Changing who has legal ownership of your home can be done for any number of reasons.
Whether it is moving in with a partner and wanting to co-own the property, giving your children security by transferring ownership to them, or splitting up with a partner and removing ownership, a transfer of equity will be required.
What is a transfer of equity?
Before going into this further, it is important to look at what is meant by the transfer of equity.
Equity is, by definition, the financial value of a property that you own. Therefore, the transfer of equity is the addition or removal of a person from the deed to a property.
Why is the transfer of equity important?
A transfer of equity occurs when ownership changes and at least one previous owner remains.
If one of the owners is being taken off the deed of the property, then the remaining party will need to buy the other out.
This may mean that they need to remortgage the property. The party who leaves will then be given their share of any equity by the mortgage lender.
Sometimes, the transfer of equity can be given as a gift. This may be when a parent gives their child a portion of the property, meaning no money changes hands, but they are given a title on the deed.
Things to know before transferring equity.
The transfer of equity is a complex part of property law, so having a solicitor to complete the transaction is required.
The person being added must have a solicitor to represent them, but the person who already owns the property doesn’t have to. However, in most cases, both parties have the representation of a solicitor due to the advice that they can offer.
You should also be aware of the costs involved with transferring equity. Not only will there be solicitors’ fees, but you will have conveyancing fees, as well as Stamp Duty Land Tax (SDLT) to pay due to this being a house resale.
It should be noted that SDLT does not need to be paid if the transfer of equity is a gift, it is part of a divorce settlement, or if the equal property split is exempt from it.
The transfer of equity process.
The first part of transferring equity is ensuring that you have reviewed the title deeds to the property. You then need to hand them over to your solicitor for checking.
Then, you will need to prepare the transfer documents which can also be given to your solicitor.
Thirdly, you need to notify all third parties involved in the transfer of what will be happening, this usually being the mortgage lender.
Next, you will need to sign the transfer documents which have been prepared by your solicitor.
Finally, your solicitor will notify the Land Registry that the transfer of equity has been completed. Here, any outstanding fees – such as SDLT – will need to be paid.
If you are intending to transfer equity and need legal representation or advice, please contact us today.