Bank of Mum and Dad – When a Gift Becomes a Court Case

It’s common for parents to help their children buy their first home. But what happens if, years later, the parents say the money wasn’t a gift at all, and they still own part of the property?

The New Zealand Court of Appeal recently considered this question in Liao v Liao [2026] NZCA 250.

The Dispute

The case involved a disagreement between parents and their adult daughter.

The parents contributed 10% of the purchase price of a house in Auckland. Their daughter paid the rest using her own savings and a bank loan. The property was registered solely in her name.

Several years later, the parents asked their daughter to transfer the property to them. They argued that the house had always been intended to belong to them and that putting it in their daughter’s name was only temporary.

Their daughter disagreed, and the family dispute ended up before the Court of Appeal.

What Does the Law Presume?

If someone contributes to the purchase price of a property but the property is registered in someone else’s name, the law may presume that the contributor intended to keep an ownership interest. This is what the law calls a resulting trust.

However, that presumption does not always apply.

When parents give money to their children, the law presumes that the money was intended to be a gift. This is known as the presumption of advancement.

The parents argued that this rule should not apply where the child is an adult.

What Did the Court Decide?

The Court of Appeal held that the relationship between parents and children is unique, regardless of the child’s age. Because of that relationship, the law should continue to presume that money given by parents to their children is intended as a gift.

As a result, the Court confirmed that the presumption of advancement continues to apply between parents and their children, even when the children are adults.

Why Does This Matter?

The above case is a reminder that if parents contribute money towards a child’s property purchase, it is important to record the arrangement clearly in writing to avoid disputes at a later date.