Q. My boyfriend and I have been saving for a house deposit for a number of years. His brother recently inherited some money and agreed to loan us €15,000. On the basis that the money from my boyfriend’s brother was a gift, the bank approved the mortgage. It was always agreed between my boyfriend and I that we would pay his brother back when we were in a position to. When we spoke to our solicitor, we were told the bank would need my boyfriend’s brother to sign a ‘deed of confirmation’. He said that he wouldn’t be able to sign it. We’re at a loss for what to do.
Dear Reader,
It is generally accepted in Irish law that when someone provides money towards the purchase of a property, they would be entitled to an ‘equity’. While case law has dealt more with the situation that may arise as between a married or cohabitating couple, the same principals apply to monies advanced by other parties.
As the law stands, your boyfriend’s brother may be entitled, as a matter of law, to an equity in the property given he has advanced the sum towards the purchase. The deed of confirmation is a standard document required by the bank in circumstances where a person, other than the parties mortgaging the property, provides funds towards the purchase.
The deed usually states that the person who advanced the money is aware that the property is going to be subject to a mortgage, that the bank can take steps to realise their security should there be a default, and that the person who advanced the money will take no steps to recoup the money from the property.
This is all done in an effort by the bank to ensure that, should you ever default on the loan, that the bank’s legal security over the property has priority over whatever interest your boyfriend’s brother may hold.
It is important to note that your boyfriend’s brother is not waiving any right he may have in the property or saying that he is not owed any monies, simply that the bank’s interest will rank in priority to his. Should you repay the monies owed to your boyfriend’s brother then he would have no equity in the property.
This can be a difficult situation to resolve within the family. You could enter into a formal loan agreement with your boyfriend’s brother. That said, this would likely affect the proposal you submitted to the bank. Perhaps your boyfriend’s brother could take advices from his own solicitor to reassure him as to the nature and effect of the deed.