How can I help my children purchase property?

On 24 May 2018, the Supreme Court of New South Wales handed down a judgement that highlights the risk for parents who provide financial assistance to their children when purchasing property. Whether the funds are treated as a loan or a gift -it is fundamental to any agreement.

In Dunphy v Russell [2018] NSWSC 721 (24 May 2018), the father and daughter came to a verbal agreement in 2010 whereby the father would provide $200,000.00 to the daughter and her partner to purchase a property in Manly NSW. Following the purchase, the relationship became estranged between the father and daughter and in 2017 the daughter opted to sell the property.

The critical issue in the proceedings was whether the parties had agreed that the funds were a gift or a loan. The versions of the agreements were noted as being “starkly contrasting”, and there was no written evidence to support either party.


The facts

On 30 November 2010, the daughter exchanged contracts for the purchase of a property at Manly for the agreed price of $562,500.00. The father provided $200,000.00 of the money required to purchase the property, including payment of stamp duty and other costs, with the total amount required to settle being approximately $600,000.00.

In early September 2017, the father found out that the daughter had entered into a contract for the sale of the Property to a third party at a price of $1,137,000.00. At this time, the relationship between the father and daughter had broken down and the daughter had no intention of splitting the proceeds from the sale.


The father’s version

On the father’s evidence, he was approached by his daughter in mid-2010 where it was discussed that she and her partner were looking to purchase a unit but could not afford to do so on their own. An agreement was struck that the father would provide some funds towards to the purchase as an investment on the proviso that the daughter would pay rent at 1/3 of the market price until the money was paid back.


The daughter’s version

On the daughter’s evidence, she approached her father in November 2010 seeking assistance with her house deposit. The father suggested that he would talk to his business banker and see if he could arrange a business loan to assist with the purchase of the property. This agreement was made on the proviso that the daughter’s partner was not to be on the title as he would then benefit greatly from the gift and the relationship had not been going on that long.


The Decision

The father was successful in his claim. The daughter was ordered to pay her father the sum of $379,000, being one-third of the proceeds of the sale of the property.


Why is it important to document the agreement between family members?

Most families feel that this would not happen to them as there is a mutual trust and respect, however, the reality is often quite different. The main thing to take from the decision is that the matter would presumably not have proceeded to Court if there was a well-drafted written agreement in place.

When looking at loaning or gifting any large financial sums, it is important to consider engaging a lawyer to record the terms of the agreement. In doing this, you will protect all parties and provide clarity as to the intentions should the relationship later break down.

Contact O’Brien Winter Partners so that we may assist you in properly documenting your family arrangements to avoid unnecessary legal costs in the future and to protect you in unforeseen circumstances.


Call us on 02 4949 2000 or email at



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