of time you're comfortable with. That's the way for you to protect your investment. But if you want to be able to put a lien on the house, the girlfriend has to sign the paperwork. If only your son signs it, only he has to repay you.

Also, if the girlfriend is the only one on the mortgage, she's probably also the only one on the deed. And that means your son has NO protection if they break up. His girlfriend will be able to ask him to move out by giving him 30 days notice and she doesn't have to give him back any of the money he paid in. So it's in his best interests for the two of them to see a local attorney and have that person write up a contract that will protect him in the event that they split up.

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