Are you thinking of handing over property? Transferrring ownership of a property requires a formal transfer of equity. Toni Spencer explains.
IF you are planning to give or sell all or part of a property you own to one of your children, a partner or anyone else, you will need a formal document - a transfer of equity. This is used to transfer a share of ownership of a property. For example, this may happen when joint owners transfer the property into the sole name of one of the owners, or alternatively from sole ownership to joint names.
You may want to carry out a transfer of equity to transfer a property to joint names following marriage or civil partnership. Alternatively the property may be left in a will and may need transferring to the beneficiaries. You may also transfer the share in a property to a sole owner following a divorce or separation when one party buys out the other.
Your solicitor will begin by ensuring that the owner of the property has good title - he or she acrually owns the property and has a right to pass it on.
The solicitor will then draft a transfer deed which will meet the requirements of the transfer. If there is a mortgage on the property, the owner must obtain consent to the transfer from their lender.
This will usually involve the owner completing a transfer of equity application.
If the property is being transferred from sole names to joint names, the new owner will be agreeing to be bound by the terms of the mortgage.
Alternatively the transfer may be carried out simultaneously with a re-mortgage. This would effectively release the previous owner from their obligations under the old mortgage and involve taking out a new mortgage under the name of the new owner.
The only other option would be to discharge the mortgage - pay off the money that is owed - before the transfer.
Once the mortgage requirements and transfer deed have been attended to, the transfer deed will then be signed by all the parties involved in the transaction and submitted to Land Registry for registration.
Some transfer of equity transactions will attract stamp duty, it depends entirely on the circumstances of the transfer.
Usually if you are taking a share of a property that is over the current threshold for stamp duty, or there is an outstanding mortgage on the property, you may have to pay stamp duty on your share.
Your solicitor will be able to advise you on whether stamp duty is payable and how much will be paid. Even though a transfer of equity seems like a relatively simple transaction, it can easily become quite complex. To prevent any difficulties seek legal advice from a solicitor.
Toni Spencer is a solicitor in the conveyancing department of Browell Smith & Co, tel: 0800 107 3000, email Toni.Spencer@browells.
co.uk, visit www.browells.co.uk