Home-loan ‘pre-nup’ warning to parents
Refund demand after divorce highlights need for paperwork, lawyers say. Bevan Hurley reports. In an increasingly difficult era for running schools, are our boards up to the job? By Megan Hunt, Josh Fagan and Caleb Harris.
A husband and wife from one of New Zealand’s wealthiest philanthropic families are taking their former son-in-law to court to recoup half of the $422,000 they loaned for the purchase of a home.
Bruce and Marion Goodfellow have launched legal proceedings against Nigel Brown after his split from their daughter, Claire.
And lawyers and real estate experts say such ‘‘bank of mum and dad’’ disputes are increasing in frequency.
Specialist divorce lawyer Jeremy Sutton said around 25 per cent of cases he handled dealt with these issues. ‘‘Everyone needs to be aware of the complications if they divorce.’’
Parents who gift their children money to buy their first homes are being urged to seek a ‘‘pre-nup’’ after a rise in the number of divorces ending in legal action.
According to court documents, the Goodfellows say they loaned $422,000 to the couple so they could buy a house on Auckland’s North Shore.
But Brown said the money belonged to his ex-wife, and he shouldn’t have to pay it back.
He said the money was part repayment of a debt owed to her by a company called Amalgamated Dairies, which is headed by Bruce Goodfellow, head of the Rich-lister family and worth an estimated $550 million. National Party president Peter Goodfellow is his brother.
In a statement through his lawyer, Brown said it was a sensitive matter and he did not wish to comment.
The Goodfellows comment.
Property records show Brown and his former wife purchased 88 Chelsea View Drive in May 2005. The new owner bought the home last year for around $830,000.
The couple also formerly owned 8 Zion Rd, which has a council valuation of $810,000.
The matter is set down three-day trial in August.
Sutton said parents who offered help with their children’s first home should document clearly whether it was a gift or a loan. declined for to a
‘‘It is very hard for people in their 20s and 30s to fund a house deposit in Auckland. Therefore they look to their parents for help.
‘‘People want to put the kids up the property ladder and the only way, often, is to give them a sizeable amount, whether it’s a loan or a gift. People need to be aware when they give a sum of money to know on what basis that it is given.
‘‘To prove it is a loan or gift is expensive and may require a full court hearing and huge legal costs and expenses,’’ he said.’’
Sutton said parental debt was even more common among Asian, and particularly Chinese homebuyers, who would often receive six-figure sums from their parents.
There were also competing needs between the bank to secure their interest, the parents and the couple.
Banks may put pressure to ensure that the deposit is a gift and not be required to be repaid.
Lawyer Chris Patterson said he had been involved in a similar case where a divorced couple disagreed on whether a loan from the wife’s parents should be included in relationship property debt.
‘‘Where you’ve got a couple who are struggling to get into the market, if they’re going to get a helping hand from one or more members of their family, they need to document the basis on what the money is being advanced to them.
‘‘That deal needs to be clearly understood by both members in the relationship.’’
He said the law would regard it as a loan even if only one partner knew that it was. Some principals say their newly elected boards of trustees do not possess the skills to govern their schools.
The Sunday Star-Times conducted a snap survey of the nation’s schools this week, after they reported the results of their board of trustees elections on Thursday – the country’s biggest exercise in democracy every three years, in which 13,000 parents and 2500 teachers are elected to the governing boards.
It reveals 5 per cent of principals (about 120 schools) believe new board members do not have the skills and experience to govern a school, many of which are large and complex organisations.
Part of the problem is that in many cases not enough parents stood for election: at about 560 schools, everyone who was nominated walked straight onto the board unchallenged.
Of the 327 schools who responded to the survey, 13 per cent did not even have enough candidates.
Two-fifths expected to have to co-opt more trustees to get the experience they need, which typically includes financial skills, facilities management, legal and policy nous and sufficient diversity to adequately represent the wider community.
For instance, Asian people made up 11.8 per cent of the population at the 2013 Census, but constituted only 1.7 per cent of the new boards of trustees membership.
The new boards have some tough challenges ahead of them: principals said their number one priority would be creating and refreshing schools’ charters and strategic plans. Next priority would be capital investment and maintenance of schools’ often run-down facilities.
One worried principal, who did not want to be named, said that at higher-decile schools there were more parents capable of occupying trustee-type positions and running boards effectively.
But in lower-decile schools, trustees did not have this same skill level, which created a greater reliance on principals to direct and support them. ‘‘We’ve got people with the best interests at heart, but whether they have the right skill set to run a board as a board was designed is questionable.’’
Tamatea High School principal Robin Fabish advocated encouraging parents with the right skills to apply, or reaching out to the wider community. But an inexperienced board could still work, with a good principal and trustees who were willing to learn, he said.
‘‘We’re lucky at Tamatea,’’ Fabish said. ‘‘Other schools may not be in the same boat. Board elections can be like Russian roulette for some principals who have no idea what they are getting.
‘‘It worries me that some principals attracted more than 150 signatures yesterday, reads: ‘‘We the undersigned, ‘‘Rory’s family, friends, comrades, concerned NZ citizens, and patriots of a common thread;
‘‘Request that the Rt Honourable, Governor-General of NZ (Te Kawana Tianara o Aotearoa). The Sovereign’s representative in New Zealand of Queen Elizabeth II, whom Rory Patrick Malone swore an oath of allegiance to serve and defend his country. Please consider this reasonable request to honour our fallen soldier, our brother and friend at NZ Government House.
‘‘To hold a medal ceremony in NZ’s capital and allow his actions to be respectfully honoured by all those who wish to attend.
‘‘To announce that his medal will be interred in the NZDF museum and placed on display.
‘‘To allow his mother the respect, dignity and gratitude of a thankful country, people and government that have been given the mandate to represent them.’’ may be facing a board that is less experienced, or even worse, has elected members who have personal agendas that are not in the interests of the learning and development of the students and the wider community,’’ Fabish said. Some principals may be facing a board that has elected members who have personal agendas. Tamatea High School principal
Napier City Council chief executive Wayne Jack is a member of the Tamatea board, despite not having children at the school.
Being a trustee was a way for him to give back: ‘‘I believe in what the school is doing and how it is connecting with its community.’’
His role at the local authority meant he could create connections between the school and council, such as work experience opportunities for students.
Masterton Intermediate principal Russell Thompson said it had 10 candidates for five positions, the highest number in many years, after struggling to get a full board, let alone have an election for a few years.
He put this down to the school’s track record in turning around troubled kids. ‘‘Boards of trustees are all about community support and the support we’re getting from the parents and the wider community probably couldn’t get much better.’’
But the actual voter turnout was ‘‘disappointing’’.
In West Auckland, Woodlands Park primary principal Liz Manley said the fast-changing education environment meant the new board was in for a ‘‘turbulent time’’.
‘‘Over the last five years . . . there’s been significant changes in the way of what schools are asked to do, I expect that will continue,’’ she said.
‘‘We’re really fortunate, we had a good selection of people that put their hands up to stand for the board. It’s going to be a challenge but we’re always up for a challenge.’’