Conveyancing Guide
To help you understand what is involved with your conveyance, we have put together some useful information including a guide to buying and selling houses and some frequently asked questions.
Transfer Of Equity
The purpose of these notes is to help you understand the formalities involved in transferring the ownership of your home, without a purchase or sale.
1. Reasons for transferring equity
When a couple split up, the property may need to be transferred from their joint names, to the sole name of the person who will remain at the property. This can be done either with or without money changing hands. In these circumstances, the mortgage lender will have to release the relevant party from the mortgage, and may therefore wish to be satisfied that the remaining party is able to meet the obligations under the mortgage on their own. Where money is to change hands, it is often necessary for the remaining party to re-mortgage or obtain a second mortgage.
Ownership of property is often transferred by way of a gift, particularly from parents to their children, often as a way of minimising liabilities in respect of inheritance tax.
2. Formalities
The formalities of transferring ownership are very simple, simply involving a document known as a Transfer Deed being signed by both parties to the transaction, and witnessed. If the property is subject to a mortgage, the person transferring the ownership will have to be release. The Lender will provide necessary documentation to that effect. If the person acquiring the property requires a second mortgage or needs to re-mortgage, more formalities are required.
The transaction is complete as soon as the Transfer Deed is property signed and witnessed and any necessary mortgage-related formalities are dealt with and if necessary the consent of any mortgage company is received.
3. Post completion
After completion, a few further formalities need to be dealt with.
Stamp Duty may have to be paid. On completion therefore, the transfer deed is sent to the local Stamp Office for an adjudication. If it is decided that Stamp Duty is payable, the Stamp Office will confirm the amount due.
After Stamp Duty is paid, the change in ownership of the property has to be registered at the Land Registry. This can take several weeks. A registration fee is payable. The deeds are returned to us after registration. If there is a mortgage, the deeds will be held by the Mortgage Lender until the mortgage is paid off.
4. Insurance
Once ownership of the property is transferred, the new owner assumes the risk of fire and other damage occurring to the property. Buildings Insurance should therefore be taken out, and should run from the date of completion. If the property is subject to a mortgage, the Lender will insist on the property being insured, and may offer to arrange insurance for you. Alternatively, you can arrange your own cover, which is often cheaper.
Buildings insurance only covers bricks and mortar, however. You must therefore arrange contents insurance. A basic contents insurance policy will only cover the second-hand value of any lost or damaged contents, but more expensive policies are available which provide now-for-old cover. When taking out insurance, you must be careful to insure for the full cost of replacement. If the contents are under-insured, and you make a claim, the insurance company will apply what is known as “averaging” and will only pay out a proportion of the replacement cost.
Arranging insurance for a flat needs particular care. Flats are usually owned under a long lease, and if the Landlord is responsible for insuring the building, that responsibility may mot extend to the interior walls, floors and ceiling of the flat, so contents insurance will have to be appropriately extended.
5. Confidentiality
Any information in our possession about work that we do for you is confidential and will not be passed on to anyone without your consent. There are however times when we need to pass on information in your best interests, such as when the selling agent needs to know whether your mortgage offer has been confirmed (without this information the Agent might have to advise the Seller to re-market the property). To cover eventualities like this, we have included in the Instruction Form a general authority to supply information as required in your best interests.
6. Wills
We strongly recommend that you make a will, or consider any necessary amendments if you already have a will. In either case, we would be pleased to advise you. Remember, on your death, the property may not pass to the person you wish if you have not already made a will.
7. Tax implications
Whilst we will be dealing with the legal aspects of this transaction to ensure that the legal estate is transferred validly, we are not in a position to advise you on any possible tax consequences of the transaction. If you are concerned that there may be such consequences, we would strongly advise you to seek the assistance of an accountant or contact us and we can recommend you to a Financial Advisor whose services you may or may not wish to use.
Click here for a quote for legal fees for transferring equity on your property