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SPECIAL CIRCUMSTANCES - Transfer of Equity
If you currently own a property with one or more co-owner, and you either wish to buy out that person’s interest, or they want to sell their interest to you, then this is known as a transfer of equity.
In these cases we cannot act for both parties.
Where you have a mortgage on the property normally the party transferring their interest in the property will require releasing from the mortgage conditions and debt. There are three ways of doing this:
- Discharging the existing mortgage from monies from your own resources
- Obtaining consent from your current lender to transfer the property and making application for a further advance where required for the “buy out”
- By re-mortgaging your property and borrowing sufficient funds to discharge the existing mortgage and any surplus required for the “buy out”.
In all circumstances, we advise that a formal valuation is obtained to ensure all parties are aware of the value of their share and any payments made are reasonable. There is never any guarantee that the valuation will be achieved on an open market or that the value may decrease. Documents
We will normally produce two documents to be signed to enable the transfer to happen – A Transfer Document called a TR1 and a Statutory Declaration. The co-owner must get these two documents witnessed by an independent solicitor. This is so that we can be sure the person is willingly transferring the property to you and understands what he or she is doing. We will not complete the new mortgage until the signed documents, correctly witnessed, are returned to us. New Co-owner
If you are currently the sole owner of a property and you wish to transfer the ownership to one or more people, who will also be parties to the mortgage with you, then the new owner may need to get documents agreeing to the transfer witnessed by an independent solicitor, who will require identification.
This is because we will be acting for both of you in relation to the mortgage and we need to be sure that there is no duress. The current owner must sign a statement which provides that he or she understands the step being taken and that the transfer is not being done to prejudice any creditors. The person who will become a new co-owner then needs to get his or her documents witnessed by someone other than a family member. Marriage, Divorce or Separation
If you are getting married, entering a civil partnership or splitting up and want to change the ownership arrangements of your property then you should consult our matrimonial department first for advice. This is advisable before agreeing to transfer any interest you may have in a property to a co-owner or transferring the property into your sole name.
Where you are getting divorced it may be that even after completing the transfer the party transferring their interest in the property will still have a claim on the property or your settlement could be prejudiced. Our matrimonial department will be able to identify where this risk applies and advise how this maybe prevented.
Our conveyancing department works closely with our matrimonial department in dealing with these kinds of transfers on a regular basis and is pleased to offer a specialist service.
Wherever you own a second property it is always worthwhile seeking specialist tax advice to see what tax implications there may be. If you are instructing our matrimonial department it is always advisable to ensure you advise them of any tax liability you may have so this can be taken into account in the whole settlement.
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