Transfer of equity – the process of adding or removing someone from the title deeds. Sounds simple enough but this process is subject to a wide variety of variables that can completely alter how you might wish to proceed.
This month we’ve taken some time to bring together a few of the questions we see asked most relating to equity transfer in the hope that it may guide some of you in the right direction before engaging in a transfer.
Firstly, when would equity transfer happen?
Equity transfer relates to who has a share in the property. If one owner or owners decide to sell or transfer part or the whole of their share in a property to another owner or owners, then an equity transfer has taken place. This is most often the case during separations or divorce proceedings. It can also be the case if a party wishes to transfer a property before their death, maybe to a child. A newly married couple may wish to share their home and an equity transfer can take place. There are a whole host of other reasons for choosing to transfer equity in a property that we are more than happy to discuss.
What conversation if any should I have with my mortgage lender?
Before any equity transfer can take place it is important all parties involved are made aware of the situation. This includes your mortgage lender should there be an existing mortgage. Any change in ownership will require their consent. It is their absolute right to investigate this further and propose conditions of acceptance which must be met for the mortgage to remain as is. From here conditions vary from lender to lender. It is best, in this case, to allow a professional to handle the back and forth.
My name does not appear on the property title deeds, only the original parties over 40 years ago. Should I be concerned?
In short, no you shouldn’t. The original lease referred to by the title deeds will have only the original parties. You want to look at the ‘Proprietorship Register’. You will be listed as the property’s owner here.
I want to transfer the ownership of my property to my children. What are the risks?
There are some risks and these get more serious if you also wish to remain living at said property. In this situation, you must consider the impact this decision may have on you should you children divorce, pass away or become bankrupt. You could end up homeless.
For your children, there will be tax implications when selling the property and you may need consent of the lender before proceeding with any transfer if the property has an outstanding mortgage. This is a complicated situation and worth talking through first with a professional.
Can I transfer equity to a person under the age of 18?
Not related to the previous question, you may wish to transfer equity to someone under the age of 18, related or unrelated. In this situation, you will require a trust deed to be set up. Legally the person who is under 18 cannot hold the property, however, this document allows a trustee to hold the property until such time that the person turns 18 and the equity is transferred to them.
Stamp duty – I’m divorcing, do I need to pay it?
Simply put, no. Transfer is a part of the divorce and so there is no stamp duty payable here.
Do not be daunted by a pending transfer of equity. It can easily become puzzling but PDR Property Lawyers are here to help guide you through the process without hassle. You can find out more on our dedicated Equity Transfer page.
You can call us now on 01733 203873 for a no obligation quotation free of charge.