A Transfer of equity is the transfer of all or part of the legal ownership of a property to another person. In the transaction, you can either be added to the legal title of the property, removed from the legal title of the property, or you can agree to add another person to the legal title of the property.
There are many important factors to consider when transferring a property.
The transfer can be by agreement between the owners or intended owners, or pursuant to a court order or separation agreement following divorce or separation.
Transfers are usually triggered by life events such as new relationships and/or marriage as well as the relationship breakdowns and/or divorce.
If you are intending to transfer a share of your property as part of your lifetime planning then we would invite you to contact us for legal advice to understand the advantages and disadvantages of doing so. We can also review your Will and advise you on Lasting Powers of Attorney for Property & Finances and in relation to Health & Welfare. We offer a host of services that are bespoke to your needs.
You will need to instruct a lawyer to deal with the transfer of the property to make sure the property has been legally transferred in the correct way.
What if there is a mortgage on the property?
If there is a mortgage on the property, the mortgage lender will need to agree to anyone being added to the title and they may need to carry out their own checks in relation to the person being added to the title. A new mortgage will be issued.
In the event that someone is being removed from the title, the mortgage lender will need to ensure that the person remaining on the title is able to afford the current mortgage. The mortgage lender can also provide a new mortgage offer to the person remaining on the title. A new mortgage will be issued.
Some lenders may not issue a new mortgage but will instead provide their written instructions consenting to the transfer. This will also set out their requirements for particular clauses required in the transfer deed and whether they will require a new secured charge to be required against the title at HM Land Registry.
Before completing any work, your lawyer will require sight of either a mortgage capacity report or a mortgage agreement in principle. This is to enable your solicitor to assess whether the transfer is able to proceed based on your financial position.
What is the process of a transfer when adding someone to the title by agreement?
Where the transfer involves someone being added to the title or ownership of the property, you must decide with the other person whether you will own the property as Joint Tenants or Tenants in Common. You should seek legal advice when making this decision.
If you decide own the property as Joint Tenants, you and the other owner will each have equal rights to the whole of the property.
If you decide to own the property as Tenants in Common, each owner can chose to own a different share of the property, for example one person can own 60% of the property and the other can own 40%. You should seek legal advice when making this decision.
Your lawyer may advise that the property should be owned as Tenants in Common where one person has been placed on a title to reflect that the equity that the person who owned the property initially has accrued.
A transfer deed will be drawn up reflecting the change in ownership and the type of ownership. This transfer, deed once approved and signed by the intended owners, will be sent to HM Land Registry to be registered and the current ownership status recorded correctly.
If the property is in Wales then Land Transaction Tax liability will need to be assessed. If the property is located in England then Stamp Duty Land Transaction Tax liability will need to assessed. The requirement to lodge the relevant Tax Return and pay tax will depend upon the upon the value of the transfer, and whether you own any other properties.
It is also important that you seek legal advice regarding your Will as changing the way you own a property may also require changes to your Will, as your intended wishes may not be upheld upon your death.
Likewise if you do not have a Will, it is important you consider this when securing or changing the way you own your property. This is to make sure that your wishes are achieved when dealing with your property upon your death.
Please contact our Alexis Thomas on 01633 242526 who can offer guidance on this.
What is the process of a transfer when removing someone to the title by agreement?
Where the transfer of equity involves an owner being removed from the title, each owner needs to consider what the consideration (value) should be given for that share in the property.
Whilst it may appear that a transfer of equity is for instance simply removing one owner from the title of the property, the person being removed will no longer be entitled to the equity in the property. For example, if someone is being removed from the title of a property worth £200,000 that they held as joint tenants, if there is no consideration, that person is effectively walking away from £100,000.
Also the person being removed from the title of the property will no longer be liable for the mortgage and so they will also benefit from being released from this debt but the remaining owners will be completely liable for the debt.
What is the process where the transfer of equity is following the making of a court order in financial proceedings following a divorce or dissolution?
There are two ways in which a Financial Remedy Order can be granted by the family court which may include a transfer of equity or transfer of property:
The parties have been involved in contested financial remedy proceedings in relation to their divorce or dissolution dealing with their matrimonial assets and the court has granted a Financial Remedy Order, or
The parties have reached a financial settlement and a Financial Remedy Order has been entered into by agreement, often referred to as a Consent order.
The family court is not able to approve a settlement or grant a Financial Remedy Order until Conditional Order or Decree Nisi has been granted in the divorce or dissolution proceedings.
Once the court has granted the Financial Remedy Order, your lawyer can proceed to draft the transfer deed reflecting the change in legal ownership of the property. This transfer deed , once approved, will be sent to HM Land Registry to be registered. The change of ownership will be recorded at HM Land Registry.
We would advise that you seek family law advice before dividing your assets and property following separation and before agreeing to a transfer of property. Please contact our family team on enquiries@hpjv.co.uk to book a free initial consultation.
Starting the conveyancing process
Once the agreement or order concerning the property is reached, our conveyancing team can assist with transfer of ownership of the property.
If you are looking to instruct a lawyer to deal with dividing your property, please click this link CONVEYANCING QUOTE to receive a quote or contact our Conveyancing Department on 01633 242526 or email enquiries@hpjv.co.uk.
