Mother demanding we pay back gifted money with interest

[Ldn_2018]

Hi Legalbeagles,
Firstly, thank you for setting up this site.
I’m really hoping that you might be able to advise me regarding recent demands made by my Mother that I pay her back with interest the money she gifted me to go towards a deposit for our house. The amount in question is £20,000 paid by my Mother directly into my bank account. On the same day my mum also signed a letter addressed to our conveying solicitors stipulating that the money was a gift towards our deposit and non refundable (solicitor advised us this was required for anti money laundering purposes). My Mother has since fallen out with us (my youngest has sever asthma and can’t be around her dog which she refuses to leave at home if she visits ). Instead she now says the money was actually a loan to be paid back with interest ( no written evidence of a payback agreement was made) and she’s threatening legal action. The problem is that before a gift was agreed I had asked if she would lend us a smaller amount £10k and later thanked her by text for lending us the money. However, my Mother didn’t lend me £10k at that time instead she very generously decided to up the amount to £20k and gifted it to me instead via my bank account a week later. This arrangement was made between my mother and I prior to the funds going into my account this is why I arranged for her to signed a letter to our solicitors on the same day she made the payment. My Mother says my text thanking her for lending me money proves I need to pay her back the loan with interest. Problem is there’s no way I can pay her back the full amount with interest. I’m currently on mat leave and about to have another baby. I’m hoping you can advise me on this matter as I have no idea where I stand legally. It’s so upsetting that my Mother has done this to my family and I it’s literally come out of the blue and she seems set on destroying us financially
Thank you.

[Amethyst]

Have you a copy of the signed deposit source letter ?

[jaguarsuk]

Hi Legalbeagles,
Firstly, thank you for setting up this site.
I’m really hoping that you might be able to advise me regarding recent demands made by my Mother that I pay her back with interest the money she gifted me to go towards a deposit for our house. The amount in question is £20,000 paid by my Mother directly into my bank account. On the same day my mum also signed a letter addressed to our conveying solicitors stipulating that the money was a gift towards our deposit and non refundable (solicitor advised us this was required for anti money laundering purposes). My Mother has since fallen out with us (my youngest has sever asthma and can’t be around her dog which she refuses to leave at home if she visits ). Instead she now says the money was actually a loan to be paid back with interest ( no written evidence of a payback agreement was made) and she’s threatening legal action. The problem is that before a gift was agreed I had asked if she would lend us a smaller amount £10k and later thanked her by text for lending us the money. However, my Mother didn’t lend me £10k at that time instead she very generously decided to up the amount to £20k and gifted it to me instead via my bank account a week later. This arrangement was made between my mother and I prior to the funds going into my account this is why I arranged for her to signed a letter to our solicitors on the same day she made the payment. My Mother says my text thanking her for lending me money proves I need to pay her back the loan with interest. Problem is there’s no way I can pay her back the full amount with interest. I’m currently on mat leave and about to have another baby. I’m hoping you can advise me on this matter as I have no idea where I stand legally. It’s so upsetting that my Mother has done this to my family and I it’s literally come out of the blue and she seems set on destroying us financially
Thank you.

You should go to the Solicitor and obtain a copy of the letter.

Your mother has signed a document to confirm it was a gift, what you say in a text doesn't override a written and signed agreement to a Solicitor.

Also, if it's a loan that will have tax implications for your mother and by signing a letter stating it's a gift then accepting repayment with interest one might view that as tax avoidance or even tax fraud.

My view is that once you have a copy of the letter from the solicitor that you write a letter to her setting out your position something along the lines of:

Dear Mum

I write regarding the ongoing dispute about the sum of money you allege as a loan for the deposit to purchase our home.

You gave that money as a gift and you are now trying to assert it was a loan in order to financially punish me due to our recent disagreement. I have not made or offered any sum of repayment as this sum was not a loan as you well know, enclosed is a copy of the letter you signed and sent to my Solicitor confirming that the sum was a gift.

It is very unfortunate that you are behaving in this manner, but should you decide to pursue this by filing a claim in the County Court you will be required to prove on the balance of probabilities (in the opinion of the Judge what is more likely) that the sum was a loan and I believe this letter establishes the opposite.

You should also be mindful that if you file a claim at the County Court I will have no choice other than to defend it and if successful am not in a financial position to absorb the cost of doing so, therefore will seek my cost of and occasioned in dealing with your claim.

We remain grateful for the gift that has allowed us to purchase our home and we now consider this matter closed.

Yours Sincerely
<<SIGN>>
Ldn_2018
ENC.

[Ldn_2018]

Have you a copy of the signed deposit source letter ?

Hello, thank you for replying it is much appreciated. My solicitor holds the original copy of the signed letter on file along with proof of id and address also provided by my mother. do you think this evidence is sufficient if the matter goes to court?
Thank you.

[Ldn_2018]

You should go to the Solicitor and obtain a copy of the letter.

Your mother has signed a document to confirm it was a gift, what you say in a text doesn't override a written and signed agreement to a Solicitor.

Also, if it's a loan that will have tax implications for your mother and by signing a letter stating it's a gift then accepting repayment with interest one might view that as tax avoidance or even tax fraud.

My view is that once you have a copy of the letter from the solicitor that you write a letter to her setting out your position something along the lines of:

Hello, thank you so much for taking the time to reply to me your advice has really has helped and I will be using a copy of your template.
Thank you.

[Amethyst]

Hello, thank you for replying it is much appreciated. My solicitor holds the original copy of the signed letter on file along with proof of id and address also provided by my mother. do you think this evidence is sufficient if the matter goes to court?
Thank you.

