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Transfer of Equity
What Is a Transfer of Equity?
A Transfer of Equity involves changing the co-ownership status of a property. Common reasons to initiate a Transfer of Equity include:
- Adding your spouse to the property’s deed after marriage or remarriage
- Removing an ex-partner from the deed after divorce
- Adjusting the ownership shares among co-owners or buying out a co-owner’s share
- Reducing future inheritance tax liabilities or taking advantage of personal capital gains limits
What Is Equity?
Equity refers to the value of your property minus any remaining mortgage balance. For example, if your property is valued at £200,000 and your remaining mortgage is £80,000, your equity is £120,000. If you wish to transfer equity to a spouse, you would only transfer half of the equity, which would be £60,000 in this case, rather than half of the total property value.
The Basic Process
To begin a Transfer of Equity, you will first need an official copy of the property’s title. This is used to verify any existing mortgages or restrictions on the property. Your conveyancer will then:
Review the property’s title or deeds
Verify the identity of the parties involved
Prepare the transfer deed
The next steps depend on whether there is a mortgage on the property:
If there is no mortgage
The current and new owners sign the transfer deed in the presence of a witness. The conveyancer then registers the transfer with the Land Registry. A stamp duty certificate is required if the transaction value exceeds £40,000.
If there is a mortgage
The mortgage lender’s consent is required because adding someone to the title makes them equally liable for the mortgage. Removing someone from the title passes their liability to the remaining owners. The lender will want to ensure that the remaining owners can continue making mortgage payments. Your conveyancer will request written consent from the lender, who may alter the mortgage terms before agreeing. Once consent is received, the process continues as outlined above.
If the lender does not consent
The mortgage must be repaid before the transfer can proceed. This could be done with a cash payment or by remortgaging with another lender who agrees to the transfer.
Before the Lender consents
consents it is likely that the Lender would require the party who is transferring the equity to the person / person(s) benefiting- receives independent legal advice to ensure that they understand the legal implications of transferring over such equity to another party. This is where we can assist in providing the requires Independent Legal Advice online.
A Deed of Trust differs from a mortgage deed, which secures a loan against the property, using the property as collateral.
When Might You Need a Deed of Trust / Declaration of Trust?
In the UK, a Deed of Trust may be needed in various situations involving shared property ownership:
When multiple people buy a property together, especially if their contributions are unequal, the Deed of Trust defines each person’s ownership share.
A Deed of Trust can be used by friends or family members purchasing a property together to clearly establish ownership percentages and responsibilities.
If one person contributes more than others, the Deed of Trust ensures their larger investment is acknowledged in the ownership arrangement.
Unmarried couples living together may use a Deed of Trust to outline their respective shares, particularly if they contribute unequally.
When multiple people invest in a property, a Deed of Trust defines ownership stakes and how rental income or sale proceeds will be divided.
When multiple people invest in a property, a Deed of Trust defines ownership stakes and how rental income or sale proceeds will be divided.
If one co-owner wants to sell their share, the Deed of Trust outlines the process, protecting all parties involved.
A Deed of Trust protects each party by clearly defining ownership rights and obligations.
In all these cases, the Deed of Trust provides legal clarity and helps prevent disputes. It is essential to seek legal advice to ensure the document reflects the agreements of all parties.
How It Works
01.
Submit Your Documentation
Once we receive your mortgage details and other relevant documents, we can schedule a video appointment.
02.
Video Call via Zoom
In a 30 minute video call approx , we’ll review lender documentation, such as the Transfer of Equity docunents, and discuss any associated risks.
03.
Postage (Wet Signatures)
After the required documents are signed and witnessed, you’ll need to send them to us for stamping and certification, as wet signatures are still mandatory.
04.
Digital Copies
We’ll scan the documents, email you a digital copy, and send the originals to your solicitor.
