Transfer of equity or property share – what do I need to know?
Sometimes, having bought a property with someone else, you might decide that you want to change the legal ownership or status of that property to reflect what’s going on in your life.
This is known as a transfer of equity – when the legal ownership of the property changes but at least one of the original owners remains on the title – and there are several scenarios in which you might want to undertake this, including:
- Getting married or re-married and wishing to add a new partner’s name to the deeds;
- Relationship breakdown – where a couple, on separation or divorce, transfer the property from joint names to one party’s sole name or where one buys out the share of the other;
- Changing the percentage share of a property as part of family arrangements or where the property is a gift;
- When someone has died.
For more help and information about transferring a property share, please get in contact with any member of Wards Solicitors’ specialist Conveyancing Team.
What if I have a mortgage?
Put simply, the equity in a property is the difference between its value and any mortgages it is subject to.
If you want to change the ownership of a property with its current mortgage, you will need your lender’s consent or the owners may need to repay the existing mortgage and take out a new one. This is called a remortgage.
- It is important to consult with your current lender and take independent financial advice on the best way forward.
Do I need a Declaration of Trust when transferring equity?
When a transfer of ownership adds a new co-owner to the title, the owners need to decide whether they will be ‘joint tenants’ or ‘tenants in common’ – click here to read more about this – and may want to set out what they want their respective shares to be in a Declaration of Trust.
Will I need to pay tax and Stamp Duty?
When money changes hands for a share in the property, this is considered when calculating stamp duty. Any mortgage may also have to be taken into account and may affect the amount that has to be paid.
Some transfers will be exempt, for example, following a divorce where the property is transferred by court order.
What happens in the case of insolvency or bankruptcy?
Sometimes, as a way to protect the property from creditors in bankruptcy or insolvency cases, joint owners may look to transfer the property into the sole name of one of them.
However, the law allows transactions to be set aside if the person making the gift becomes bankrupt within two years, or five years if the bankruptcy was known about or imminent at the time.
- For more help and information about transferring a property share, please get in contact with any member of Wards Solicitors’ specialist Conveyancing Team.