Transferring equity is the process by which ownership in a property or land is transitioned to somebody else, somebody is added to the title or they are removed from the title. If the property is mortgaged, the lender must consent to the transfer of ownership before it can be performed.
Transferring equity requires the engagement of a transfer of equity solicitor who will ensure that the process is conducted correctly, that all necessary legal processes are performed and that the lender, HMRC and the Land Registry are all notified of the change to the ownership of the property.
Why Would Someone Want To Transfer Equity?
There are many reasons why somebody would want to carry out a transfer of equity, but the most common reasons are to add a spouse to the title deeds of the property, to gift the property or a share in it to a child or other family member, to buy out an ex-partner’s share of the property after a separation or divorce, or to increase the percentage owned or to sell a share of a shared ownership property.
Process for Equity Transfer
Prior to conducting an equity transfer, it is sensible to approach your mortgage lender to seek a Decision in Principle for the change of ownership. Gaining approval from your mortgage lender at the outset can simplify and shorten the legal process and enable changes to be enacted more quickly. Your lender will also be able to confirm whether your preferred solicitor is on their panel of approved conveyancing solicitors, as this will again streamline the process.
The first step in the process is to instruct a transfer of equity solicitor to handle the legal process on your behalf. The solicitor will review the existing title deeds for the property in question and prepare the transfer deed and any other legal documentation that is required to enact the change in ownership.
They will obtain consent from the mortgage lender and anybody else who has a vested interest in the party, such as a landlord, housing association or other joint owners. The mortgage provider will need to confirm that the new owner has the financial means to pay their share of the mortgage. Once all necessary consents have been obtained, they will register the Deed of Transfer with HM Land Registry and complete the Stamp Duty Land Tax form.
When the legal process has completed and the title deeds have been updated at the Land Registry, the change of ownership is complete.
Summary
Transfer of equity is an everyday occurrence and conveyancing solicitors are well versed in the process. Whilst the process will take longer for a mortgaged property than for one which is owned outright, taking the time to consult the mortgage lender before beginning the legal process can aid in selecting the most appropriate solicitor for the job and streamline the timescales to completion.
