Are you financially prepared to complete the acquisition?
Proof of Capital
When you want to acquire real estate, have found the estate you want to acquire, and start to communicate with the owner, then it is normal that the owner wants to assure himself that you have sufficient financial resources to complete the acquisition before he allows you access to the property, gives access to sensitive documentation, and begins serious negotiations.
One way to demonstrate that you have access to sufficient financial resources is to present a 'Proof of Funds letter' from your current bank or in conjunction with another bank that is willing to consider financing the acquisition.
Being able to produce concrete evidence of funding is essential, as it can be the main factor that determines whether you will be able to purchase the estate you have your heart set on. It would be a good idea to speak to your financial agent early about your payment plans. After that, you can ask your financial agent to guide you in acquiring this document, which will give you a better chance when the seller considers accepting your offer.
One can provide different types of letters, of which we will mention a few hereunder.
Some of these letters may serve different purposes and be provided at different stages in the process.
The different types of example letters shown on this website are for general information only.
You are adviced to consult your legal advisor, accountant, and bank for concrete advice.
For technical reasons, you can only review the example letters on a computer screen.
'Account statement’ refers to a letter from your bank that details the amount of money that is available on one or more of your accounts, in that bank, at a particular time.
Such a document is rarely accepted by the seller as Proof of Capital, because it only represents a snapshot of the funds present in an account at the time the document was printed.
'Letter of Recommendation from Bank’ refers to a letter from your bank stating that you are a long-standing valued client of the bank and that you, to their best knowledge, will be able to structure the acquisition of a certain object up to an amount of [xx Euro], as well as that you will have sufficient working capital to operate this object.
'Proof of Funds Letter’ refers to a letter from your bank that details the amount of money that currently can be available for a certain investment.
'Bank Comfort Letter’ refers to a letter from your bank, created to serve as your written documentation to a seller as proof that you, according to certain conditions (e.g., your satisfaction with due diligence), are willing and capable of making certain payments. This is usually asked for when a seller doesn’t want to give a financial guarantee against a specific outcome.
'Blocked Funds Letter’ refers to a letter from your bank as proof that the funds in a specific account are reserved or “blocked” for a specific transaction. Once this letter is issued, a specific amount of funds in an account must not be used or depleted and should stay in the account until they need to be used for the agreed-upon transaction.