If you have been fortunate enough to receive a gifted deposit to assist with your purchase of a property this article may prove helpful in understanding what may be required of you and the third party providing funds.
What is a gifted deposit?
A gifted deposit is money provided by a third party to assist with your purchase of a property, which could be from a family member or friend.
The money is non-refundable and does not entitle the third party to any legal rights or interests in the property. As such, it is strongly recommended that the third party obtains independent legal advice before making the gift.
What if I have a mortgage?
If you are obtaining a mortgage, your lender will require separate evidence of the gifted deposit, usually in the form of a Gifted Deposit Declaration. This will need to be signed by the third party and returned to your solicitor or conveyancer to forward to your lender. Your solicitor or conveyancer will then need to wait for confirmation from your lender that they are happy to proceed.
What is in the Gifted Deposit Declaration?
The Gifted Deposit Declaration will state the following:
- Name and address of third-party providing funds
- Relationship of third-party to purchaser
- Gifted deposit amount
- Confirmation that the gifted deposit is unconditional and non-repayable and that the third party will not receive any rights or interest in the property whatsoever
- That a Bankruptcy Search will be carried out against the third party’s name
- That the third party understands the importance of seeking independent legal advice and has had the opportunity to do so
Please note that this list is indicative and different lenders may use different forms of Gifted Deposit Declarations. Please speak to your solicitor or conveyancer if you have any queries or concerns in relation to the same.
What if I am a cash purchaser?
The third-party providing funds may still be required to sign a declaration to confirm that the funds are non-repayable and that the third party will not receive any rights or interest in the property.
What if the gifted deposit amount changes?
If the gifted deposit amount changes, you must let your solicitor or conveyancer know as soon as possible. If you are obtaining a mortgage, this will more than likely need to be reported to your lender so that further confirmation can be obtained from them that they are happy to proceed on the basis of the new gift. As your solicitor or conveyancer will need to wait for such confirmation, letting them know about any changes to the gift as soon as you can will help to avoid any delays.
Verification of Funds
To comply with anti-money laundering regulations, your solicitor or conveyancer will need to verify the source of funds the third party provides. Please ask your solicitor or conveyancer for further details on how this will be done.
If you have already instructed us to act for you on a property purchase and are receiving a gifted deposit to assist with the same, please do not hesitate to contact your solicitor or conveyancer if you have any questions. They will be able to advise you and we are more than happy to help.
If you have had an offer on a property accepted and are looking to instruct our team, please visit our online conveyancing calculator by clicking ‘here’ to receive a free quote or alternatively please email web@swinburnemaddison.co.uk.
This article is for general information only. It does not and is not intended to constitute legal or professional advice. The law may have changed since this article was published and we would always recommend that you seek specific advice on any particular legal issue.
