Par­ents can help but need to be care­ful

Kapi-Mana News - - OPINION -

House buy­ers are now re­quired to make a 20 per cent de­posit, which is mak­ing it harder for first- home buy­ers to get into the hous­ing mar­ket. That may in­crease the num­ber of par­ents who are help­ing out their chil­dren with their first house pur­chase.

How­ever, par­ents need to be care­ful.

Some im­por­tant things to think about if you are plan­ning to as­sist your chil­dren with their first house pur­chase in­clude:

How will you help them? For ex­am­ple, you may have eq­uity in your own home that could be used as se­cu­rity, or you may have money that you could lend or gift to your chil­dren. You may also have a fam­ily trust that is able to help out.

If you plan to gift money to one of your chil­dren and he or she is in a re­la­tion­ship, what hap­pens to the money if the re­la­tion­ship breaks up? Even if a fam­ily trust gifts money to your child, your child’s part­ner may still be able to claim a 50 per cent share in that money.

If you are guar­an­tee­ing your child’s bor­row­ing, is it a limited guar­an­tee or an all-obli­ga­tions guar­an­tee? A limited guar­an­tee is limited to the loan amount that is spec­i­fied in the loan agree­ment and usu­ally will be plus in­ter­est and collection costs. An all- obli­ga­tions guar­an­tee also guar­an­tees all other bor­row­ings that are made in the fu­ture, even if you are un­aware of them.

What are the pos­si­ble con­se­quences for you if they de­fault on their loan?

You might not re­alise that the bank may choose to pur­sue you even be­fore they pur­sue your child, and also that you could be un­know­ingly guar­an­tee­ing your child’s fu­ture bor­row­ing as well. This could put your own fam­ily home at con­sid­er­able risk.

It is very im­por­tant to get good, in­de­pen­dent, le­gal ad­vice if you are con­sid­er­ing as­sist­ing fam­ily with a property pur­chase, es­pe­cially if you in­tend to act as guar­an­tor.

The same ad­vice also ap­plies if you are sup­port­ing them into a busi­ness ven­ture.

Busi­ness ven­tures carry even more risk and the ‘‘as­set’’ can dis­ap­pear a lot more eas­ily than a solid fam­ily home (leaky build­ing is­sues aside).

You should seek ad­vice be­fore your child con­firms a con­tract as ‘‘un­con­di­tional’’, other­wise you may find yourself with the added pres­sure of en­ter­ing into some­thing you are not happy to do.

L asks about spam emails and what can be done?

Un­der the Un­so­licited Elec­tronic Mes­sages Act, it is un­law­ful for any­one in trade to send an un­so­licited commercial elec­tronic (emails, texts etc) mes­sage. Even one mes­sage can be in breach of the Act.

In gen­eral, the mes­sage has to be try­ing to sell or pro­mote a good or ser­vice to be cov­ered as a commercial mes­sage.

To be com­pli­ant, elec­tronic mes­sages must also pro­vide in­for­ma­tion about who sent the mes­sage and a means of un­sub­scrib­ing from the mes­sages.

If you are re­ceiv­ing un­wanted emails or other elec­tronic mes­sages from within New Zealand and you have not been able to stop the mes­sages by un­sub­scrib­ing, then you can com­plain to the Depart­ment of In­ter­nal Af­fairs.

Col­umn cour­tesy of Rainey Collins Lawyers, ph 0800 733 484. If you have an in­quiry you would like dis­cussed, email Alan on aknowsley@ rain­ey­collins.co.nz.

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