What is a transfer of equity?
The world of residential and commercial conveyancing can seem quite daunting to some as there are many legal terms you may not be familiar with but, quite simply, transfer of equity (ToE) is a legal term for the process where the ownership of a share or interest in a property is transferred from one entity to another, a partial conveyance.
Equity of course, is an asset that comes from a homeowner’s interest in a property once any outstanding balances (usually mortgages) have been accounted for.
A transfer of equity (ToE) happens when circumstances require that the legal ownership or status of a property must change. Undertaking a transfer of equity can be quite complicated and it's important that you receive sound legal advice from a qualified solicitor to ensure that the transfer is completed correctly and in line with your wishes.
Here are some of the situations which may require a transfer of equity -
Marriage - You may get married or re-marry and wish to add your new partner's name to your property title.
Divorce or separation - you may be divorced or separated and want or need to remove your ex-partner’s name from the property title.
Here are some areas you’ll need to consider -
Tax and SDLT/LTT (in Wales) - ToE can have tax implications for you and those involved. Some transfers will be considered a 'gift' and depending on the value of a share in the property there may be stamp duty to pay, although some transfers of equity are exempt: for instance where a property is being transferred as a result of a court order following divorce proceedings.
To check current stamp duty rates visit the HMRC website but our property experts can help you understand whether you'll have to pay stamp duty in your specific case.
Mortgaged properties - If you need to change the ownership of a property with a current mortgage, you'll need to seek your lender's approval in advance. Their priority will be to ensure the remaining owners or new owners can service the mortgage or loan repayments, can provide adequate security and lenders will usually charge administration and valuation fees for this. They'll also insist that a solicitor undertakes the legal aspects of the transaction.
Here at Insight Law we have a wealth of knowledge and experience that can help you make the right decisions and we’ll carry out the legal work for your transfer of equity efficiently and for a fixed fee, keeping you updated throughout.
To contact our team please click here
Posted by Insight Law on
14 June 2018
Conveyancing, Conveyancing Solicitor, FAQ, T of E, Transfer of Equity