Insolvency Act Policy

lionsixty

I'm hoping someone can help with this issue as I'm not finding a whole lot on Google.

I'm in the fortunate position of having a property transferred to me as a gift and the solicitor who is handling my side of the arrangement has proposed that I take out an Insolvency Act Policy in case the gifters go bankrupt within 5 years (this is highly unlikely).

They also mentioned that if I was to sell within this 5 year period then a Mortgage company or purchaser would likely require this policy (no plans to sell at present).

So my question is do I need to take this Policy out at this moment in time or could I wait until the possibility of sale becomes more probable (i.e. if 4 years down the line I intended to sell)?

tim123456789

I would guess not, as otherwise the insurance company will suspect that you are only taking out the policy because you anticipate the bankruptcy, and decline to cover.

lionsixty

Thanks for your comments, that was my original thought but searching around I saw some people saying that purchasers had asked them to take out a policy at the point of sale because of previous equity arrangements within the previous 5 years (i.e. one partner had signed over the property in full to the other, or one had gifted half the equity to another), exposing the property (or part of) to be set aside under the Insolvency Act.

I'm not concerned with the risk of insolvency I'm just reluctant to take the policy as we may well stay for over 5 years and not require the cover.