Why choose QCAS?

The team at QCAS is friendly and always gets the job done. Our specialist team has more than 10 years experience in dealing with transfer of equity transactions and our focus is on doing the best job for our clients. We will always explain the process carefully for you and we will provide a full and transparent quote for our fees with no nasty surprises.

Give us a call today for a no obligation chat with one of our friendly advisers.

What is a Transfer of Equity?

When a property has two or more owners, sometimes circumstances occur when one of the owners needs
to transfer part or all of their share of the property to one of the other owners. If an individual takes on the whole share this is a sale and purchase - arms length transaction requiring 2 separate representatives.

These types of transactions are known as a transfer of equity. The equity in a property, owned by any
individual, is the net value of their share of the property and is calculated after deduction of any outstanding
mortgages or other loans that are legally secured on the property. A transfer of equity is the process under
which a current property owner wishes to relinquish either a part or their whole share in a property and transfers ownership to someone else.

As part of an equity transfer, if there is a mortgage on your property your lender must be informed and
approve the proposed transfer of equity. If the transfer of equity is taking place as result of divorce or separation,
the proposed new owner(s) of the property must be able to satisfy the lender that they will be able to maintain
mortgage repayments before the previous owner may be released from the mortgage.

Your guide to a Transfer of Equity

1. Receive Instructions for the transfer of equity:

1. Once we receive details of the transfer of equity we then confirm your instructions to proceed.
2. We will obtain the up-to-date position on your property from the Land Registry.
3. A redemption figure for your transfer of equity is requested from your existing lender.
4. A copy of your mortgage offer is obtained. If you are keeping your existing mortgage we will need a letter of consent from your lender, or if you intend to obtain a new mortgage with a different lender, we will need the new Mortgage Offer.
5. You complete and return the transfer of equity of the property forms.

2. Set a completion date for your transfer of equity

1. The legally required searches are carried out and funds requested from your new lender once the documents are received. A provisional Completion Date is then agreed with your new lender.

3. Transfer of equity completion

1. Funds from your new lender are received by us.
2. We redeem the sum of your existing lending.
3. Our fees are paid before the balance of funds are sent to the client.
4. Transfer of Equity Registration. The case will be passed to our registration team once it has been completed. The team register the interest of your new lender with the Land Registry

Other Transfer of Equity and Equity transfer information:

When home owners choose to amend the legal ownership of their property it is referred to as a transfer of equity. There are many reasons an owner may choose to do this. We have listed some of these reasons below as a guide for you;

• Tax – Accountants sometimes advise property owners to carry out a transfer of equity to their children or other family members. This can be a more tax efficient way of financially sharing the home and it is also considered as a transfer of equity and may be deemed in law as a gift.

• Amending and, or transferring the financial status of shares in a property – In situations where home owners jointly buy a property but do not want to legally own the property on an equal share basis, a trust deed can be set up to clarify exactly what percentage share is owned by each person.

Ownership of the Property Title is always as joint tenants. A Declaration of Trust deals with the level of the equity share of the owners of the property. If you wish to change the percentage of equity share in the property a new Declaration of Trust will be required.

Even though a transfer of equity may be seen as a simple process people often forget that it is a legal one. Legally a transfer of equity can be complex and therefore it is wise to obtain professional legal advice from a qualified solicitor. Click here to get a transfer of equity quote from us today!

• Marriage – If a couple own two properties when they marry, they often decide on one matrimonial home. It therefore makes sense to transfer the matrimonial home into joint names. This is referred to as a transfer of equity. The person being added to the property deeds will usually not pay full price for their share in the property as the transfer of deeds or transfer of equity is seen in the law as a gift. It is also referred to as a transaction at an under value.

• Insolvency Act/Deed of Gift – If a property is transferred for less than it is worth or a substantial gift is made and the person who transferred the property or gave the gift goes bankrupt that gift/transfer may be called back in order to pay off any creditors. The implication is that the transfer/gift was done to avoid creditors. Your lender may require you to take out an Insolvency Indemnity Policy on completion. The policy provides cover for a lender where there is/has been a deed of gift, transfer at an undervalue or passing of a deceased joint tenant's interest to a surviving tenant, which might prejudice the insured's interest in the property under Sections 339-342 and 421A of the Insolvency Act 1986, as amended by the Insolvency Act 1994 and Section 12 of the Insolvency Act 2000.

