If you’re looking to transfer the ownership of your property, we’ve put together this handy guide so you can understand the process and what this allows you to do.
So What Is It?
Transfer of equity essentially works by transferring the equity of ownership of a jointly owned piece of real estate to one of the joint owners solely. To further understand this concept though you need to be aware of what equity is and why people choose to transfer it. People often refer to equity as how many shares somebody owns in a company, and in property it works in a similar way. In this case, it is a legal term for how much of your property you own, as opposed to the bank.
To give you a property specific example. In this example, you procured a house worth $200,000 and had $50,000 to put towards the cost directly. To cover the remaining cost, you’d need to take out a $150,000 mortgage with a bank. Therefore, in legal terms, you own $50,000 of your house, meaning you have $50,000 of equity in the property.
So Why Would Someone Do it?
This whole concept typically applies to those who share a property, say for example a married couple that took out a mortgage together, who are now getting a divorce so they are looking to dissolve their property agreement.
Often one partner will want to keep it, rather than sell the property and split the money equally. The problem arises because both partners own a share of the property, so it’s not as straight forward as one partner buying the other out. This is where transfer of equity comes in. Through transfer of equity, one partner can legally transfer ownership of a property to another, so that this partner can then buy them out.
This will then allow one partner to relieve themselves of ownership of the real estate and remove themselves from the its title deed. Consequently, they are also relieved of mortgage obligations, which the remaining partner then becomes solely responsible for. If partners can’t agree on these things this is commonly where disputes happen and lawyers are needed to ensure an outcome is achieved that is fair for both parties.
So How Do You Transfer Equity?
Unfortunately, this is a tricky legal process and not one you take care of yourself. Therefore, next you will need to hire conveyancing solicitors to do the legal work for you. Typically, they will put together the following elements:
- Gain possession of title deeds (or an official copy from the Land Registry).
- Prepare the Transfer of Equity Deed, and then arrange for the partners to sign it in front of a witness.
- Give notification to any third party who have an interest in the property i.e. the bank that provided the mortgage. In the case the property is mortgaged, they need to provide written consent in order for a transfer of equity to take place.
- Calculate whether stamp duty is payable, fill out the Stamp Duty Land Tax Form, which is then signed by the owners of the property, then submit it to Inland Revenue.
- Register the transfer with the Land Registry – This comes with a fee.
- As required by law, check the client’s legal identity.
- Oversee the signing of the transfer of equity deed, then repeat the above process to remove a name from the property deed.
Once all of the above is complete, the process is done. That is essentially how transfer of equity works and how it legally enables you to part from a joint agreement. If you’re looking to do this, you first of all need to decide on who is getting the property or what is happening with it. From there, contact transfer of equity solicitors who will get the ball rolling as efficiently and quickly as possible.