What is a transfer of equity?

October 25th, 2022

A Transfer of Equity is the process of adding or removing a person from the title deeds of a property. In turn, this will either add or remove them as an owner of the property. Perhaps a co-owner needs to be created, a name needs to be taken off of the lease or the deeds are to be transferred completely. No sale of the property is involved as at least one of the owners should remain on the title.

What is the process? 

Whether you are adding or removing names to the deeds of a property, it’s important to always seek legal advice from a trusted source eg. A Solicitor.

Generally speaking, a Transfer of Equity can usually be a simple process guided by a Solicitor. No matter the number of parties involved, the steps within the process should always be the same:

  1. Title deeds are reviewed – There will be a copy of the property deeds from the Land Registry that a Solicitor will need to look over.
  2. Transfer documents are prepared – Following the beginning of the process, a transfer deed document will be drawn up to be signed.
  3. Inform any third parties – These can include banks, mortgage lenders or building societies. If any of these parties are involved with the property, they must be notified and provide written consent.
  4. Sign the deed – Once the transfer deed (TR1) is ready and all parties have been notified, all parties will need to sign the document and have this witnessed. This can be done by anyone who is not involved in the transaction and is not a family member.
  5. Land Registry office notification – The Land Registry office must be notified of the deed transfer, a fee will incur of a range between £50 – £1,000.

When might a Transfer of Equity be needed? 

There can be a number of situations in which a Transfer of Equity may be needed. Some of the most common reasons include:

  • Relationship breakdown – whether it a separation or divorce and you own a property with your partner, an agreement must be made on what to do with this asset.
  • A new relationship – The property may have been previously bought before a new relationship was entered. By entering a Transfer of Equity, the other partner can be added to the deeds, therefore sharing the ownership and responsibilities of the property.
  • Removing joint ownership – It’s becoming more frequent for people to purchase properties with friends or family, buying them out or putting a Transfer of Equity in place can resolve this when the time comes for one party to take full ownership of the property.

A transfer must always ensure there is a minimum of one legal owner, but no more than four.

Is the Transfer of Equity process different if a mortgage is involved? 

If there is a mortgage on a property, there will be more steps involved within the transfer process. The party that is leaving the deeds must be released from the terms and conditions of the mortgage. As the mortgage is seen as a credit agreement, written consent of the lender/bank must be given before any transfers can be completed.

If a party is added to the title, they will become responsible for the mortgage. In the same way, if a party is removed from a title, they are also leaving the credit agreement that is the mortgage. However, this cannot simply be walked away from, the debt must first be resolved.

If a mortgage needs to be resolved, there are a multiple of options that are available. These include, paying off the mortgage or seeking approval from a lender to transfer the share of the property to the new owner.

Our service to you

If you have any queries or further questions about a Transfer of Equity, our team at Verisona Law are happy to advise and guide you. No matter the situation, a Transfer of Equity can work dependant on each individual’s circumstances.

Contact us today for sound and professional advice suited to you and your needs.