gift Archives - Emyr Pierce

Nov 8

Should I sign a pre-nup before living in my husband’s house?

I am getting married in five months and we plan to live in a house which was bought for my future husband by his parents. They are suggesting we sign a pre-nuptial agreement to ensure their investment remains in their family in case we separate. Is this something I should agree to?

Prenuptial Agreements are a little mercenary and can cause suspicion from the outset which is not always good for one’s relationship! It may be better to simply view it from a basic property ownership point of view as if you were not getting married at all. In those circumstances there are two issues which arise.

If it was a genuine gift to their son then it may be important for Inheritance Tax purposes for this gift to continue in time – particularly if they gifted the property say 5 years ago – as once a period of 7 years has expired since the gift the value of the gift falls outside the Estate of the in-laws in the event of their death. This may, therefore, have substantial tax savings.

The only way that they can ensure that you agree from the outset that you have no intention of claiming any interest in this property is to enter into such a pre-nuptial agreement recording this intention. Your rights as a wife may still afford you certain rights of occupation etc that may benefit you – regardless of any such agreement and you need to seek specialist advice before doing anything at all.

Alternatively, your in-laws could take a charge over the property for the full value of the purchase price, which means they retain an interest in the whole amount that they advanced to enable the property to be bought. However, this will imply that the purchase monies were not a gift from your in-laws.

If they at some time in the future (after you have been married for some considerable time) wish to release that charge for no consideration then at that time it would amount to a gift and the 7 year rule would start to run from that date. Should you separate then the in-laws’ investment is preserved as they still have a charge on the property.

* Emyr Pierce is Managing Director of Emyr Pierce Solicitors in Rhiwbina, Cardiff, Western Mail Conveyancer of the Year, specialising in Domestic and Commercial Property. Contactwww.emyrpierce.co.uk or email law@emyrpierce.co.uk

Oct 1

How can I get on the property ladder?

I am a first time buyer, but I have very little deposit to put down and, of course, the Lenders have stopped all 100% mortgages. Does that mean I have no chance of getting on the property Ladder?

Unfortunately, it does – unless you can find wealthy parents who are willing to lend you the balance of your 10% deposit, as most lenders will not lend more than 90% in the current market.

Any such loan or gift from your parents or any other third party will need to be disclosed to the Lender during the application process, and if your parents, for example, wanted to protect their investment by way of a second charge on the property, the majority of Lenders will not agree to this.

An alternative is to look at the availability of any shared ownership properties by enquiring of Housing Associations or the Local Authority, as this is another way of getting a foot on the property ladder in cases where you only own that proportion of the property that you can afford, with the balance being retained in the ownership of the Housing Association.

Most new build developments have, as a matter of policy, a certain number of units of such Social Housing as a condition of the initial development as required by the Local Planning Authority to provide first time buyers in the community with such an opportunity.

Aug 28

Can I stop my home being repossessed by selling it to my son?

I am currently experiencing serious financial problems. My son has lived with me for the last 22 years. Could I sell the property to him to prevent the property being repossessed? If so does it have to be for the full market value?

Any transfer to your son either for no consideration (a gift) or at an undervalue (less than market value) could be deemed to be a deliberate attempt on your part to defraud your creditors under the provisions of the Insolvency Acts, and could be subsequently overturned by your Trustee in Bankruptcy should you be declared bankrupt within a period of five years from the date of the gift.

Provided there is sufficient equity in your property then you can of course sell to anyone you wish (including your son) for the full market value provided of course there is sufficient to repay the amount owing on the mortgage, inclusive of all arrears and costs. If the sale value is less than the amount owing on the mortgage (negative equity) you can only proceed with any such sale with the express consent of the Lender.

You would not be able to transfer the property to your son, or anyone else, without first repaying the mortgage as the Lender has a Restriction registered against your property title preventing any such dealings without them first being repaid their loan. In the event of a negative equity situation you would need to negotiate a settlement or they will repossess and sell at auction. It may of course be in the Lender’s interest to agree to a sale even though they will not receive the full repayment as they will save the costs of repossession and subsequent remarketing and will receive a larger sum from the net proceeds.

* Emyr Pierce is Managing Partner of Emyr Pierce Solicitors in Rhiwbina, Cardiff, Western Mail Conveyancer of the Year, specialising in Domestic and Commercial Property. Contact www.emyrpierce.co.uk or email law@emyrpierce.co.uk

Jun 27

House gift could be overturned by insolvency

My husband gifted me his share of our house three years ago but now he has major debt problems and I have heard that the transfer of the property into my sole name could be overturned. Is this true?

Sadly, you are right. Under the current Insolvency laws, if the person making the gift becomes bankrupt within five years of the date of the gift then the bankrupt’s Trustee in Bankruptcy can claim that the transaction was an attempt to defraud creditors and declare the transfer to be void.

This will have serious implications for you as the property will then be regarded as remaining in your husband’s sole name and will be available for the Trustee in Bankruptcy to force a sale to pay your husband’s creditors.

You will have certain rights of occupation as the spouse of the bankrupt but you may be forced to buy the property off your husband’s Trustee in Bankruptcy to preserve your right to live at the property.

In the case of a Deed of Gift it is always prudent to obtain a Declaration of Solvency from the Donor (the person making the gift) and also taking out a Deed of Gift Indemnity Policy to protect the Donee (the person receiving the gift) against the possibility of a claim being made against the property by a Trustee in Bankruptcy within five years of the gift.