Sarah is here to help house buyers and sellers get to grips with the conveyancing process. This month, she discusses transferring equity in a property…
I am buying my husband out of our family home as part of my divorce. How do I go about removing him from the deeds?
If you have bought a property with someone else, there are many reasons why you might need to change the ownership. This is called a transfer of equity and it can be arranged in a number of circumstances:
- To remove an ex-partner if you separate
- Add a spouse if you marry
- Change the percentage ownership of a joint property or buy out a co-owner
- Reduce future inheritance tax liability by taking advantage of personal gains tax limits.
In order the change a property’s ownership, you need to instruct a solicitor, but provided the title is registered, it is a relatively straightforward process.
The first consideration is whether there is a mortgage on the property. If so, you will need consent from the lender to add or remove parties from the borrowing. It can be worth speaking to your solicitor about whether you are best placed to stick with your existing mortgage, or look to obtain new funding, depending how the property is to be transferred.
Your solicitor will then deal with any new lender and repay the old mortgage at the same time as handling the property transfer. Anyone aged 18 or over can become the registered owner of a property, but they also need to be party to the mortgage.
Stamp duty is levied on transfer of equity transactions, so this may affect you if a large sum of money is being paid to add or remove someone from the property’s title. In most cases, the amounts involved will be under the threshold, but your solicitor will advise you at the outset if there is tax due, so you are fully aware of the costs involved before you proceed.
You are allowed to gift shares in a property i.e. without funds changing hands, depending on the circumstances and why the property is being transferred in the first place.
How do I begin the transfer of equity process?
To put a transfer into motion, your solicitor will need to obtain an official copy of the property’s title. This will then be reviewed and any mortgage dealt with, as detailed above.
You will need to provide proof of your identity, so it can be verified that you are the owners of the property and then a Transfer Deed can be drafted and sent to you to be signed.
If the property is being transferred into the names of more than one party, your solicitor will discuss how you wish the ownership to be structured and what share is to be registered to each party.
If you would like to know more about the transfer of equity process, don’t hesitate to contact me or my conveyancing colleagues on (0114) 218 4000.