TRANSFER OF EQUITY SOLICITORS - UK PROPERTY CONVEYANCING

The legal term for that proportion of the value of land or property that nominally belongs to the owner(s) as opposed to the proportion of the land or property represented by the loan or mortgage is referred to as ‘equity’. This means that if a house is worth £200,000 and the outstanding mortgage amounts to £120,000 then the ‘equity’ which is effectively held by the owners is the amount of £80,000. The equity may be owned by more than one person if the property is jointly owned and each individuals share in the equity may vary dependent on prior agreement contained in a signed and witnessed deed. A transfer of equity usually takes place when one or more of the joint owners is bought out by one or more of the other joint owners. Some transfers of equity, particularly between close family members, are carried out with no financial transaction being involved. In most cases a transfer of equity solicitor is instructed to carry out the conveyancing work, which whilst not often being complicated does benefit from legal expertise, the speed of a lawyers transaction and from the insurance carried by lawyers in the event of any unexpected problem.

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Scenarios for Transfer of Equity

There are many different scenario’s where a transfer of equity may be necessary or desirable including :

In the case of a husband and wife following an uncomplicated divorce or separation the total equity is calculated and one of the parties usually pays the other one half of the equity to buy out that spouses share. In the case of partners who jointly own a house or property similar considerations apply.

Transfer of equity may be an efficient method of inheritance tax planning. A parent may wish to transfer property to children sooner rather than later to reduce the burden of tax on death.

Joint owners may wish to change the relative proportions of ownership by execution of a signed and witnessed trust deed which may effectively be a transfer of equity. The trust deed must be registered at the land registry to be effective.

In addition to divorce, a transfer of equity may be necessary upon marriage if one spouse wishes to add the other spouses name to the deeds of a house individually owned prior to the marriage.

If the owner’s credit rating is poor, adding another owner who has a good credit rating will increase the chances of a re-mortgage to raise money especially for home improvements.

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Transfer of Equity Solicitors

Our specialist conveyancing solicitors deal with transfer of equity transactions and all other matters relating to land law in England & Wales. We offer expertise at a budget price with no hidden extras. We give a fixed price quotation over the phone and there is never any need for you to personally attend at our offices. Call us now or email our offices with full details for a low price quotation.

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Morgage and Remorgage Lenders

A transfer of equity solicitor should be able to deal with an uncomplicated transaction in a short period of time however it does involve the parties coming to prior agreement and almost always requires the consent of the lender especially where there is to be a future mortgage on the property. In many cases the owner who is retaining the property will need to take out a mortgage for the whole amount of the previous loan in order to pay off the outgoing owners share. The main problem that arises in that respect is where the person buying out the equity does not have sufficient income to fulfil the lenders requirements, in which case the lender may still loan sufficient for the buy out but will require both parties to remain liable on the loan in the event that the lender defaults on payment. Otherwise the borrower may require an independent Guarantor for the loan such as a friend or relative. A transfer of equity solicitor will be able to give you detailed advice on these matters.

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Micellaneous Points

Most of the work carried out by a transfer of equity solicitor is straightforward however there are certain points that the parties to the transfer may need to consider :-

Stamp duty which is a government tax that may be payable on transfers of property does not generally apply to transfer of equity following matrimonial breakdown however it may apply to other types of transfer of equity.

Jointly owned property belongs equally to all joint owners in the absence of prior contrary agreement contained in a signed and witnessed trust deed irrespective of relative contributions of the owners to the purchase price, mortgage payments or property maintenance.

The current lender will insist on approving the transfer and their consent should be obtained prior to entering into any binding agreement even if there is to be no loan or mortgage on the property in the future.

All interested parties should be legally represented by different solicitors to ensure fair play to all concerned notwithstanding that the contracting parties relationship may still be on an amicable basis.

To prevent future dispute about the fairness of the proposed transaction it is necessary to obtain several valuations from qualified independent surveyors, valuers or auctioneers prior to agreeing a figure for the transfer of equity.

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Conveyancing Solicitors

Members of the public often ask what a transfer of equity solicitor does for their money. There is a common misconception that this type of transaction involves little work, however outlined below is the absolute minimum that a transfer of equity solicitor must do to carry out the most basic transfer of equity transaction :-

• Confirming the identity of the client as required by law.
• Obtaining original title deeds or an official copy from the Land Registry.
• Drafting, approving & preparing the final deed of transfer.
• Arranging for signature of the deed in the presence of a witness.
• Corresponding with interested third parties including mortgage lenders.
• Obtaining formal written consent to the transfer from relevant parties.
• Assessing whether stamp duty is payable and arranging payment.
• Completion of the transfer of equity after execution of all relevant documents.
• Submission of the Stamp Duty Land Tax form to the Inland Revenue.
• Registration of the transfer at the Land Registry and payment of the fee.

SOLICITORS HELPLINE 0844 332 0434

Free Legal Advice

If you would like to discuss your needs just call our helpline or email our offices. We offer free initial advice over the telephone on all matters relating to conveyancing and land law in England & Wales. There is no charge for our initial telephone advice and you are under no obligation to instruct us to act on your behalf.