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 which has a value.
The owner cannot gift property if they have debts or liabilities that they can't afford to pay. This is to stop people from giving away their assets in order to avoid paying what they owe. If you give away your assets and then become bankrupt, the transaction could be reversed by the trustees in bankruptcy, returning it to your ownership, in order to sell it to balance your debt.
To make a declaration of solvency, you will need to provide evidence to show that you have assets with a total value higher than your total debt. You make the declaration to the solicitor, who swears the declaration. It is a criminal offence to make a false declaration.
The declaration is an assurance to the Lender and/or Buyer that the transaction will not be reversed.
Gifted transactions require a declaration to be made in front of a solicitor. We charge a fixed fee of £150 INC VAT per person and have availability at short notice. Terms apply.
You can make the declaration yourself, but it must be sworn by a solicitor.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.
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.
Frequently Asked QuestionsUnder 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".
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.
You need to sign a declaration of solvency in the presence of a solicitor who counter signs your signature. The solicitor doesn't check your financial position, they only witness your signature.
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Parachute Law Limited trading as Parachute Law is a company registered in England registration number 10437783. Our registered office is 21 Silwood Road, Ascot, Berkshire SL5 0PY. Parachute Law is authorised and regulated by the Solicitors Regulation Authority (SRA) number 646947. The safety of your data is our concern and we are registered for data protection at the Information Commissioners Office registration number ZA461672. VAT registration number 306751707.
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