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If you wish to transfer all or part of the ownership of a property, referred to as ‘transfer of equity’, you will typically need assistance from a regulated professional. While the process can be straightforward, some transactions may take longer or be more complex, especially if it is at the core of a financial settlement in a divorce. 

This article looks at the transfer of equity process and some frequently asked questions regarding the transfer of property ownership after divorce.

 

What is Transfer of Equity?

Transfer of Equity is the legal process required to add or remove someone from the title deeds of a property, which adds or removes them as an owner. Transfer of equity is not the same as selling the property, as at least one of the property’s original owners will stay the same.

 

Transfer of Property Ownership After Divorce

After a divorce, it is common for the marital home to be sold and the proceeds divided between the two parties. However, sometimes the property is transferred so that one spouse becomes the sole owner. It is up to you how assets and the property you own will be divided, and these aspects should be included as part of the overall divorce settlement agreement.

Once you have reached an agreement regarding your assets within financial settlement agreement it is then advisable to record the details in a consent order. A consent order is presented to the court to make it legally binding once the divorce has been finalised. A financial consent order also prevents one party from making future financial claims on their former spouse, providing a clean break.

If the property still has a mortgage, you will need to ask permission from the mortgage provider, and financial ability to pay the whole mortgage will be taken in to account.

 

What are the tax implications on a transfer of equity in a divorce?

New changes are coming into effect from April 2023, which updates the rules that apply to transfers of assets between spouses and civil partners who are in the process of separating, meaning they will no longer need to settle their estates within a year and face Capital Gains Tax (CGT) bills. It provides that they be given up to three years in which to make no gain or no loss transfers of assets between themselves when they cease to live together; and unlimited time if the assets are the subject of a formal divorce agreement. Currently, when spouses or civil partners separate, no gain or no loss treatment is only available in relation to any disposals in the remainder of the tax year in which the separation happens. After that, transfers are treated as normal disposals for capital gains tax purposes. Find out more information about the new measures here:

Capital Gains Tax: separation and divorce

 

Do I need a Solicitor for a transfer of equity? 

In some cases, it is possible to complete a transfer of equity by yourself  without a solicitor. However, this is not recommended as the process can be complex, especially if the transfer of property ownership forms part of the overall financial settlement in a divorce. It is essential you fully understand the various implications and ensure that the property is correctly registered with the Land Registry. You will also need a solicitor if there is still a mortgage on the property as there are certain legal requirements that will need to be met.

 

What is the Transfer of Equity Process?

In most cases, you should instruct a transfer of equity or financial settlement solicitor who will help guide you through the process. The key stages include:

  • Obtaining and reviewing the title deeds from the Land Registry– including checks for a mortgage, obtaining mortgage offer, and dealing with the mortgage company or any other restrictions on the property.
  • Obtaining permission from the mortgage company or obtaining a new mortgage
  • Checking and confirming the identity of each party
  • Preparing the transfer deed documents ready for signature
  • Notifying third parties– obtaining consent from any third party involved, such as a mortgage lender, bank or building society.
  • Land Registry Fee – a fee is payable to the HM Land Registry, depending on the type of application. To calculate the correct cost, see: HMLR Fee Calculator.
  • Registration of the deed transfer at the Land Registry – your solicitor will send the completed forms and correct fee to the HM Land Registry.

 

Financial Settlement and Consent Order Solicitors Kingston

Whilst you may feel that your separation is amicable, issues concerning transfer of equity and financial settlements are not always straightforward, and involve a complex area of law, especially when property is involved. We strongly recommend that you seek specialist legal advice from our experienced divorce lawyers to ensure you fully understand your legal rights and that your options are appropriately reviewed.

For further advice on divorce and other aspects of family law, don’t hesitate to contact our Family Law team today.

This blog post is not intended to be taken as advice or acted upon. If you are seeking legal advice, please contact our team of solicitors

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Marie-Cecilia Ferreira

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