Estate agent asking for proof of funds before release of keys

[ArtfulHermit]

Hi - I’m not sure where is best to put this but I guess it’s a legal matter. I’m in Scotland in case it makes a difference.

Just (literally today) bought a house in cash. Estate agent is saying that they still need to be sent proof of funds before releasing the keys - they say HMRC expects them to check proof of funds in addition to our solicitor. Is this true, I can’t see anything online to say it is a legal requirement for the EA?

Thanks

Can you show them your bank statement detailing the transfer/transaction?

In England, yes estate agents also have to ask for proof of funds under money laundering legislation. I would assume the same applies in Scotland but your solicitor will tell you.

Yeah we had to prove where our deposit came from. It was mostly wedding present money so we provided our marriage certificate, and bank statements.

There'll be a lot of paperwork to go through, not just a case of handing over the keys surely?

All I can see online re AML for estate agents is “where appropriate may have to ask for proof of funds”, so is it just a case by case basis?

Even in Scotland I didn't think house purchases were that fast!

But, yes, EAs have rules they have to comply with and I'm sure obtaining proof of funds is one of them

No, it isn't case by case. It depends on what you are doing. If you are buying a house, the estate agent must check your ID and ask for proof of funds.

They have to check on a risk-based approach. Fast + cash-based purchases of property are going to flag as higher risk and, if they consider them so, they will need to ask for additional documents to verify where the money is coming from.

It's a basic requirement. Being evasive about it like you are doing is also a red flag.

What's your issue with it?
Where did the money come from?

If you’ve already gone through the proof of funds process with your solicitor just ask them to confirm with the Agent they are satisfied that the funds are legit.

I think they mean source of funds rather than proof of funds. Proof of funds is what an EA asks for from a cash buyer when the offer is accepted to prove they do have the cash available. Source of funds is evidence of where the cash came from- this is the money laundering check. Worth checking their exact requirements. Some are more stringent in establishing the audit trail than others.

https://www.lawscot.org.uk/members/journal/issues/vol-63-issue-03/when-estate-agents-need-client-id/

This is advice for solicitors who are under no obligation to supply the information on behalf of their clients but that the purchase is under obligation to provide ot to the estate agent.

I'm in England but when we bought our house we had to provide proof of funds. It's standard procedure from what I understand, to do with money laundering legislation.

This is absolutely true. I'm also in Scotland and have bought/sold a few homes now and you will always be asked for proof of funds. Even if you state the cash has come from a gift or inheritance, you will need to prove this.

See so have I and never been asked by the EA, hence the confusion ☺️

Yes it’s general practise I would say (in England)
I bought my house cash with funds from a previous property sale , savings in my bank accounts/ Ida’s and inheritance and had to prove all proof of funds and how it was acquired to my solicitor and they shared that all money laundering checks has been completed to the estate agent.
I don’t know what proof was actually shown to the estate agent as they acted on my behalf.
Hope it all goes well

I’ve never been asked for source of funds by an estate agent but just ask your solictor to send it to them. They really should have done this before now, rather than on the day it settled.

I hope you got the keys this afternoon and are now in your house.

it is different in Scotland so what happens in England does not apply,what normally happens is once the solicitor has done due diligence with money laundering Generally any funds coming form a house sale ( well it's obvious where that is coming from) but other funds deposited with the solicitor to maybe make up balance will need a paper trail as to how you got the money ie has it been slowly building up from salary is a saving account of X bank? did £3000k come from mr Smith and why? etc etc. Once they have done this and sent funds to the sellers solicitors they normally contact the estate agent and say the money has gone through you can release the keys, the estate agents in Scotland do ID checks and proof you are legally able to sell before marketing but they donot deal with legal side Unless you have one of the agents that are both solictors and estate agents so they do both the marketing and the legal side

I’m surprised they allowed a viewing without proof of funds.

we sold and bought a house last autumn in Scotland and certainly proof of funds was done via our solicitor for our onward purchase. The estate agent was informed by the solicitor and then we got keys to our new house and they released our keys to our purchaser just get back in touch with your solicitor and they should inform the solicitor and estate agent of the property uyou are buying that everything is in order and your purchasers solictior should confirm to the estate agent of the property you are buying that the money has been received once they money has been paid they must release keys

When you say 'release of keys' do you men once the purchase funds have been transferred to the vendor? So that you can move in?

Surely the solicitors conform that with the EA so that you can collect the keys? Obviously they won't give you the keys before the sale is complete?