Get a Quote for a Declaration of Solvency
Our experienced conveyancing solicitors can help witness you declaration of Solvency for a gift of property or for company directors. Our quotes are competitive and we're rated Excellent on Trustpilot. Get a quote today and see for yourself.
A declaration of solvency is required by a mortgage lender and or a buyer when the owner is
gifting their share in a property for zero consideration. The gift means the owner no longer owns the property/asset that was once theirs and for which does have a value. The issue with gifting property for no consideration is if you did it knowing it would mean you couldn't afford to repay your debts/liabilities.
To be able to declare you are solvent your assets (assets meaning valuable things you own like money in the bank, car, jewellery or houses) must outweigh your liabilities (HMRC taxes, loans, mortgages, contracts with suppliers). If you were made bankrupt after the gift then the transaction could be reversed in order for the property to be sold to pay off the creditors. Mortgage lenders would be at risk of not getting repaid which is why they ask for a declaration and also
Insolvency Indemnity Insurance.
Insolvency Act 1986: Section 339 - Transactions at an undervalue
(1)Subject as follows in this section and sections 341 and 342, where an individual is adjudged bankrupt and he has at a relevant time (defined in section 341) entered into a transaction with any person at an undervalue, the trustee of the bankrupt’s estate may apply to the court for an order under this section.
(2)The court shall, on such an application, make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction.
Here is a declaration of solvency format template which you can use to evidence you are solvent:
|
Assets
|
Liabilities
|
Balance
|
- £500,000 Current value of home
- £5,000 Current value of car
- £5,000 Money in bank
|
- £400,000 Current mortgage on home
- £4,000 Current hire purchase on car
- £10,000 Current credit card debt
- £20,000 Current loan
|
|
|
£510,000
|
£434,000
|
£76,000
|
In the above example you can see that the assets outweigh the liabilities which means you are solvent.
What is the statutory declaration of solvency procedure?
You need to sign a declaration in the presence of a solicitor who counter signs your signature. The solicitor doesn't check your financial position, they only witness your signature.
Speak to your own solicitor or mortgage lender to confirm their own prescribed format.
