Emyr Pierce

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Will sale to son stop home repossession?

I am currently suffering serious financial problems. I want to transfer or sell my house to my son who has lived in it for the last 22 years. Could this prevent the property being repossessed?

By transferring the property to your son I presume you mean gifting it – as opposed to selling the property to your son in an arms length transaction at the full market value.

Any transfer to your son for no consideration (a gift) could be deemed to be a deliberate attempt on your part to defraud your creditors under the terms of the Insolvency Acts, and could be overturned by your Trustee in Bankruptcy should you subsequently be declared bankrupt.

If you are in arrears on your mortgage you will not be able to transfer, or gift the property to anyone without the consent of your Lender and this consent will only be forthcoming upon repayment of the amount owed under the mortgage.

In other words, whether you sell to your son, or any third party, will amount to the same thing whereby the Lender will have first call on the proceeds of sale.

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.

* 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