hi guys,

Long story short we are needing 2k to top up our deposit to make up a short fall. We are lucky enough to have some one who is gifting us the money. The bank is saying that if the money is lent we need a letter of deed of acknowledgement of debt. How does it work for gifted money. Do we still need a letter saying it has been gifted?

bullfarmer2 - 2021-07-21 19:38:00

What does the bank say? That is the only source you can actually rely on.

tony9 - 2021-07-21 19:55:00

I gifted a family member a sum to help them into a home and had to sign something, can't remember what it was called or who it was through but was either bank or lawyer.

kacy5 - 2021-07-21 21:29:00

So you should not have told the bank anything,2k is not much, a couple of withdrawals from the eptpos will get you that, you should have said it was under your pillow, simple, these banks /governments are control freaks, say as little as possible.

msigg - 2021-07-22 07:13:00

I had to sign something saying the money was a 'gift', but it was on the understanding by my family member that it was actually a no interest, personal loan.

articferrit - 2021-07-22 07:25:00

When I provided a gift to family for a house purchase the broker provided a form of words.

artemis - 2021-07-22 07:56:00

My son is in Aus and needed a top up to buy last year. They could borrow an extra 40K if they had the 10k I gave them. I had to send a statement saying I was "giving" them the 10k. Which I did and helped with the purchase of the property.

bryalea - 2021-07-22 08:17:00

I guess the bank wants to know if there is 'indebtedness' attached to the funds and if so the details regarding repayment. Just like any other debt you may have eg car loan, they want to know the implications it may have on your ability to meet your repayment commitment to their loan, both now and in the future. Of course they theoritcally also have 'legal obligations' regarding funds they may handle, so pulling out $?000... you had 'tucked away' for a rainy day may be asking for more questions from them. In addition, the NZ system has a thing about people who need to go into care - and 'gifts' being retrospectivly calculated into their worth and therefore any qualification for benefit/state funding assistance. (Not sure of the details but just an aside for people who are being offered assistance particularly from older people). The state basically, if the funds are needed, require it to be paid back.

Edited by brouser3 at 8:31 am, Thu 22 Jul

brouser3 - 2021-07-22 08:24:00

This message was deleted.

andrew697 - 2021-07-22 09:45:00

bullfarmer2 wrote:

hi guys,

Long story short we are needing 2k to top up our deposit to make up a short fall. We are lucky enough to have some one who is gifting us the money. The bank is saying that if the money is lent we need a letter of deed of acknowledgement of debt. How does it work for gifted money. Do we still need a letter saying it has been gifted?

No, you will not need a letter. The Deed is enforceable and the lender wants to know that it is not repayable.

johnston - 2021-07-22 09:51:00

Here the lender is wanting a Deed not a letter or other document. The lender is looking for a reason NOT to lend. Do as they say. Easy.

johnston - 2021-07-22 09:53:00

As johnston says - the bank is protecting its lending and might be that this application is marginal.

amasser - 2021-07-22 10:06:00

The bank is doing what all good business should do.. it is called DUE DILIGENTS.. I suspect they are also doing it as it will be a legal / regulatory requirement to know were all the money you are using to buy a house is coming from. If the whole deal all turns to custard the bank want to know who else maybe in the que, along with them, for repayment !!
It is all also tied up with the Anti Money Laundring regulations...

onl_148 - 2021-07-22 12:59:00

onl_148 wrote:

The bank is doing what all good business should do.. it is called DUE DILIGENTS..

Diligence

matt5209 - 2021-07-22 13:31:00

If the money is being gifted and it’s your child and their partner buying the house, also get the lawyer to draw up a contracting out agreement. So if their relationship ends, the partner doesn’t get any of the gifted money.

lakeview3 - 2021-07-22 14:26:00

We had to supply our daughters lawyer with a letter stating we were gifting her money for her deposit

maddie44 - 2021-07-22 14:53:00

onl_148 wrote:

The bank is doing what all good business should do.. it is called DUE DILIGENTS.. I suspect they are also doing it as it will be a legal / regulatory requirement to know were all the money you are using to buy a house is coming from. If the whole deal all turns to custard the bank want to know who else maybe in the que, along with them, for repayment !!
It is all also tied up with the Anti Money Laundring regulations...

