5 Must Know Facts about Transfers of Equity
As experts in property services, our legal team at RDC Solicitors are well rehearsed in Transfers of Equity, which in legal terms, describes a change in the legal ownership of a property when at least one of the original owners remains. Here are 5 must know facts about Transfers of Equity.
1. Transfers of Equity & Property Ownership
Transfer of equity is a legal process that involves the transfer of a property's ownership rights from one person to another. Governed by UK law, this process is typically needed when there is a change in the ownership of a property. When a transfer of equity takes place, the legal title of the property is transferred from one party to another. This can involve the removal or addition of one or more parties to the legal title of a property.
2. Reasons for Transfer of Equity
There are several different reasons why a transfer of equity may happen, for example:
- When a couple get married or start living together and want to add a new partner’s name to the deeds of the home.
- In the event of a separation or divorce and the ex-partners wish to transfer property from joint names to sole ownership.
- When someone wishes to gift of a percentage share of a property, perhaps as part of inheritance planning.
- As part of tax planning.
- When someone has died.
3. Mortgages Matter
Transfers of equity can be more complex when there is a mortgage on the property. In this case, it’s a must to obtain the consent of the mortgage lender because in adding someone to the title, they will become equally liable for the mortgage. Equally, in removing someone from the title, they pass their liability on to the remaining owners of the property.
It is also worth noting that the term ‘Transfer of Equity’ refers to the money value in a property, which is the value minus any money borrowed against it (e.g., a mortgage). For example, a transfer of equity of 50% refers to 50% of the equity (value-mortgage), and not 50% of the whole property value.
In most cases, an application to the current mortgage provider will need to be made to approve the transfer of equity before a transfer deed can be drafted or an application made to the Land Registry to register the new ownership of the property.
4. Potential Fees Involved in Transfers of Equity
There are several potential fees involved in a transfer of equity which include, but are not limited to, the following:
- Mortgage administration fees.
- Mortgage search fees.
- Conveyancing fees.
- Land Registry fee.
- Stamp Duty Land Tax.
- Potential admin fees from the freeholder in the event that you are transferring equity in a leasehold property.
5. The Importance of Getting Legal Advice
The process can be complicated and typically involves various legal and financial requirements, so it is essential to seek professional advice before undertaking a transfer of equity.
If your personal circumstances have recently changed, for example you have married or re-married, divorced or separated, and you want to change your title deeds by adding or removing a co-owner’s name, we can help. RDC Solicitors will liaise with your mortgage company on your behalf in relation to any proposed change in ownership of your property and help you with shared ownership schemes, equity release schemes and residential landlord and tenant requirements.
For further information, advice, and legal support regarding a transfer of equity, or any other aspects of conveyancing, call RDC Solicitors today on Bingley 01274 723858, Ilkley 01943 601173 or Bradford 01274 735511.
