Transfer of equity

A transfer of equity occurs where you wish to make changes the way your property is owned without a sale, as such, taking place.

It occurs where the legal ownership of a property changes hands – for example where joint owners transfer the property into the sole name of one or other of them, or where a sole owner adds another owner into the title.

Most transfers of equity will be far more straightforward than a sale or purchase. In many cases, for example, searches or enquiries will be much more limited because the parties are likely already to have knowledge of the property. Also, there is rarely a need for a contract.

The main complication tends to be where the property is subject to a mortgage since the consent of the lender will need to be obtained before the transfer can take place.

Why might you need a transfer of equity?

A very common reasons why a transfer of equity may be needed is because the owner of the property has entered into a new relationship or marriage and wishes to put the new partner/spouse onto the deeds of the house they will be living in. Note that if the property is subject to a mortgage then the lender will need to consent to that transfer.

Similarly, there may need to be a transfer of equity where a relationship has broken down and the property is being transferred from joint names into the sole name of one of the parties to the relationship following a separation or divorce. This may be as part of a court order to deal with the distribution of assets on divorce. Once again, the consent of the lender will need to be obtained and the remaining party may need to be able to show that they are able to make the mortgage payments on their own.

Finally, a transfer of equity may be for tax planning purposes. The ownership of a property may need to be transferred into the name of a third party (for example family member) to help reduce tax liabilities or to help ensure that the property remains in the family.

The tax position, especially in relation to the latter reason for transfer, must be taken into account and we will be able to advise you upon this.