Whilst in some cases, the process of transferring all or part of the ownership of a property can be straightforward, some transactions can involve complexities. Therefore, it is sensible to instruct a trusted legal professional in all circumstances.

Known as ‘transfer of equity’, there are a variety of reasons as to why it might be necessary to add or remove someone from the ownership of a property. Upon divorce, the transfer of property ownership can be particularly complex.

In this article, our experienced solicitors at Beverley Morris & Co. outline what you need to know before you enter into the transfer of equity process as part of your divorce proceedings.

What is equity transfer?

Transfer of Equity, or equity transfer, refers to the legal process of adding or removing someone from the title deeds of a property, affecting their ownership status. At least one of the original property owners is the same, meaning that this is not the same as buying or selling property.

Transferring Property Ownership After Divorce

It is common for a marital home to be sold and the sale proceeds to be divided amongst spouses. However, depending on the circumstances, it may be appropriate to transfer sole ownership to one spouse. This should be decided between you as part of your divorce settlement agreement whilst you decide how to distribute your other assets.

In cases where the property still has a mortgage, the mortgage lender will need to provide permission. The spouse receiving sole ownership of the property will be required to prove that they are financially able to continue the repayments.

Once you and your ex-spouse have reached a settlement agreement regarding your finances and property, recording the details in a consent order is sensible. This will then be presented to the court to make it legally binding once the divorce is finalised. Financial consent orders also prevent either party from making future claims to the other’s finances in the future, meaning there is a clean break.

What is the Transfer of Equity Process?

The Transfer of Equity process can become complex; therefore, ensuring that you have the support of an experienced and knowledgeable solicitor throughout the process is advisable.

When you instruct Beverley Morris & Co. to assist with transferring property ownership, the following steps are followed:

  1. Our solicitors will obtain and review the title deeds from the Land Registry. Any restrictions on the property will be considered at this point.
  2. Permission will be obtained from the mortgage company to transfer ownership, or a new mortgage will be applied for and obtained where necessary.
  3. The identity of each party will be checked and confirmed.
  4. The transfer documents will be drafted and prepared ready for signing.
  5. All relevant third parties will be notified, and relevant consent obtained where necessary. This might be a bank, building society or other mortgage lender.
  6. The Land Registry fee will be paid. The amount will depend on the type of application being made. Usually, the value of the share of the property being transferred will need to be known. To gauge the Land Registry fee for your transaction, please utilise this HMLR Fee Calculator.
  7. The Land Registry will be notified of the deed transfer as all relevant forms will be sent alongside the correct fee to HM Land Registry.

What are the tax implications?

Updated in April 2023, the rules surrounding Capital Gains Tax (CGT) now allow spouses or civil partners up to three years to make no gain or no loss transfers of assets between themselves. This time period is unlimited if the assets are subject to a formal divorce agreement.

Prior to this update, estates had to be settled within a year, and no gain or no loss treatment was only available in relation to any disposals in the remainder of the tax year in which the separation occurred, meaning that all future transfers were treated as normal disposals and CGT was payable.

The new system has simplified the rules surrounding Capital Gains Tax and gives more time to couples wanting to transfer assets.

Financial Settlement Solicitors Blackheath

Even in cases of an amicable separation, you may face issues regarding organising and dividing your assets and finances.

Financial settlements are not always straightforward, and this area of law can be complex, particularly when property needs to be considered.

It is strongly advised that you seek the advice of an experienced team of solicitors, well-versed in family, divorce and property law. At Beverley Morris & Co., our family and residential property teams will work collaboratively to ensure that you are kept up-to-date and understand your obligations when you are looking to transfer property ownership as part of your divorce proceedings.

To speak to a solicitor about your matter today, please call 020 8852 4433, email enquiries@beverleymorris.co.uk or fill in this contact form.

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