WA Protection of House as an Asset if Girlfriend moves in?

[Willowtree]

Hi, I am asking this on behalf of my son who is 25 years old, has bought his own house with a mortgage. My son purchased a house in 2014, he took a mortgage out in his own name and we also took a mortgage out for his deposit for the loan. He is paying us back each fortnight along with his own mortgage. Previously he has rented out a room and the tenant then paid rent into our loan for the house. Now my son is thinking that if he has a girlfriend move in that he would like to protect himself against having the house taken from him in the future if the relationship broke down. I have had different opinions offered, one being if the title of the house is in his name as is the mortgage that is protection enough for him. He would also like the protection that if anything happens and the asset is sold then the loan to us is paid out from the proceeds of the sale and the partner can't claim any of this. The other scenario we have been told is if he charges the partner rent then legally this is like just having a tenant and there is no claim on the house can anyone lead me in the right direction or offer any insight into these questions.
Thanks

 

[Rod]

if the title of the house is in his name as is the mortgage that is protection

this is like just having a tenant and there is no claim on the house

No and No. These factors might help, a little, but a court looks at the totality of relationship and by themselves the two factors together will not save your son from a claim that has a good chance of success.

The best way form of protection is a binding financial agreement preferably done by lawyers. BFA needs to consider various factors including having children and possibly getting married one day. A BFA without legal advice is like driving a car with insurance from a disqualified insurance co.

 

[Rob Legat - SBPL]

Your son will need to talk to a lawyer that practices in family law (which I don't) to get full advice. However, from a general perspective:

- In the event that the property is sold, the mortgagees will receive payment first. The only real possibility that you won't receive payment is if the sale price is insufficient to pay out the first mortgagee While this might seem impossible, it can and does happen if (for example) further advances are made under the first mortgage, valuations drop, the first mortgage is an 'all moneys' mortgage and there is other debt. This doesn't mean the debt isn't still payable, but this doesn't seem to be the ambit of your question.

- If they're co-habiting in a relationship, that will outweigh whether or not she's paying rent. If they're together long enough to be classified as a de facto relationship (which I understand can arise in number of ways: relationship of two years or more, having a child together, or serious contribution to the relationship), she can legally make claim for a property settlement. This would include a possible claim against the equity in the home.

- If he wants to protect against this, he should look into getting a binding financial agreement drawn up. Of course, selling that idea to his girlfriend is a matter he'll have to broach on his own.

 

[Willowtree]

Thanks for replying to me I will forward this information to my son. The mortgage broker suggested that he put a caveat on his house I'm really not sure what this will do.

 

[Tim W]

It is always a good idea to be cautious when salesmen
(such as Mortgage Brokers, and real estate agents)
use legal terms as though they know what those terms mean.
Remember, salesmen are to the law as hospital pink ladies are to cardiac surgery
(both relevant to the process, but hardly interchangeable)

I most strongly agree with @Rob Legat - SBPL above.