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Transfer of Equity

Property owners may wish to change the legal ownership/status (transfer equity) of their property for a number of reasons some of which are listed below:

Marriage. Following marriage the partners often wish to transfer the matrimonial home into joint names. This is called a Transfer of Equity. Unless the party being added to the deeds is paying full market value for the share in the property the law will deem this transfer as a gift or transaction at an undervalue (see below).
Divorce or separation. Following divorce or separation the partners may wish to transfer a jointly owned property back into the sole name of one of the partners. This is also called a Equity Transfer and may be deemed in law as a gift or transaction at an undervalue (see below), unless full market value has been paid for the property share, or the property is being transferred as a result of a court order.
Tax planning. Property owners are sometimes advised by their tax planners or accountants to transfer a share of the family home into the name of a child or other family member. This is also a Transfer of Equity and may be deemed in law as a gift (see below).
Transferring or changing the financial status of shares in the property. Some property owners buy a property jointly but do not wish to own the property on a strictly 50/50 basis. If this is the case a trust deed is set up to explain the share that each partner owns. This trust deed is registered at the land registry. If the property owners later decide to change the percentages Equity Transfer would be needed plus the trust deed would need to be changed.

Whatever the reason for the transfer what may appear to be a simple arrangement can be quite complex and legal advice should be sought.

Changing a property from sole name into joint / multiple names or adding a name to the deeds.

What the solicitor does:

Obtains the title deeds or an Official copy from the Land Registry in readiness for an equity transfer.

Prepares the Equity Transfer deed and arranges for the parties to sign it in the presence of a witness.

Notifies any third parties who have an interest in the property, such as mortgage lenders. If the property is mortgaged or secured to a lender they must give formal written consent to the transfer.

Assess whether stamp duty is payable.

Complete the Stamp Duty Land Tax Form, arrange for this to be signed by the property owners and submit it to the Inland Revenue.

Checks the legal identity of the client (this is required by law).

Removing a name from the deeds

The same legal procedure as outlined above is followed

The solicitor may not act for both parties as there may be a ‘conflict of interest’. Each party should appoint a solicitor who will provide independent advice.

Transferring property and retaining the existing mortgage

If the property is mortgaged and the property owner intends to keep the same mortgage they must seek the approval of the lender to the transfer. The property owner will probably be asked to attend an interview or write a letter to explain the reason for the transfer (particularly if one party is being removed from the deeds).

If the lender approves of the equity transfer they will issue a written acceptance to the client and their solicitor. There may be conditions to the acceptance of equity which the solicitor must ensure are met.

If an owner is being removed from the deeds the lender will want proof that the remaining owner (s) can afford to repay the mortgage. If the lender is not satisfied that the remaining owner (s) can afford to repay the mortgage they will refuse to release the exiting owner from the liability for the mortgage payments and conditions.

If a new party is being added to the deeds then the lender will require that person to sign a mortgage deed accepting liability for the existing mortgage and the mortgage conditions. The usual credit and reference checks will be made by the lender.

FREQUENTLY ASKED QUESTIONS ON EQUITY TRANSFER FOLLOWING THE DEATH OF A PROPERTY OWNER

1. What happens to a property when the owner dies?

The Transfer of land following death is regulated by the Land Registration Act 2002

When a person dies and they own land that will be inherited by someone else, it is usually necessary to register the change of ownership at the Land Registry. A solicitor will do this for you and if you would like a quote for this please either:

Call us on 0845 060 33 55 or 01638 576478

Or click on the QUOTE button on this web-site and select the Transfer of Equity option, inserting Ł0 as the consideration. ·

Or e mail us at customerservice@cms-uk.co.uk. and we shall be pleased to answer any queries you may have.

If a solicitor has been employed to deal with Grant of Probate or Letters of Administration it is not necessary to use the same solicitor to transfer equity of the property. It is often much more cost effective and efficient to use a specialist Conveyancer to deal with this aspect of the equity transfer of property. All CMS solicitors are fully qualified to deal with this type of land transfer.

