ID & Money Checks – what are they and why are they necessary?

From the beginning of your property transaction, whether you’re buying or selling, estate agents, property lawyers, mortgage brokers, and mortgage lenders will all want information about you before they proceed with you as a client. But why?

The reason for needing to verify a person’s identity is to ensure you are who you say you are. If you’re selling a property, it must be your name on the title deeds to ensure the home is legally yours to sell. Furthermore, if you’re buying, does your money come from a legitimate source?

Although this may feel a little intrusive, your lawyers will not normally know you personally and, as industry professionals, they have a legal obligation to complete these checks. This is more important as we move to a world of doing things ‘digitally’ without perhaps ever meeting any of the parties involved during your property transaction.

While most peoples’ intentions aren’t to abuse the house buying process, the truth of the matter is there is a small minority that use it to launder a large amount of money in a single transaction.

Same information shared again and again

Yes, unfortunately, this is an annoying reality of the house buying process. There isn’t the option for one party to share your information with another as each is individually regulated and legally responsible if something goes wrong.

Each party will be responsible for carrying out their checks and therefore, you should be prepared to share the same information each time.

Source of funds

Whether you’re buying a property with a mortgage or you’re a cash buyer you’ll still need to prove where your funds are coming from.

Your source of funds could come from the following:

  • A financial gift from family or friends
  • Savings
  • Inheritance
  • The sale of another property

Whatever the source is you will need to prove where it came from.

For example, in today’s world, it’s quite common for ‘the bank of mum and dad’ to gift their children some, if not all, the money towards the deposit. In this instance, they will need to confirm how much their contribution is and how these funds were obtained.

Being prepared

Knowing that you’ll have to prove your identity and source of funds is one thing, but being prepared with the correct information is essential to ensure you do not delay your property transaction from the very beginning.

What you’ll need to provide:

  • Proof of identity document
    • Either passport or driving licence – digital checks of these documents are becoming more commonplace – many of our customers can now opt to have these documents checked through our online system
  • Proof of your current address
    • E.g. a driving licence, bank statement, or utility bill (not more than three months old)
  • Proof of where your funding has come from – common information required includes:
    • Your last three months’ bank statements, usually current account and savings accounts
    • If the funds are coming from a previous property sale or remortgage, a completion statement or letter of confirmation from the lawyers who acted at that time
    • If some, or all, of your funding, is coming from an inheritance, you will need evidence from the executors of the estate or from the acting lawyers

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