Protecting deposit from 3rd party for house in single name in the event of divorce?

Long Johns

Hi
Sorry if the title seems confusing, I wasn't sure how to say it. So I'm inquiring about the following:

If one married person should buy a house in their own name for themselves and their spouse to live in and use 3rd party funds from their side IE a family member or so on for their deposit, is there a way they could protect those funds in the event of a divorce via legal paperwork while drawing down the mortgage?

Obviously I would assume any capital appreciation since the purchase would have to be split down the middle between the spouses but since the deposit was given by a third party on one side can this be protected and given priority in the event of a post-divorce sale?

Hope I've made sense...many thanks

Sangre

Can the third party's money be protected? As in, can the third party get the money back?

Few questiosns;

Is the third party related to either party? What were the circumstances and/or conditions of paying the funds?

Could be an arguement for a rebuttable resulting trust? Someone else might have to help you, long time since I've read on them.

Long Johns

Hi Sangre
Yes the third party and the owner/mortgagee would be related. The funds would be a gift (with possibility of payback) but with no conditions per se attached.

I'm not sure what rebuttable resulting trust is to be honest, if that's legal jargon, I'm not in the game so not sure what that would refer to.

The central issue is trying to protect the third party investment, the hope being that if the house were to be sold in the event of a divorce then payback of their monies would be given first priority rather than being lumped in as the property of the mortgagee or their spouse thereby being put in the 'divorce pot' so to speak. Hope I'm not conviluting the situation, trying to explain as best I can...

Sangre

If this is a genuine legal situation I would advise professional advice. Especially if it is a sizeable portion of money. Small cost now for big future savings.

Very simply a resulting trust is where property gets transferred to one who pays nothing for it; and then is implied to have held the property for benefit of another person. However with certain relationships it is presumed to have been a gift, I think in Ireland it is father to child or husband to wife. Please don't take this as gospel, its all from memory of studying it from a good while back. I'm stimulating discussion not advice

There might be also an oral contract to pay back, very hard to prove though.

As with most legal situations, it all depends on the facts unfortunately.

Long Johns

no its not a legal situation thankfully but definitely something to try to box off prior to a house purchase if it were possible, just in case things didn't go as planned. I just wondered was there a specific approach to this kind of thing when the conveyancing was being done etc

servicecharge

I would guess it can be done but the bank will be a problem.

But you need to speak to an experienced conveyancer, I am not one.

Denalihighway

where do the bank come into this? They would just be processing the documents so not sure they would come into things at all? The mortgage holders would be one of the spouses and the 3rd party (a parent I'd assume) and the title would only be that spouse's name (I think anyway, from what I've gathered)

I know they ask for confirmation of where 3rd party funds come from for the balance of funds prior to the loan drawdown etc but surely they would be irrelevant where any legal situation arose, all they would be concerned about is the mortgage being paid in the event of a sale?

servicecharge

I would imagine your parents would have to sign a waiver that they won't have any beneifical interest in the property. So if they have no interest in the property it can be divided on divorce.

Just cause the property is in one name doesn't preclude a claim that it is a family home pursuant to the 76 Act. So never mind capital appreciation, you would be facing a claim for half the house.

Again this isn't my area, just playing devils advocate.

Long Johns

yeah that certainly makes sense Servicecharge, (the fact that the couple would be married prior to the purchase automatically gives certain rights to the other spouse) but I'm still wondering about there is a possibility of being able to ring-fence the initial investment funds by the third party, from the proceeds of a sale resulting from a divorce. Maybe it's not possible as you say

Victor

Denalihighway wrote: »

where do the bank come into this?

And the Revenue. One of the conditions of first time buyer status is that any "gifts" actually are gifts.