Helping a child buy their first home is one of the most generous things a parent can do. Across Australia, the so-called “Bank of Mum and Dad” is now one of the largest informal lenders in the property market — and in Victoria, where median house prices remain well above the reach of most first-time buyers, parental assistance has become a practical necessity for many families.
But generosity without documentation is a risk. And in 2026, that risk has become sharper than ever.
What the courts have said
In March 2026, the Federal Circuit and Family Court of Australia handed down its decision in Han & Han [2026] FedCFamC1A 54. The case involved a parent loan of approximately $1.8 million — documented in a loan agreement, and secured by a caveat on title since 2007. By the time of the property settlement, the debt had grown to $4.66 million. The court disregarded the entire liability.
The reason was straightforward: the loan had never been enforced. No interest had been demanded for sixteen years. No repayments had ever been made. The court concluded that the money was never genuinely going to be called in — and treated it accordingly.
The message for Victorian parents is clear. Documentation matters. But documentation alone is not enough. A loan that is not actively managed — with interest charged, repayments demanded, and enforcement action taken when necessary — is vulnerable to being treated as a gift in any subsequent family law proceedings.
What we recommend
At Hayton Kosky Lawyers, we have developed a careful protocol for Bank of Mum and Dad transactions. We document the arrangement in a formal Deed of Loan, we execute a mortgage over the property (registered where the bank consents, held unregistered with a caveat on title where it does not), and we provide parents with clear written advice on the risks — including the frank advice that no arrangement, however well structured, carries an absolute guarantee.
We also advise parents on what they need to do after settlement to protect their position over the life of the loan.
We have prepared a comprehensive three-part legal guide covering the Bank of Mum and Dad from every angle — for parents, for children and their partners, and for legal practitioners. The guide incorporates the latest case law including Han & Han, and is updated quarterly.
If you are considering lending money to a child to assist with a property purchase, or if you have already done so and want to review your documentation, contact us on 03 9557 3355 or visit haytonkosky.com.au.
Hayton Kosky Lawyers — Level 1, 300 Centre Road, Bentleigh VIC 3204
This article provides general legal information only and does not constitute legal advice. Readers should obtain advice specific to their circumstances before acting.