Deed of Gift Bankruptcy Indemnity Policy

lissa_23

I am buying my ex-husband out of the family home and I have to give him 30% of the value of the house. This was agreed in our divorce and rubber stamped by the courts in our consent order. The total split of marital assets in the divorce is 50%/50% so my ex-husband is receiving other assets to make up his 50%.

I am taking out a mortgage with Nationwide for about half of the amount I need to pay my ex.

However, I have just been told that Nationwide will require me to take out a Deed of gift indemnity policy to cover them should my ex become bankrupt in the next 5 years as the amount I am paying him for his share in the property is at an undervalue. They are saying that the Official Receiver could ask for some money back as he has 'gifted' his share of the equity to me.

I think this policy is unnecessary as the amount I am paying my ex has been agreed by the courts and is not a 'gift' as he is receiving other assets to make up the difference.

Does anyone know if this is just the conveyancers selling me something that I don't need as they are charging an arrangement fee of £54 for a policy that costs £100.

Please let me know your views.

MotheroftheKid

I went through a similar process a few years ago (mutual agreement - no rubber stamping from the courts). Although the bank made no reference to this, my solicitor made me aware of this 5 year rule.

If it was me, I would refuse to pay this, hopefully your ex will still be around in 5 years, but if not, then due to the fact that you have the court paperwork etc, it's clearly not a gift.

Trollfever

Bankruptcy Law v Matrimonial Law.

It may not be a gift, but it could be a voidable preference in bankruptcy as it is a transaction at undervalue.

GMS

You pay a solicitor to give you professional advice and to look after your interests. If it later transpired that you were mis advised then you would have recourse to action.

If you take advice from somebody on a forum who is not a solicitor and not aware of your circumstances which later causes you issues then you are up the creek without a paddle.

As has been said there are different rules relating to bankruptcy. If somebody were aware of a bankruptcy happening in the future they could dispose of assets orior to the event. This is the reason why the indemnity is needed, not suggesting this is the case with you but the Official Receiver could look at it that way should your ex go bankrupt in the future

lissa_23

Thanks for all your comments.

The lawyers that want me to take out the policy are the conveyancers for the mortgage company who are doing the mortgage legal work for free (free to me anyway, I'm sure the mortgage company are paying them though!). They are charging me for the doing the transfer of equity work though. Therefore, I'm not sure they are acting in my best interests. I have also lost faith in the advice given by my lawyer during the divorce as everything she said was overturned by my ex's solicitor and I came out of it very badly. So I don't want to ask her for any more bad advice, and be charged for the privilege!

I have asked for advice from the mortgage brokers I used but no reply as yet.

DVardysShadow

Trollfever wrote: »

Bankruptcy Law v Matrimonial Law.

It may not be a gift, but it could be a voidable preference in bankruptcy as it is a transaction at undervalue.

If you are talking about the house at 30%, this is an undervalue transaction. But the real transaction includes other assets. So I would say that the transfer of equity has to be documented as part of the larger settlement.