Parents helping you buy a home: What happens when you separate?

It’s increasingly common for parents to help their children buy a first home. But if the couple later separates, a tricky question comes up: was the money a gift, a loan, or did it buy the parents a share of the property? The recent decision in A v N [2025] EWFC 371 (B) helps clarify how courts decide these matters during a divorce and highlights why clear evidence is so important when a third party, like a parent, is involved.

The two-stage exercise: Property rights first, distribution second

When a parent claims they have a financial stake in the family home, the court doesn’t immediately divide the property between the couple. First, it has to determine the parent’s legal position. Does the parent own a share, or are they owed money as a debt? Only after settling the parent’s claim does the court decide how to fairly divide what remains between the separating couple.

The parties should try to agree a way forward on a voluntary basis, and outside of the court arena, to include exchanging financial statements (Form E). These should include narrative sections detailing the couple’s respective positions on the parent’s contribution, the history of the property’s ownership, and their respective interests. This information helps to determine whether the parent has a legitimate claim to a beneficial interest in the property.

If a consensus cannot be agreed between the parties and the parent, it is likely that the matter will need to be referred to court for the issue to be determined within financial remedy proceedings.

Gifts, loans or trusts: What the court looks for

What the family called the financial help-whether a ‘gift’ or a ‘loan’-isn’t the final word. The court looks at the reality of the situation and seeks hard evidence of what everyone intended when the money was provided. The key questions are:

• Was there a common intention that the parent would have a beneficial share? If so, what share, and on what basis?
• Alternatively was it meant to be a loan, with a clear agreement on how and when it would be repaid?
• If there’s no clear proof of a gift or a loan, the law might assume the parent has a share in the property that’s proportional to the amount they contributed. This is known as a ‘resulting trust’.

Presumptions and pitfalls

The law has certain starting points, or ‘presumptions’. For example, money given from a parent to a child is often presumed to be a gift. However, this assumption can be challenged with evidence showing it was meant to be a loan or investment. When a property is owned jointly, the starting point is a 50/50 split, but strong evidence can prove a different arrangement was intended.

The biggest pitfall is informality. Arrangements made on a handshake can fall apart when examined in court. Without paperwork, a ‘loan’ that looks and feels like a gift will likely be treated as one. On the other hand, a clear loan agreement and a history of repayments strongly suggest the parent has a right that must be settled before the couple’s assets are divided.

How parental interests interact with needs and sharing

Even if a parent proves they have a valid claim, the court’s first priority is to ensure the needs of any children and the financially weaker partner are met. A parent’s proven financial right isn’t ignored, but the court will consider the bigger picture. If a parental contribution was always intended to be separate from the couple’s finances, it’s more likely to be protected from being shared, but only if everyone’s basic needs can still be met.

Practical lessons from recent authority

The recent decision in A v N [2025] highlights the need for clarity. Parents who want to protect their contribution should put it in writing from the start, ideally in a formal loan agreement or a declaration of trust. Couples receiving help should be clear about whether it’s a gift, a loan, or an investment. When a dispute does arise, the proper legal process is to involve the parent formally so their rights can be decided before the couple’s assets are divided.

How we can help

As a team, we have extensive experience advising on and litigating cases involving parental contributions to the matrimonial home. We understand the complexities that arise when parents assert a beneficial interest, and we regularly work in close collaboration with both Family and Property counsel to develop a robust case strategy from the earliest stages. Our approach ensures that any claim of a beneficial interest by a parent is scrutinised carefully and addressed reasonably, with a view to achieving a fair and practical outcome for all parties. Whether you are a parent seeking to protect your contribution, or a couple facing a third-party claim, we can guide you through the process with clarity and confidence.