Many families help a child buy a first home, and many never write down what the help was meant to be. Years later, after a separation, a death or a disagreement between siblings, each person may remember it differently. This guide looks at the practical side: what a written record usually covers, what is worth keeping, and what to ask a lawyer before the money moves. It is a general overview, not advice on your situation. For the court decisions behind it, see our article on Lalli v. Lalli.
Why It So Often Goes Wrong
When parents help with a down payment, the conversation is usually brief and warm. Everyone understands the help in their own way. One person thinks it was a gift. Another thinks it was a loan to be repaid when the home was sold. A third assumes the parents now own a share of the home. Nothing is written, so the question is only asked years later, often at the worst time.
In Lalli v. Lalli, 2026 ONCA 123, the Court of Appeal for Ontario dealt with parents who had provided part of the money for a home and later claimed a share of it. The decision turned on the evidence of what the person who provided the money actually intended. Evidence recorded at the time is usually the most useful.
Three Different Arrangements
Family help with a home generally falls into one of these categories, and they are not the same:
- A gift. The money is given and does not have to be repaid.
- A loan. The money is to be repaid, on terms the family has agreed.
- Something in between. For example, the parents expect to share in the home or in the proceeds when it is sold.
Which category applies depends on the facts and on what the people intended. The categories can be treated differently if a couple separates or if a parent dies, so it is worth deciding which one you mean before the money moves.
What a Written Record Usually Covers
There is no single correct form. These are the topics families commonly settle, and they are worth discussing with a lawyer rather than copying from a template:
- Who is providing the money, and who is receiving it: one child, or both spouses.
- The amount, the date, and which home it is for.
- Whether it is a gift, a loan or a shared interest in the home.
- If it is a loan, whether there is a repayment date, how it will be repaid, and whether interest applies.
- What happens if the home is sold, or if the relationship between the spouses ends.
- Who has signed, the date they signed, and whether each person had the chance to get their own advice.
What to Keep
- Bank records showing the transfer from the parent's account, rather than cash with no trace.
- Emails and messages from the time the money was provided.
- Any document the lender asks for, such as a letter confirming the source of the funds.
- Repayment records, if it is a loan.
A letter written for a lender serves the lender's purpose. Ask your lawyer whether the family also needs a separate record of its own.
Couples: Talk About It Before Closing
If the child is married or in a long-term relationship, it helps to agree early whether the money is meant for one person or for both. A marriage contract can address how a family contribution is treated, and this is a topic to raise with a lawyer well before closing. Our guide to divorce in Ontario explains how property division works at a general level.
Questions to Ask a Lawyer
- Should we treat this money as a gift, a loan or something else?
- What should a written record say in our situation, and who should sign it?
- Should the child and the child's spouse each get separate advice?
- How does this arrangement fit with the wills and powers of attorney of the parents?
- What does the lender need, and how does that differ from what the family needs?
- If the money has already been given, what can we do now?
If the Money Has Already Been Given and Nothing Was Written
Gather what already exists: transfer records, emails, messages and any papers from the purchase. Do not create a document dated in the past. If you want to record the arrangement now, record it with today's date and say what it is. A lawyer can help you decide how.
Frequently Asked Questions
Does help with a down payment have to be written down?
Whether or not it is required in your situation, a written record made at the time is usually the most useful evidence of what everyone intended. Ask your lawyer what is appropriate for your family.
Is a gift letter for the mortgage the same as a family agreement?
Not necessarily. A letter prepared for a lender serves the lender's purpose. Ask your lawyer whether the family also needs its own record.
Can a loan from parents be interest-free?
That is for the family to decide, and tax may be relevant. Ask a lawyer and an accountant before you finalize the terms.
Should both spouses sign?
It depends on whether the money is meant for one spouse or both, and on what the document says. Ask your lawyer.
What if a parent dies before the home is sold?
How the arrangement was described and recorded can matter to the estate. Speak to a lawyer about both the family arrangement and the parents' wills.
Sources
- Lalli v. Lalli, 2026 ONCA 123 (CanLII)
- Pecore v. Pecore, 2007 SCC 17 (CanLII)
- Ontario Family Law Act
This article provides general information about Ontario law as of the date of publication and is not legal advice. It does not create a solicitor-client relationship. Outcomes depend on the specific facts; please consult a lawyer about your circumstances.
