ARTICLES

Buying a new home is an exciting time but can also be quite daunting as there is a lot of legal paperwork to sort out.

When you instruct a solicitor to act on your behalf, one of their first jobs, which is required by law, is to verify your identity, and in the case of a purchase, details of your source of funds. This is required by all solicitors as they must comply with the law about money laundering and proceeds of crime, in particular The Proceeds of Crime Act 2002.

The rules are not prescriptive, but all solicitors are required to take reasonable steps to verify where the money you are purchasing your property with is from. Therefore, you be asked whether money you are contributing is from your savings, being gifted to you or loaned to you from a third party (separate from your main mortgage lender), and whether any of the monies are from overseas. If so, you will also be asked to supply supporting documentation to prove the source of the money, such as:

1. Money being provided by you from savings

Solicitors will need to see copies of bank statements showing the monies being used for your house deposit. They will also need to know how this was accrued, for example regular savings, inheritance, property sale, divorce settlement, etc, and will request evidence to support this.

2. Gifts from Third Parties

Solicitors will need to see the original of a letter, addressed to your Lender, which has been signed and dated by the person making the gift confirming information such as the property address the gift is for, the amount of money being gifted, the relationship of the people to you, that the money does not have to be repaid plus another questions. Evidence of how this gift money was accrued will also be requested, plus copies of bank statements showing the money.

3. Monies being loaned to you

If you are borrowing any monies towards the purchase, in addition to any mortgage, then your solicitor is required to report this to your Lender. It is worth noting that this may affect their decision to lend.

If you do not have a mortgage but are borrowing monies privately, then you will need to provide details of any arrangements that you have agreed with any private lender.

4. Monies coming from abroad.

You will need to provide details of any money that is coming from abroad, whether this be your own savings or monies that are being gifted to you, and confirmation of which country it is coming from. Depending on which country the money is coming from there may be some additional requirements and be prepared to provide translations of bank statements and other documents.

It is possible that your deposit may come from more than one of the above categories, in which case, it is important to provide everything that is relevant for each part.

With regards to proving your personal identity, your solicitor will provide you with a list of documentary evidence that they require, which includes a passport, photocard driving licence, National ID card with photograph or residence permit issued by the Home Office, plus others. You will also be asked to prove your current address with evidence such as recent utility bills, council tax bill for the current year, or a recent mortgage statement.

As well as it being a legal requirement, it is important to remember to satisfy your ID, proof of address and source of funds with your solicitor as soon as possible, as they will be unable to proceed to exchange without them.

If you have any queries about this, please do not hesitate to contact us.