Buying Property From Family: Where Informality Causes Harm

Family transactions skip the safeguards that protect both sides. The omissions that damage relationships as well as finances.

Property transactions between family members proceed on trust, which is reasonable, and then skip the documentation that exists to protect people who trust each other. The difficulties that follow are usually about ambiguity rather than bad faith.

Why these keep happening

Each of these omissions is made to avoid appearing distrustful. The consequence is that when circumstances change, there is no record of what was agreed, and the disagreement is with family rather than with a stranger.

1. No written agreement

A written contract between relatives feels like a statement about the relationship.

• Avoid it by: Document the transaction properly, exactly as you would with any other party.
• Proof it is closed: A written contract covering price, timing and what is included.

What it costs you: Terms are remembered differently over time, and there is nothing to refer to.

2. Skipping title verification

The property has been in the family and its status is assumed to be known.

• Avoid it by: Verify title and ownership regardless of the relationship.
• Proof it is closed: Documented ownership verification.

What it costs you: Inherited property in particular frequently has ownership complications that nobody has addressed.

3. Informal payment arrangements

Payments are made as funds become available, without a schedule.

• Avoid it by: Agree a payment schedule and document every payment with a receipt.
• Proof it is closed: A payment record signed by both parties.

What it costs you: Neither party can establish what has been paid, and the position becomes unclear over years.

4. Not addressing the price basis

A family price is agreed without reference to market value.

• Avoid it by: Obtain an independent valuation as a reference, even where the agreed price differs from it.
• Proof it is closed: A valuation on file alongside the agreed price.

What it costs you: Other family members may later question the arrangement, and there is no independent basis for the figure.

5. Skipping inspection

The property's condition is assumed to be known within the family.

• Avoid it by: Inspect the property and document its condition at the time of sale.
• Proof it is closed: An inspection report retained by both parties.

What it costs you: Defects become a source of resentment afterwards, with each side believing the other knew.

6. Not involving other family members who may have an interest

The transaction is between two people and involving others seems unnecessary.

• Avoid it by: Establish who may have an interest and address it before completing.
• Proof it is closed: Documentation showing that relevant parties were informed or consented.

What it costs you: Others with an interest or expectation raise it later, sometimes years afterwards.

A short check before you sign

• Is there a written contract?
• Has title been verified independently?
• Is every payment documented with a receipt?
• Is there an independent valuation on file?
• Have other family members with a potential interest been addressed?

If it has already happened

If a family transaction has already occurred informally, document what was agreed now, with both parties confirming it in writing. Verify the ownership position and complete any registration that was not done. These steps are considerably easier while relations are good than after a disagreement or a bereavement.

If you are buying a finished property, Domira can inspect it, verify the documentation and price the findings with you before you commit.