We are continuing our 200-year anniversary celebrations with random acts of kindness in the local...
Gifted deposits to get on the property ladder
With an increasing property market, more and more buyers appear to be receiving financial gifts from friends and relatives to help them get on the property ladder.
It is imperative that your solicitor is made aware of gifted deposits as early as possible.
As conveyancers, we are under various obligations to mortgage lenders to explain the source of the deposit. In the event that the mortgage offer received for the buyer makes no reference to the lender being aware that the deposit is a gift from a third party, then we must report this to the lender for their specific authority to proceed.
We are also required to obtain a letter from the person giving the funds, known as the Donor. The letter states that the money is an absolute gift, not repayable and the Donor will have no legal interest in the property. Anti-Money Laundering Regulations also require us to obtain identification for the Donor, certified by a lawyer, along with bank statements showing where the money has come from, for example, regular savings, inheritance, bonus etc. We are also required to carry out a bankruptcy search against the Donor.
Please inform us if you become aware of any gifted deposits, so that we can deal with these matters early on in the transaction, making the process more effective to exchange of contracts.
If you have a client who needs any advice on the above, please contact one of the Residential team on 01206 217 300.