Insolvency - Gift of Deposit

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The current economic conditions are leading to a large number of first-time buyers purchasing properties with the assistance of their parents.  This can raise concerns about creditor avoidance on the part of those parents in the event of insolvency.  For this reason some lenders may require that a suitable insurance policy is provided before granting a mortgage.

First Title has reacted to this by introducing Insolvency Gift of Deposit cover, which protects the lender in the event that the transaction is set aside by the Trustee in Bankruptcy because the donor of the deposit subsequently becomes insolvent.  First Title is covering the bankruptcy of the donor of the deposit in so far as this affects the ownership of the property; for example, a Trustee in bankruptcy could claim ownership in the property to the value of that deposit.

This cover will benefit the mortgage lender in the first instance, however as an added extra the benefit will also pass to successors-in-title where the subsequent transaction is at arms length and for full market value.

This risk is also available for inclusion in the Home Owner's Protection Policy (HOPP), to find out more information on the HOPP product, please click here.