2. How do I find out whether the Deceased owned any land?

The Deceased will usually have Title Deeds for any land that they owned. If there is no mortgage on the property they may keep the Title Deeds at home or they may be held for safe keeping with a bank or a solicitor.

If you are not sure whether the deceased owned property or land you may check this with the Land Registry. You should be aware that a fee is payable for this service. You will find their contact details in our useful links section below. As Personal Representative of the deceased, you can find out this information by making a search in the Index of Proprietors’ Names.

If you feel that you need to carry out this search, particularly if you think that the deceased may have owned a number of properties, you may contact the Land Registry and they will explain the procedure you need to follow. Please be aware that there is a fee to search the Index of Proprietors’ Names.

If the land or property is already registered with the Land Registry then the deeds will consist of a Charge Certificate if the property is mortgaged or if there is no mortgage the deeds will consist of a Land Certificate.

If the deceased has owned the property for a long time, and there have been no changes, then the land may not be registered with the Land Registry in which case the title deeds will consist of a collection of deeds and documents usually Conveyances, Legal Charges, Assents etc. and will include the deed which conveyed the property to the deceased.

3. How should the Personal Representatives of the Deceased deal with the estate?

By law, the Land Registry always has to assume that the Personal Representatives of the Deceased are following the wishes of the Deceased and are acting within their powers. The Land Registry are not empowered to investigate whether any transfer of the property is in accordance with a Will.

Depending upon the wishes of the Deceased or their Will the Personal Representatives may:

Become the registered owners in their capacity as Personal Representatives
Transfer the property to any Beneficiary of the Will of the Deceased
Transfer the property to the Executor of the Will of the Deceased as Trustee
Transfer the property to someone else in their capacity as Personal Representatives
Discharge a mortgage if the Deceased was the lender

4. What happens if a joint owner dies?

A. Property held as ‘Joint Tenants’

When property is owned jointly or by several owners as joint tenants the surviving owner (s) may apply to the Land Registry to register the property in their sole name. There is no fee for this but you will need to send the Land Registry:

A completed form DJP (See the Land Registry web-site for the form)
Evidence of death (the original or official copy of the death certificate, the grant of probate or letters of administration).

B. Property held as ‘Tenants in Common’

When a property is owned jointly or by several owners as tenants in common their share of the property must be dealt with according to the Will of the Deceased. See 2. above.

5. What happens if the owner of an unregistered property dies?

If the Deceased is the sole owner or last surviving joint owner of the property then the Personal Representatives of the Deceased will deal with the property – see 2. above. The property will be conveyed to the new owner by means of a Deed called an Assent or a Transfer. The new owner of the property will then have to apply to the Land Registry for first registration of the property.

6. Registration of Personal Representatives

Personal Representatives may apply to become the registered owners of a property. This option could be used if the Beneficiary of a Will is a minor and not able to inherit. In this case, the Personal Representatives become the registered owner, but only as Personal Representatives of the Deceased.
Once they are registered as owners of the property, the Personal Representatives can later Transfer or Assent the property to the Beneficiaries of the Deceased.

7. Registering the Beneficiaries of the estate – Assents

The Beneficiaries of the Estate may also become the registered owners. In this case they will need to produce the original or an official copy of the Grant of Probate or Letters of Administration, a Stamp Duty Land Tax Certificate and the appropriate fee. If the Beneficiary is already a joint owner of the estate there is no fee to pay. The Beneficiary can apply directly to the Land Registry but this can be complex and a CMS solicitor will be able to deal with this for you easily and efficiently.

8. Equity transfer of property to a third party

Following Grant of Probate or Letters of Administration the property may be legally transferred to a third party upon production of the Grant of Probate/Letters of Administration.

9. What forms are used to transfer the property of the Deceased?

Form AS1 will be used to assent, i.e. transfer, the whole of one or more registered titles to the beneficiary or beneficiaries.

If form AS1 is not appropriate then one of the following forms may be used:

Form AS2 – assent of a charge (mortgage) (i.e. where the deceased was a lender);

Form AS3 – assent of part of one or more registered titles;

Form TR1 – transfer equity of the whole of one or more registered titles;

Form TP1 – transfer equity of part of one or more registered titles.