If you need to add someone to a property title, remove an ex-partner, or transfer ownership between family members, a transfer of equity may be the right legal process.
A transfer of equity happens when one or more of the owners of a property are added to, or removed from, the legal title.
Although it may sound straightforward, a transfer of equity involves important legal and financial considerations. Mortgage lender requirements, stamp duty rules and Land Registry formalities must all be handled correctly.
What is a transfer of equity?
A transfer of equity is the legal process of changing the ownership structure of a property without transferring the whole property to an entirely new third-party buyer on the open market.
When might a transfer of equity be needed?
This type of transaction is often required in the following situations:
- Marriage or moving in together – one owner wishes to add their partner to the legal title.
- Separation or divorce – one party transfers their interest to the other, removing the ex-partner from the legal title.
- Tax or estate planning – a share of the property is transferred to another family member.
- Gifting a share in the property.
- Buying out a co-owner – one owner pays the other for their share.
- Remortgaging arrangements – a lender may require ownership changes as part of the mortgage process.
Each case has different legal and practical implications, particularly where there is an existing mortgage or money changing hands.
How does the process work?
The exact steps will depend on the circumstances, but a transfer of equity usually involves the following:
1. Carrying out checks and searches where required
Identity checks and anti-money laundering checks are required. Depending on the transaction, additional searches or enquiries may also be appropriate.
2. Taking instructions and reviewing the title
The first step is to establish who currently owns the property, how it is held and whether there are any restrictions on the title. If the property is leasehold, the lease may need to be reviewed to check whether notices must be served on the landlord or managing agent.
3. Dealing with the mortgage lender
If the property is mortgaged, the lender’s consent is usually required before any owner can be added or removed. In some cases, the lender will carry out affordability checks on the remaining or incoming owner. If one owner is being released from the mortgage, the lender must formally agree to that release.
This is one of the most important parts of the process. The legal title and the mortgage arrangements must be consistent.
4. Preparing the transfer documentation
A transfer deed is prepared to record the change in ownership. This document sets out who is transferring their share, who is receiving it and whether any payment is being made.
Where there is more than one owner, it is also often sensible to prepare a declaration of trust. This records how the beneficial interests in the property are held, for example whether the owners hold equal shares or unequal shares.
5. Completion
On completion, any agreed funds are transferred, the transfer deed is dated and the ownership change takes effect.
6. Registration at HM Land Registry
The final stage is registration at HM Land Registry. The register is updated to show the new ownership position and, if relevant, any changes to the mortgage.
Is stamp duty payable?
Even where a property is being transferred between family members or former partners, Stamp Duty Land Tax (SDLT) can arise. This often depends on the facts of the transaction, particularly where mortgage debt is being assumed or a share is being transferred for value.
Any SDLT liability will be calculated once the full details of the transaction have been reviewed.
How long does a transfer of equity take?
A straightforward transfer of equity can often be completed more quickly than a full sale or purchase, although timing varies depending on:
- whether there is a mortgage and if so, how quickly the lender issues consent;
- whether the property is freehold or leasehold;
- whether any declaration of trust is needed; and
How much does a transfer of equity cost?
The cost will depend on the complexity of the matter, but the main expenses are usually:
- legal fees for preparing the documents and completing the transaction;
- HM Land Registry fees for registration;
- ID verification fees;
- leasehold notice fees, if applicable;
- mortgage lender fees, in some cases; and
- SDLT, where payable.
As a general guide, our legal fees for a straightforward transfer of equity are often lower than for a full conveyancing transaction, but costs can increase if the transaction becomes more complex.
At the outset, we provide a quotation setting out the legal fees and likely disbursements based on the information available at that stage.
Why use a solicitor for a transfer of equity?
A transfer of equity may appear to be an administrative change, but the legal consequences can be significant. Issues around ownership shares, lender consent, SDLT and future rights in the property should be addressed properly from the start.
A solicitor can assist by:
- ensuring the title is transferred correctly;
- liaising with the mortgage lender;
- preparing the transfer deed and any trust documentation;
- advising on the Land Registry requirements; and
- helping the transaction proceed efficiently and with minimal delay.
How O’Donnell Solicitors can help
Whether a property is being transferred following separation, as part of family arrangements, or to reflect a change in financial ownership, careful legal drafting and a well-managed process are essential.
If you are considering a transfer of equity, early legal input can make the process quicker and clearer.
O’Donnell Solicitors can advise on transfer of equity transactions across England and Wales, including freehold and leasehold properties, matters involving existing mortgages and transactions requiring declarations of trust. Our focus is always on providing clear advice and an efficient service from instruction through to registration to ensure the legal formalities are handled correctly.
To discuss your circumstances and obtain a quotation, please contact us on 01457 761 320 or at enquire@odonnellsolicitors.co.uk.