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Are You Considering Transferring A Share In Your Property?

The transfer of a share or interest in a property from one person to another is broadly known as a Transfer of Equity.

There are many reasons why a Transfer of Equity may be undertaken:

Marriage or cohabitation – when two people are married, form a civil partnership or live together and the property occupied is owned by one party, it may be desirous to have the ownership of the Property transferred into joint names.

Divorce or relationship breakdown – following any form of relationship breakdown it may be necessary or preferred, to have a Property that is owned in joint names transferred into the name of one party only.

Tax reasons – an Accountant or other financial professional may advise a Property owner to make a Transfer of Equity to make the individuals position more Tax efficient.

Prior to any Transfer of Equity appropriate Legal, Tax and Financial advice should be obtained to ensure that a Transfer of Equity is the most suitable option taking into consideration all circumstances.

The Process

Where a Mortgage or Charge is secured against the Property the consent of the Lender must be obtained prior to any Transfer of Equity taking place. Further financial provision may need to be made to enable the Transfer to take place or the Lender may have specific procedures that must be followed before any Transfer can take place.

If the Transfer is as the result of matrimonial or civil proceedings it is preferable for a sealed Court Order to be granted prior to any Transfer taking place, otherwise, there may be a risk that Stamp Duty Land Tax may apply to the transaction or that the details of the Order may be varied.

The Legal Title will be inspected, either through H M Land Registry, in the instance of registered land or upon inspection of the Title Deeds, in the event that the Title is currently unregistered.

The Transfer Deed can then be prepared which is the legal document that allows the Transfer of Equity to take place. This Deed must be signed by all parties.

Any consideration that is passing hands as a result of the Transfer of Equity should be made available to the Solicitor acting prior to Completion being able to take place.

In certain circumstances Stamp Duty Land Tax may be payable and a suitable Return prepared and filed with the Inland Revenue. Your legal advisor will be able to confirm whether Stamp Duty Land Tax will be payable depending on your individual circumstances.

Insolvency Act Indemnity Insurance may also be required in specific situations where the Transfer of Equity is taking place at less than market value. This is because if the outgoing party is declared bankrupt after the Transfer has taken place, a Trustee in Bankruptcy may believe that the Transfer was undertaken in order to avoid creditors and apply to the Court to have the transaction set aside. This could place a future Purchaser or Mortgage Lender at risk.

It is important to note that Insolvency Act Indemnity Insurance does not protect the parties to the transaction and only covers Lenders and future Purchasers. This means that if there is no Mortgage and the outgoing party is declared bankrupt your security at the Property could be at risk.

Your legal advisor will be able to confirm whether Insolvency Act Indemnity Insurance is appropriate in your case and advise you of any premiums payable.

Further matters may be relevant to your individual circumstances and will be raised by your legal advisor where necessary.

For further information please contact Victoria Pollington at Fosters Solicitors, Becket House, 1 Middleton Street, Wymondham, Norfolk NR18 0AB. Tel: 01953 713181 or email vp-team@fosters-solicitors.co.uk

This information is intended for guidance purposes only and is not intended to apply to any specific circumstances and does not constitute legal advice.

This article was produced on the 12th May 2015 by our Property team for information purposes only and should not be construed or relied upon as specific legal advice.