I was going to reply on the same lines as Jaguar has if you could get a copy, obviously it depends on the actual wording but I expect it would go hugely in your favour.

My only concern would be 'everyone' who borrows off the bank of Mum&Dad signs the 'gift' note when paying the house deposit whether M&D expect it repaying or not... I believe the 'gift' document is for 'affordability' purposes in mortgage lending so not sure how well it would stand up in a court dispute. But I'd think it would be pretty persuasive if it's not taken as a legal document.

[R0b]

As with all the comments above, I think your mother could have great difficulties in proving that this was a loan.

1. For a contract to be enforceable there needs to be an intention to create legal relations. There is a presumption in law that family arrangements are not considered to be an intention to create contractual relationships, unless it is blindingly obvious e.g. brother agrees to purchase car from sister for £1,000.

2. There is also the issue that she signed a document confirming it was a gift and nothing else. If there was an intention to create legal relations and for the £20,000 to be intended as a loan all along, why did she sign the document confirming it was a gift?

3. If her best argument is based on the text message about 'lending' you the money, I would think its a non-starter. Granted, you used a poor choice of words by referring in the text as 'lending' the money but I think a court may take the view that the transfer together with the document she signed meant that there was not an intention for the money to be loaned and it was instead gifted. If you also add into the mix that she has suddenly demanded the money following a falling out that probably won't go in her favour either.

4. Even if the court considers the money to be a loan, that doesn't automatically mean she can claim interest. What interest is she suggesting is owed? If what you wrote above was exactly what you said in your text message, there's no reference to paying any interest and therefore she isn't entitled to it.

The onus is on her to prove that this was a loan and not a gift but I would think that she will have an uphill struggle if this went to court taking into account the surrounding facts and evidence you have to support you. The text message can simply be put down to a poor choice of words which had no intention of meaning that the money was loaned to you and you sent her the message thanking her the generous amount she gifted.

If she was that serious about bringing a claim against you then she would need to spend £1,000 to issue a claim and then a further £335 for the hearing fee if it gets to that stage. Do you think she would be prepared to do that?

I would also contact your solicitors who did the conveynacing and get a copy of your file they hold. You are entitled to receive that providing you have paid all outstanding fees though they might charge you reasonable copying costs.

You could make a subject access request which will cost you £10 but that only relates to your personal data and may not cover what you need.

[jaguarsuk]

As with all the comments above, I think your mother could have great difficulties in proving that this was a loan.

1. For a contract to be enforceable there needs to be an intention to create legal relations. There is a presumption in law that family arrangements are not considered to be an intention to create contractual relationships, unless it is blindingly obvious e.g. brother agrees to purchase car from sister for £1,000.

Balfour v Balfour [1919] established this, not just families it extends to other social arrangements.



"In Balfour v Balfour [1919] 2 KB 571, a husband who worked abroad promised to pay an allowance of £30 per month to his wife, who was in England. The wife's attempt to enforce this promise failed: the parties did not intend the arrangement to be legally binding. (Note that in addition, the wife had not provided any consideration.)"

http://www.a4id.org/wp-content/uploa...t-a-glance.pdf

[curious33]

Even if the courts decide it was a loan there is nothing to say there is interest added or that it can be recalled on demand.

[Ldn_2018]

As with all the comments above, I think your mother could have great difficulties in proving that this was a loan.

1. For a contract to be enforceable there needs to be an intention to create legal relations. There is a presumption in law that family arrangements are not considered to be an intention to create contractual relationships, unless it is blindingly obvious e.g. brother agrees to purchase car from sister for £1,000.

2. There is also the issue that she signed a document confirming it was a gift and nothing else. If there was an intention to create legal relations and for the £20,000 to be intended as a loan all along, why did she sign the document confirming it was a gift?

3. If her best argument is based on the text message about 'lending' you the money, I would think its a non-starter. Granted, you used a poor choice of words by referring in the text as 'lending' the money but I think a court may take the view that the transfer together with the document she signed meant that there was not an intention for the money to be loaned and it was instead gifted. If you also add into the mix that she has suddenly demanded the money following a falling out that probably won't go in her favour either.

4. Even if the court considers the money to be a loan, that doesn't automatically mean she can claim interest. What interest is she suggesting is owed? If what you wrote above was exactly what you said in your text message, there's no reference to paying any interest and therefore she isn't entitled to it.

The onus is on her to prove that this was a loan and not a gift but I would think that she will have an uphill struggle if this went to court taking into account the surrounding facts and evidence you have to support you. The text message can simply be put down to a poor choice of words which had no intention of meaning that the money was loaned to you and you sent her the message thanking her the generous amount she gifted.

If she was that serious about bringing a claim against you then she would need to spend £1,000 to issue a claim and then a further £335 for the hearing fee if it gets to that stage. Do you think she would be prepared to do that?

I would also contact your solicitors who did the conveynacing and get a copy of your file they hold. You are entitled to receive that providing you have paid all outstanding fees though they might charge you reasonable copying costs.

You could make a subject access request which will cost you £10 but that only relates to your personal data and may not cover what you need.

Unfortunately I do think my Mother will employ a solicitor because she is irrationally upset with us. She chose to forego spending Christmas Day with us at our house and spent the day alone with her dog all because I asked her to arrange a dog sitter for the day. She’s on her own and retired with too much time on her hands and the dog is the centre of her universe so she’s very bitter that my daughter is allergic. The upsetting thing is I know she’s prone to blurring the facts when it suits her she’s done it before to others so it’s good to know the letter she signed will stand up in court. Thanks again for all your help you’ve really helped to put my mind at rest.