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Earnest Money Gift Letter for the United Kingdom

Earnest Money Gift Letter Template for England and Wales

An Earnest Money Gift Letter is a formal document used in England and Wales to verify that funds provided towards a property purchase are a genuine gift with no expectation of repayment. The letter serves as evidence for mortgage lenders and property professionals that the deposit funds are legitimately gifted and comply with anti-money laundering regulations. It details the gift amount, relationship between parties, and confirms the non-repayable nature of the funds.

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What is a Earnest Money Gift Letter?

An Earnest Money Gift Letter is commonly required when a family member or close relation provides funds towards a property purchase deposit in England and Wales. The document is essential for mortgage applications and property transactions where gifted deposits are involved. It provides crucial verification for lenders and compliance with anti-money laundering regulations. The letter typically includes details of the gift amount, relationship between parties, source of funds, and explicit confirmation that the money is a gift rather than a loan. This documentation helps protect all parties involved and ensures transparency in property transactions.

What sections should be included in a Earnest Money Gift Letter?

1. Date and Parties: Full names and addresses of gift giver and recipient

2. Property Details: Address and description of property being purchased

3. Gift Amount: Specific amount being gifted as earnest money

4. Relationship Declaration: Statement of relationship between gift giver and recipient

5. Source of Funds: Declaration of the legitimate source of gifted funds

6. Non-repayment Statement: Clear statement that the gift is not a loan and requires no repayment

What sections are optional to include in a Earnest Money Gift Letter?

1. Tax Implications: Statement regarding tax considerations, used when gift amount exceeds certain thresholds

2. Additional Conditions: Any specific conditions attached to the gift, used when relevant

3. Future Interest Declaration: Statement regarding any future interest in the property, used when relevant

What schedules should be included in a Earnest Money Gift Letter?

1. Proof of Funds: Bank statements or other documentation showing source of funds

2. ID Documentation: Copies of identification documents for anti-money laundering compliance

3. Property Information: Details of the property transaction (if available)

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Ƶ

Document Type

Mortgage Document

Cost

Free to use
Relevant legal definitions















Clauses















Industries

Law of Property Act 1925: Primary legislation governing property law in England and Wales, setting out fundamental principles of property ownership and transfer

Land Registration Act 2002: Modern framework for land registration in England and Wales, governing how property rights are recorded and protected

Law of Property (Miscellaneous Provisions) Act 1989: Contains essential requirements for property contracts, particularly Section 2 regarding formalities for contracts for sale of land

Financial Services and Markets Act 2000: Regulates financial services industry and provides framework for financial transactions

Money Laundering Regulations 2017: Sets out obligations for verification of source of funds and prevention of money laundering in property transactions

Proceeds of Crime Act 2002: Legislation dealing with money laundering and proceeds of crime, relevant for verifying legitimate source of gifted funds

Inheritance Tax Act 1984: Governs tax implications of gifts and transfers, including potential inheritance tax consequences of monetary gifts

Consumer Rights Act 2015: Protects consumer interests in transactions, may be relevant if parties are acting as consumers

Consumer Protection from Unfair Trading Regulations 2008: Protects against unfair practices in trading, including property transactions

Land Registration Rules 2003: Detailed rules governing land registration procedures and requirements

Common Law Contract Principles: Fundamental principles of contract formation including offer, acceptance, consideration, and intention to create legal relations

Stamp Duty Land Tax Regulations: Tax regulations affecting property transactions and consideration of how gifts may impact SDLT calculations

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