Buying a property with help from family can make all the difference, but it also comes with a few extra steps along the way. If you are relying on a gifted deposit or using accumulated savings, you will almost certainly be asked to show where your funds have come from. While this can feel a little intrusive, these checks are there to help keep your transaction running smoothly.
What is a gifted deposit?
A gifted deposit is where part or all of the purchase price is provided by someone else, usually a family member, on the understanding that it is a genuine gift and does not need to be repaid.
What do “source of funds” checks involve?
Solicitors need to carry out what are known as source of funds checks. This is not just about where the money is coming from now, but how it was originally built up, whether through savings over time, investments, or the sale of an asset. These checks apply to both buyers and anyone helping to fund the purchase.
Mortgage lenders will also want confirmation of this, together with identification checks on the person providing the funds, to ensure there are no undisclosed interests in the property and that their security is protected.
Why timing matters
One thing that can make a big difference, yet is often overlooked, is when these checks are carried out. At Buss Murton, we prioritise undertaking all AML and source of funds checks right at the start of a transaction. This allows any queries or gaps in documentation to be identified and resolved early, rather than further down the line, reducing the risk of delays as the matter progresses.
We are increasingly seeing a rise in situations where other firms leave these checks until the “eleventh hour”, sometimes just before exchange of contracts. Where there are gaps in the evidence, or where the source of funds cannot be clearly demonstrated, this can lead to transactions being paused, or in some cases unable to proceed at all until compliance requirements are satisfied. From a client’s perspective, this can be both frustrating and stressful, particularly when parties are otherwise ready to move forward.
How to avoid delays
A little preparation early on can go a long way. It helps to:
- Speak to anyone gifting funds early, so they know what will be required
- Keep funds in a clear, traceable account, with documents showing both where the money is now and how it was built up
- Provide information promptly when requested, as delays can have a knock-on effect on the rest of the chain
A smoother transaction starts early
These checks are a standard and essential part of the conveyancing process, and while they can feel detailed, they are a legal requirement designed to protect everyone involved. By getting everything in place early, you are far more likely to keep things moving and avoid unexpected issues later on.
Need advice?
Buying with a gifted deposit can be a great way to get onto the property ladder, but it often comes with more checks than people expect. Understanding where your funds come from and being prepared early can make all the difference between a smooth transaction and last-minute delays.
For bespoke advice on this or any other area of law, get in touch with the team now.
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