A Transfer of Equity is when someone’s name is either added to the ownership of a property or someone’s name is removed.
For example, if a property is held in the joint names of two people and one person wishes to buy out the other or is given the other person’s interest to enable them to hold the property in their sole name. However, transfers of equity are not always straightforward, particularly when mortgages are involved. We can help you deal with your existing mortgage company to obtain their agreement to the transfer or act for you if you wish to obtain a fresh mortgage in your sole name.
We can also help if you wish to add someone as an additional owner of your property. For example, adding a new partner’s name to the title of a property you own in your sole name. If you have a mortgage, you will normally require the mortgage company’s consent to the new owner being named on the property and your new partner will normally need to be a party to your existing mortgage. We can assist with that process or help you if you wish to take out a new mortgage in your joint names.
If you do wish to add someone as an additional owner to your property, because they are making a financial contribution to the property, either by way of a capital sum of money or by contributing to the mortgage. It is very important that in these circumstances you obtain specialist legal advice in respect of how the ownership of the property is divided. We can prepare a document called a Declaration of Trust which will clearly set out the shares in which you both hold the property and whose responsibility it is, for example, to pay the mortgage.
In addition our Family team can assist if you wish to formalise your living arrangements in a Cohabitation Agreement. A Cohabitation Agreement can set out what arrangements you wish there to be in respect of any children should the relationship later breakdown, how you will treat property owned by either one of you either before you moved in together or acquired during the cohabitation, how you will deal with any debts you both might have, what, if anything, will you leave to each other in your Wills (although it is still important that you both make a will) and how you will resolve any future disagreements, i.e. via mediation.
Transfers of Equity often also take place between family members, perhaps for inheritance tax reasons. Our Life Time Planning team can advise not only on the change of ownership of the property but also any inheritance tax implications. This is a complex area of law and specialist legal advice should be sought before any change of ownership takes place.