No, it's not. AML does not require a Deed of Gift.

johnston - 2021-07-22 17:14:00

lakeview3 wrote:

If the money is being gifted and it’s your child and their partner buying the house, also get the lawyer to draw up a contracting out agreement. So if their relationship ends, the partner doesn’t get any of the gifted money.

Great idea. Spend $3K or $4K to protect $2K. And how do you force the partner to sign this agreement?

nic48 - 2021-07-22 17:22:00

nic48 wrote:

Great idea. Spend $3K or $4K to protect $2K. And how do you force the partner to sign this agreement?

bit of an over exaggeration….I was thinking more larger amounts. Imagine if you gifted $50,000 say. And if the partner doesn’t want to sign it? Says more about them. Do they want a house or not? If they kick up a stink about it then get rid I say.

When I got with my husband we both bought to the marriage money of our own. We drew up our own agreement and both signed it. 20 years later it’s no longer relevant and we both agreed to this.

lakeview3 - 2021-07-22 17:30:00

If you signed it without each getting independent legal advice it probably wasn't going to work anyway. And I love your way of controlling your children's partners with money.

nic48 - 2021-07-22 17:41:00

nic48 wrote:

If you signed it without each getting independent legal advice it probably wasn't going to work anyway. And I love your way of controlling your children's partners with money.

lol whatever

Any decent person would think it’s more than fair. I would never have had a problem with it if it had been relevant in my case. But then I am a fair and non greedy person. Just like when I split with my ex, I decided not to go after his very generous superannuation scheme because that would have left him with a lot less and I wanted him to be able to afford to buy a house because I knew it was better for my kids in terms of stability when they went to stay with him. We aren’t all greedy vultures and some of us know what’s morally right or wrong. In my mind it would be wrong to take money that was gifted by another family.

lakeview3 - 2021-07-22 18:00:00

I’m wondering if it is a new requirement because of the new anti money laundering laws?

lovelurking - 2021-07-22 18:21:00

Oops, #17 has already answered my post above.

lovelurking - 2021-07-22 18:24:00

The member deleted this message.

andrew697 - 2021-07-23 06:23:00

tony9 wrote:

What does the bank say? .

As poster said, bank wants a letter.

lythande1 - 2021-07-23 08:29:00

bullfarmer2 wrote:

The bank is saying that if the money is lent we need a letter of deed of acknowledgement of debt.

The lawyer writes one up, basically says you have been given it (or lent it).
Simple.

lythande1 - 2021-07-23 08:30:00

lythande1 wrote:

As poster said, bank wants a letter.

The poster wrote "we need a letter of deed of acknowledgement of debt. How does it work for gifted money. Do we still need a letter saying it has been gifted?"

There are a couple of contradictions in that statement. Because deed and gift are mentioned my guess is the lender requires a Deed of Gift which is not a letter.

The matter is easily resolved by seeking clarification from the lender.

johnston - 2021-07-23 09:53:00

A lot of interesting and perhaps misguided comments here.
For $2000 Banks just need a letter (does not need to be drawn up by a lawyer etc) that says.
I xxxxxxx hereby gift xxxxxx the sum of $xxx for the purpose of their house purchase. This is a true gift, it is not repayable or interest bearing and no charge will be placed on the property. Signed and dated, Easy

jeffqv - 2021-07-23 14:18:00

jeffqv wrote:

A lot of interesting and perhaps misguided comments here.
For $2000 Banks just need a letter (does not need to be drawn up by a lawyer etc) that says.
I xxxxxxx hereby gift xxxxxx the sum of $xxx for the purpose of their house purchase. This is a true gift, it is not repayable or interest bearing and no charge will be placed on the property. Signed and dated, Easy

Except that here the poster implies the lender may have requested a Deed. Seems unlikely for $2,000.

I truly hope the poster checks with the lender what they actually require and reports back. How novel that would be.

johnston - 2021-07-23 15:16:00

johnston wrote:

Except that here the poster implies the lender may have requested a Deed. Seems unlikely for $2,000.

