Transfer of Equity
There are a number of reasons why you may want to change the legal ownership of a property. It may be due to marriage, divorce, tax planning or a change in the share status of the property – this is known as a Transfer of Equity.
If you wish to change the Title of the ownership of the property, such as you wish to buy-out another person’s interest, or they want to sell their interest, a Transfer of Equity has to take place. There are legal requirements and implications of a transfer of equity. Where you have a mortgage on the property, normally the party transferring the interest in the property will require releasing from the mortgage conditions and debt. This would bring about the discharge of the existing mortgage or obtaining the consent from the current lender to transfer the property and potentially a remortgage of your property to borrow sufficient funds for the discharge of the existing mortgage to take place.
If you are changing a property from a sole name into joint or multiple names, then the process has to be conducted by a Conveyancer at Andrew & Andrew Solicitors Ltd. That Conveyancer will have to review the Title Deeds or a copy of the property deeds from the Land Registry to prepare a Transfer Deed, the preparation of the Transfer Deed will then have to be signed by all the parties and witnessed, notification will have to be given to additional parties such as the mortgage lenders or secured lenders and any other third party who may have to give their written consent to the Deed transfer. There is also a need to register the Transfer Deed at the Land Registry quite apart from checking all the identities of the clients as it is now a legal requirement to do so.
Circumstances which require a Transfer of Equity would be:-
When two people get married, if they own two houses, they often decide on one matrimonial home and therefore it makes sense to transfer the matrimonial home into joint names. This is referred to as a Transfer of Equity. Usually the person being added to the person’s deeds will not pay the full price for their share in the property, as such the Law sees this transfer of deeds or transfer of equity as a gift. This is also sometimes referred to as a transaction at an undervalue.
Divorce & Separation
After a divorce, the divorcees may have to transfer their share in a jointly owned property back so that only one of them legally owns the property. This is also called a Transfer of Equity and might also be seen by Law as a gift. There are, however, other circumstances, such as if a Court Order has been granted, here the law will not see this Transfer of Equity as a gift. Also, if full price has been paid for the property share, the Law will not see this Transfer of Equity as a gift either.
Accountants will often advise property owners to make a Transfer of Equity to their children or other family members. This financial sharing of the home can be more tax efficient and it is also referred to as a transfer of equity and might also been seen in Law as a gift.
A Transfer of Equity may involve stamp duty land tax and in some cases, Capital Gains Tax. While we can advise you on what the stamp duty will be, you will need to talk to an Accountant about Capital Gains Tax.
Even though a Transfer of Equity may be seen on the surface as a simple process, people can forget that it is a legal one. Legally a Transfer of Equity can be complex and you should always get professional legal advice from a qualified solicitor. Therefore, please get in touch with the Conveyancing team at Andrew & Andrew Solicitors who have 60 years professional experience. Contact us by email at email@example.com, or by telephone on local rate 023 9267 5555 or freephone 0800 083 6499.