What is a transfer of equity?
Equity distribution is necessary to finalise the process during a separation, divorce or civil partnership. For the one left with the property, this is especially important as it protects their assets.
Transferring equity is also often used when a couple marries and moves in together. In each scenario, the equity transfer legally states who has ownership over a property.
You'll first need an official copy of the title deed for the property. With this, it'll be checked if there are any outstanding mortgages or restrictions. A conveyancer will review the title deeds, check client identities, and prepare the equity transfer.
Divorce or separation
It may be that you and your ex-partner have decided to separate and one of you will keep the property. If so, you'll need a conveyancing solicitor to work out the transfer of equity.
Perhaps your ex-partner is happy to be taken off the property deeds without requiring payment. Otherwise, you may want to arrange an exchange of assets. When discussing your options, you may choose to buy them out. It remains a transfer of equity whether or not money changes hands.
When you’re transferring equity because of divorce or separation it’s important not to forget your existing lender. You may have come to an agreement about who will take over who will be the owner of the property. However, you will need to discuss with your mortgage lender whether you can afford the existing mortgage alone.
Focus on the deeds
When a couple splits up, one person can change the mortgage without removing their ex-partner from the property deeds. This is especially common if the couple were unmarried. Perhaps they don't think it matters if they're paying the mortgage, or the partner who left says they don't want the house.
Getting a transfer of equity as soon as possible is important. This is because you've decided to take full ownership of the property. If both names are on the deed, each of you will have a stake in the property. This is regardless of if only one of you is paying the mortgage.
Your partner may say that they don't want any stake in the property. However, if you decide to sell the it in the future, the situation could become more complicated.
How long does a transfer of equity take?
This depends on whether there is a mortgage on the property and whether both parties are in agreement about the terms. Your solicitor will go through the paperwork, confirm all the details and apply to HM Land Registry to change the deeds.
If a property has no mortgage, the process can be extremely quick. Those involved need only sign the transfer deed and file it with the land registry. If there are complications and disagreements, it will always take longer.
Adding a name to the deeds
Equity transfer is not just about removing a name from the deeds. It also includes adding a name. For example, parents may want to add their children to the deeds of the family home. When someone marries their partner, they may want to add them to the deeds of the property they already owned.
The transfer of equity process requires a solicitor to make the appropriate paperwork. A solicitor will also be needed to make name changes on the property deeds. This is regardless of whether any money changes hands or not.
Other concerns when transferring equity
You’ll need to pay your conveyancing fees to transfer equity. As well as this, you'll also want to think about if you’ll need to pay Stamp Duty Land Tax (SDLT). If you’re acquiring a portion of a property over the tax threshold, this may be the case.
How much do solicitors charge for a transfer of equity?
Transfers of equity can cost you up to nearly £6,000. However, it depends totally on the circumstances of the transfer. Equity value and whether you have a mortgage can have an impact on the solicitor fees.
The cost covers solicitor fees, anti-money laundering checks, bank transfer fees, land registry fees, and other expenses.