personal finance

Can I force my stepson to repay money I lent him to buy his flat?

A few years ago I lent my stepson some money to cover the deposit for his first flat. I hadn’t expected to ask for it back but I am now short of cash due to my impending divorce from his mother. Can I force my stepson to return the money if he refuses?

Deanna Hurst, a partner in the private client team at law firm Royds Withy King, says divorce and separation are never an easy time and the position involving your stepson will undoubtedly make it that much more sensitive even if the divorce itself is amicable.

The options open to you will largely depend on whether the loan was understood by your stepson to be a loan and whether there is any documentation to support that. Given that you did not expect to ask for the money back, your stepson could be forgiven for believing it to be a generous gift.

The first step would be to speak to your stepson and explain the position you find yourself in. If the separation is amicable and you have a good relationship with your stepson, it is entirely possible that an arrangement can be reached quickly. Even if he is unable to repay the loan in full straightaway it may be possible to agree a repayment schedule. If that is agreed it should be documented.

Of course, if the loan was documented and agreed with your stepson this becomes much easier, as you will be able to remind him of his obligations and agree a timeframe for the loan to be repaid. This documentation need not be long or complex, just a few paragraphs that set out the amount, any interest and when it should be repaid.

Deanna Hurst, partner in the private client team at lawfirm Royds Withy King
Deanna Hurst of Royds Withy King

If your stepson is unable or unwilling to repay the loan, you could ask your divorce lawyer if there is any possibility of the benefit of the loan being transferred to his mother as part of the separation proceedings, so that instead of your stepson owing you he would owe his mother, and that can be taken into account in the division of assets between you and his mother.

If neither of these courses work, perhaps because the separation is acrimonious, you may be left with little choice than to adopt a more heavy-handed approach.

If the amount loaned is no more than £10,000 you can turn to the small claims court. If more substantial, you will need to issue a claim through the ordinary courts. You will, however, need to be able to provide evidence to support that claim.

The threat of court proceedings can sometimes be enough to secure a settlement as a judgment against an individual will impact credit ratings and, for example, the ability to secure a mortgage at a future date.

If successful, the courts can enforce a payment plan, instruct bailiffs to recover the amount owed and even place a charge over the property. This opens up the possibility that you might be able to force its sale to recover the debt.

Joshua Shuardson-Hipkin, a solicitor in the dispute resolution team at law firm Fletcher Day, says the central question is whether you can show that the money was advanced as a loan — as opposed to a gift — and what contractual arrangement was in place between you and your stepson at the outset. While loans are commonly made between family members for such purposes, legal formalities are often neglected. This can cause issues should you be required to recover, or force, payment of the outstanding monies via the courts.

If the loan was agreed informally without any contractual documentation, you will be required to particularise what words were used prior to the loan being entered into. More specifically, the parties are required to state what was said by whom, to whom, where and when the contractual words were spoken. The more specific and detailed you can be in showing this, the better your chances of success.

Joshua Shuardson-Hipkin, solicitor at law firm Fletcher Day
Joshua Shuardson-Hipkin of Fletcher Day

My concern is that you appear to be seeking a return of “all” the money at once. Even if you can show this was a loan, such a sudden repayment term of this nature would be unusual. If an instalment plan were agreed, for example, a court may be reluctant to depart from this arrangement.

If nothing was formally put in writing and you cannot clearly recall pre-contractual conversations, it would be worth reviewing any text messages, emails, letters or other evidence to support your position. Parties will often point to regular repayments on a bank statement to demonstrate the monies were repayable and thus subject to a loan. In summary, anything that you can pull together to set out your position will help if things cannot be resolved informally.

In absence of either of the above, there is a risk that your stepson could argue the monies were a gift. I have seen several cases where the “gift” argument has been successfully raised and it can be a difficult hurdle to cross.

Your first point of call is to discuss the matter informally with your stepson. This will allow you to gauge whether he is likely to resist your request for the money to be repaid. It may be that you are worrying for nothing, particularly if you are able to agree that the loan is paid back in instalments.

If you are not able to agree a way forward, I would advise you to proceed if you can demonstrate that the monies were not a gift. A solicitor can help you in assessing the strength of your position.

In a civil matter such as this, you will be required to show that “on the balance of probabilities” the money was a loan. If this hurdle cannot be met, you could get stung further down the line. One situation you wish to avoid is losing the case at court and then being required to pay the costs of any fees incurred by your stepson in defending the action.

The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.

Do you have a financial dilemma that you’d like FT Money’s team of professional experts to look into? Email your problem in confidence to

Our next question

I own a flat in London, but I now have a baby and am looking to buy a house further out and commute every day. I would like to keep the flat as an investment but I can’t afford two mortgages given the unfavourable tax treatment of buy-to-let income.

What are the tax implications of selling half of my flat to my younger sister? We would own it as tenants in common. My outstanding mortgage would then be halved, and she would pay the monthly service charge. I would then purchase the house with my fiancé. What are the tax implications I should consider? I assume that if we sold the flat at a later date, my half would be liable for capital gains tax as it would no longer be my primary residence?


Leave a Reply