What do you need to do?

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. Gifting a house means the owner no longer owns the property/asset that was once theirs and has a value.

You cannot gift property under value if you know that you can't afford to repay your debts/liabilities. In these cases the transaction could be reversed by the Trustees in Bankruptcy to pay off your debts.

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.

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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.

Declaration of solvency meaning

Under the Insolvency Act 1986 - Section 123 - Definition of inability to pay debts it states "A company is also deemed unable to pay its debts if it is proved to the satisfaction of the court that the value of the company’s assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities".

What other declarations of solvency are there?

Under the Insolvency Act 1986 - Declaration of solvency, Section 89 - Statutory declaration of solvency Directors of a company are required to make a declaration of solvency when voluntarily winding up a company.

How can we help?

Our solicitor can help with this type of declaration so call us or fill out the form above to book your appointment

Declaration of solvency for Gifts

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