I truly hope the poster checks with the lender what they actually require and reports back. How novel that would be.

No they aren't. They are saying "The bank is saying that if the money is lent we need a letter of deed" Then ask "Do we still need a letter saying it has been gifted?"
yes they do need a letter if it is gifted but as above just a simple letter from the person gifting the money.

maddie44 - 2021-07-23 15:19:00

maddie44 wrote:

No they aren't. They are saying "The bank is saying that if the money is lent we need a letter of deed" Then ask "Do we still need a letter saying it has been gifted?"
yes they do need a letter if it is gifted but as above just a simple letter from the person gifting the money.

But what is a letter of deed? What does "still need" refer to? It implies it is in addition to something. It seems suspicious "deed" was mentioned which may mean the lender said something about a Deed or it might be the poster added the word for effect.

It is likely a simple letter and not a Deed will suffice given the amount but until it is clarified we are speculating.

Again, I truly hope the original poster can clarify.

Edited by johnston at 4:10 pm, Fri 23 Jul

johnston - 2021-07-23 16:09:00

jeffqv wrote:

A lot of interesting and perhaps misguided comments here.
For $2000 Banks just need a letter (does not need to be drawn up by a lawyer etc) that says.
I xxxxxxx hereby gift xxxxxx the sum of $xxx for the purpose of their house purchase. This is a true gift, it is not repayable or interest bearing and no charge will be placed on the property. Signed and dated, Easy

A deed of gift is a statutory declaration that has to be witnessed as such to be enforceable, regardless of what the resident legal beagle states.

gabbysnana - 2021-07-23 16:51:00

gabbysnana wrote:

A deed of gift is a statutory declaration that has to be witnessed as such to be enforceable, regardless of what the resident legal beagle states.

Apart from you no one even wrote the word witness. For your information, a Deed of Gift must be witnessed but it is not a statutory declaration.

johnston - 2021-07-23 17:39:00

jeffqv wrote:

A lot of interesting and perhaps misguided comments here.
For $2000 Banks just need a letter (does not need to be drawn up by a lawyer etc) that says.
I xxxxxxx hereby gift xxxxxx the sum of $xxx for the purpose of their house purchase. This is a true gift, it is not repayable or interest bearing and no charge will be placed on the property. Signed and dated, Easy

Sounds similar to the one I signed when gifting to a family member.

kacy5 - 2021-07-24 18:49:00

kacy5 wrote:

Sounds similar to the one I signed when gifting to a family member.

Same, no having to be witnessed or any of that palava, just a basic letter submitted stating what we were doing.I thought it was her lawyer we gave it to but hubby has said it was the mortgage broker.

maddie44 - 2021-07-24 19:01:00

kacy5 wrote:

I gifted a family member a sum to help them into a home and had to sign something, can't remember what it was called or who it was through but was either bank or lawyer.

Me too, I had to sign something.

jhan - 2021-07-25 15:32:00

Well bullfarmer2, what happpened?

johnston - 2021-07-28 19:48:00

If you want to ultimately gift / give a member of your family some money to help with the deposit on a house, you at least need a simple document that both parties sign, it can start out as a loan..
"I'm loaning you $40,000 interest free, repayable on demand"
"You signing this note / letter is your acknowledgement / receipt that you have received the money"
"The purpose of this loan is to assist you with the deposit on the purchase of the property at 123 Main St......"
Then what you do at a later date, write another letter, signed by both parties, along the lines of "you know that $40,000 I loaned you, I hereby forgive you $20,000 of it, so you now only owe me $20,000"
Then again later forgive the remainder.. all very simple, but it keeps everybody's bum covered...
You most likely love / trust your family member completely, but how would you feel if they used the money for a deposit and then 2 years later sold up and took off to OZ !! It was your intention to help them into a home for them and the say grandkids... next minute they have up sticks to oz and used your money as a deposit on a tattoo parlour !! if the thing was written up as a loan then you can just ask for the money back !!

onl_148 - 2021-07-29 16:11:00

onl_148 wrote:

