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Family loans – what can happen when things don’t go to plan

The Banking Royal Commission has highlighted the dangers involved in parents ‘going guarantor’ for their children.

Two recent NSW Supreme Court decisions (Gladys Hargreaves v Susan Eveston¹ and Dunphy v Russell²) illustrate precisely what can happen when financial dealings between family members do not go to plan. In a time where it is becoming more common for parents to assist their children with the purchase of real property, these cases are reminders that not all family financial arrangements will end well.

By adopting a careful approach to drafting and documenting of such arrangements, parties can reduce the chance of a dispute if things don’t go to plan…

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