• Divorce and separation - Following divorce the divorcees may need to transfer a jointly owned property back so that just one of them is the legal owner of the property. This is also referred to as a Transfer of Equity and can be seen by law as a gift. However there are other circumstances for example if a court order has been instructed, then the law will not see this transfer of equity as a gift. Also if the full price has been paid for the share of property the law will not see this transfer of equity as a gift.

What will a solicitor do when changing a property from a sole name into joint or multiple names?

Below is the process which a solicitor may follow when changing a property from a sole name into joint or multiple names or when adding more names to the deeds of a property

1. Review the title deeds/ copy of the property deeds from the Land Registry

2. Prepare the transfer deeds and send to the clients to have signed and witnessed in the presence of an independent adult witness who must be aged 18 and over and not related to any parties in the Transfer.

3. Notify any additional parties such as; mortgage lenders or secured lenders, banks or building societies; any third party such as these must give their written consent to the deed transfer.

4. Enquire whether stamp duty is payable. If it is the Stamp Duty Land Tax Form must be signed by all property owners and forwarded to the HM Revenue & Customs.

5. Register the transfer deed at the Land Registry. A Land Registry fee is payable.

6. Check and confirm the identity of the clients. This is a legal requirement.

Keeping an existing mortgage and transferring your property

If your property is mortgaged you must have written permission if you wish to keep the same mortgage provider and mortgage product. This is required before the transfer from mortgage provider can take place. You may be asked to explain to your mortgage provider the reasons for your transfer of equity. This is particularly likely to be the case when you are requesting that names be removed from your property deeds.

If your equity transfer is approved by your mortgage lender they will then send a written acceptance directly to you and your solicitor. Your solicitor with oversee and ensure that any terms and conditions, issued by your mortgage lender that must be met are adhered to in order for the equity transfer to be accepted

If a name is being removed from your property deeds your mortgage lender will require substantial proof that as the remaining owner you will still be able to afford to repay the mortgage. If they are not fully satisfied with this proof they can refuse to remove the name(s) from your property deeds. This would mean that this person is still liable for mortgage payments on the property.

When a new name is being added to your property deeds your mortgage lender will ask that the person signs the mortgage deed. This is to confirm that they accept liability for the mortgage payments. Your mortgage lender will also carry out the required credit checks at this point.

You will not require permission from your mortgage lender if you are remortgaging your property and transferring equity at the same time. This is because your old mortgage will be paid off and the two new legal documents will commence at the same time. Your new mortgage lender will require signatures from all the named people on your property deeds.

Removing names from your property deeds

When removing names from property deeds the same basic legal process as for changing into joint/multiple names is followed. If names need to be removed from your property deeds because of an unsettled dispute one solicitor may not be able to act for all parties involved. This is because there is likely to be a conflict of interest.

Transfer of Equity Stamp Duty

The Inland Revenue require a Stamp Duty Land Tax form to be completed and signed by the property owner. For further details see our stamp duty page

Transferring your property where little or no money is changing hands

A transaction at an under value occurs when a property or a share in a property is transferred for very little or no money. This occurs usually when people marry and have two properties between them. Essentially it means that the property is being transferred for less than it would be worth if it was to be sold.

There are various reasons why people transfer property for less than its market value or for free such as marriage or a gift to family members. Some property owners may look to transfer a property to another person to avoid loosing the property such as in the case of bankruptcy.

If a property is transferred for less than current market value, it is deemed, by law, as a gift from the owner to the person receiving the share in the property. However, the law has the power to undo property transfers made within up to 5 years of anyone on the deeds being removed or transfers being made. This allows the law to defeat debtors trying to protect their property.

Insolvency laws now permit a property to be sold and the proceeds from a sale to be used to pay off any debtors. A Declaration of Solvency will usually be signed by property owners. This is because their mortgage lender will require it when transferring a property or a share in a property for less than its market value or for free. The lender may also request that the property owner take out insurance to protect the mortgage repayments. Your solicitor will be able to draw up a Declaration of Solvency.

Transfers of property at market value

Your solicitor will prepare a transfer deed which shows the price paid for the share when the share is transferred for full market value. Your mortgage lender may require evidence that the full market price has been paid. Mortgage lenders often require a written valuation from a surveyor or an estate agent.