The Bank of Mum and Dad

Back in the day and I am talking before those in the land of mortgages suddenly understood what a mess they were in, the banks and building societies seemed not to be too bothered about where the funds were coming from as far as the deposit was concerned. These days the landscape has changed and changed for ever.

If you are buying a property and have to rely upon a deposit from a third party then you need to be able to produce sufficient evidence to satisfy your solicitor as to the veracity of those funds. If this is a gift from the Bank of Mum and Dad, your folks will require to give your solicitor identification evidence and sign a parental deposit letter stating that the money is a gift and non returnable and that they will have no proprietary rights to the property nor live in the property.

Where we are dealing with the Bank of Mum and Dad we nearly always have to deal with the ludicrous situation where we have to ask the clients for parental deposit letter when they have already been asked to produce one by the bank. Clients quite rightly cannot understand why they are being asked for this again especially when we say to them that we are acting for the bank in the preparation of the security documentation. Since the banks have been pointing their guns in the form of indemnity insurance claims at the profession following their ill judged lending decisions, the job is now as much about covering your back as it is about giving advice.

The actual nuts and bolts of a conveyancer’s job used to be about looking at the title and doing some legal work. Nowadays it feels as if we are watchdog for the banks and building societies, HMRC and the police. Whether it is anti money laundering, fraud prevention or tax evasion, it does feel that our role has become blurred.

It is vital for clients to understand that the landscape has changed significantly especially if they have bought property but not done so for a long period of time. Long gone are the days when a visit to the solicitor to sign the paperwork and a couple of interactions with the him/her was sufficient to get the transaction over the line. There is now so much additional information that is required of the clients when interacting with their solicitor. Clients now need to understand that they will be required to give their solicitor information regarding their identity, source of the deposit, reasons why they are purchasing and answer questions relating to source of the deposit. To many such questions can sometimes appear intrusive but in an age of ever increasing internet based fraud the mantra “KYC - Know your client” has never been more important!

As ever, delighted to discuss any questions raised by this blog or indeed any issues that you have in relation to your quest to get a foot on the property ladder.