The president of the Law Society of England and Wales has advised parents lending their children money to buy a home to prepare a document clarifying the details of the agreement.
People lending large amounts of money should always create a document detailing the particulars - even if it is to their own children.
According to Paul Marsh, president of the Law Society of England and Wales, parents who are lending children money to help them get on the property ladder should treat the deal in the same way that a high-street bank would. This means having a set agreement on issues such as when the loan is due to be paid back, or what happens in certain circumstances, such as a death.
"A series of potential consequences need to be considered, to make sure that everybody understands at the beginning what would happen in a series of different events," he said. "It is much cheaper and less traumatic to clarify the agreement at the outset with a legally valid document, rather than waiting and ending up in court."
Mr Marsh provided the example of a couple lending £150,000 to their daughter, who is taking out a £300,000 mortgage with her boyfriend under joint names. It is vital that a document is signed by the parents, daughter and boyfriend detailing that the latter has no interest in the loan.
This means that, in the event the daughter splits up from her boyfriend and the property has reduced in value, the parents get back the £150,000.