If you want to ultimately gift / give a member of your family some money to help with the deposit on a house, you at least need a simple document that both parties sign, it can start out as a loan..
"I'm loaning you $40,000 interest free, repayable on demand"
"You signing this note / letter is your acknowledgement / receipt that you have received the money"
"The purpose of this loan is to assist you with the deposit on the purchase of the property at 123 Main St......"
Then what you do at a later date, write another letter, signed by both parties, along the lines of "you know that $40,000 I loaned you, I hereby forgive you $20,000 of it, so you now only owe me $20,000"
Then again later forgive the remainder.. all very simple, but it keeps everybody's bum covered...
You most likely love / trust your family member completely, but how would you feel if they used the money for a deposit and then 2 years later sold up and took off to OZ !! It was your intention to help them into a home for them and the say grandkids... next minute they have up sticks to oz and used your money as a deposit on a tattoo parlour !! if the thing was written up as a loan then you can just ask for the money back !!

See a lawyer before gifting or lending money.

johnston - 2021-07-29 17:32:00

This is all rubbish, we are not talking 40k here, we are talking 2k which is pocket money. You can give anyone 2k and don't expect anything back, I would give my children 2k tomorrow if they want it, no problems, the problem here is the approach to the bank first, always remember keep it simple, either give the money( under 10k) or not, this is giving, not lending, no one needs to know where it came from. Under your pillow.

msigg - 2021-07-30 07:18:00

msigg wrote:

This is all rubbish, we are not talking 40k here, we are talking 2k which is pocket money. You can give anyone 2k and don't expect anything back, I would give my children 2k tomorrow if they want it, no problems, the problem here is the approach to the bank first, always remember keep it simple, either give the money( under 10k) or not, this is giving, not lending, no one needs to know where it came from. Under your pillow.

Because the op left long ago the thread has become generic. So rather than rubbish other posters have described their personal experiences along wth good advice from others.

While $2,000 is pocket change to you, I suspect it is a significant sum to some.

How about if you gave $250,000 to a child and their partner claimed half or a creditor swooped. See a lawyer.

Edited by johnston at 7:57 am, Fri 30 Jul

johnston - 2021-07-30 07:56:00

So above I have gave 1.5mill to 3 x children, and in a trust. Easy.

msigg - 2021-07-30 09:12:00

msigg wrote:

So above I have gave 1.5mill to 3 x children, and in a trust. Easy.

I never said it was difficult. Just said to see a lawyer.

johnston - 2021-07-30 09:24:00

maddie44 wrote:

We had to supply our daughters lawyer with a letter stating we were gifting her money for her deposit

so did we.

spead - 2021-08-01 20:41:00

msigg wrote:

This is all rubbish, we are not talking 40k here, we are talking 2k which is pocket money. You can give anyone 2k and don't expect anything back, I would give my children 2k tomorrow if they want it, no problems, the problem here is the approach to the bank first, always remember keep it simple, either give the money( under 10k) or not, this is giving, not lending, no one needs to know where it came from. Under your pillow.

any bank sees the origin of any deposit, hence a requirement to state it is a gift.

spead - 2021-08-01 20:43:00

My two cents worth is that they are checking to see if there is any liability or obligation to make repayments, and if so, how much, Thta then becomes an outgoing and commitment and may reduce the approval amount, By providing a simple letter from the giftor stating that the $2000 is a gift to assist with the purchase of the home, no repayment is required or interest applied to the debt and no security will be registered on the security property.

shorebee - 2021-08-02 13:01:00

A gift is exactly that, a gift, it doesn't have to be repaid. I wouldn't have told the bank about it but I understand your openness and honesty. You don't need a Deed from a lawyer, only if it is a loan from your friend.
Next thing you know an over zealous bank employee will be accusing you and your friend of money laundering.

Edited by spidermurti at 9:17 am, Wed 18 Aug

spidermurti - 2021-08-18 09:13:00

spidermurti wrote:

A gift is exactly that, a gift, it doesn't have to be repaid. I wouldn't have told the bank about it but I understand your openness and honesty. You don't need a Deed from a lawyer, only if it is a loan from your friend.
Next thing you know an over zealous bank employee will be accusing you and your friend of money laundering.

You need whatever the lender requires.

johnston - 2021-08-18 09:49:00