The legal process of transfer of equity happens when someone is added or removed from a property’s title deeds, with one of the owners remaining the same. It is usually used in the case of a relationship breakdown, a new relationship or if one owner wants to buy out the other. It is also sometimes used for tax purposes, when property owners transfer equity to their children.
Definition of equity
The percentage of a property that you own is known as equity. If you have a mortgage, this is taken off the total value of the property to work out the total. If you or the joint owner want to give up their percentage, you’ll need to complete a transfer of equity. This can be between two people, or several when there is shared ownership.
Examples
A couple who are in a relationship split up and want to transfer the equity to one party. The Citizens’ Advice Bureau says the first step is to find out how much your home is worth to find out the equity and then reach an agreement with your ex-partner about what to do. It is then time to use a transfer of equity solicitor, who will draft the legal papers required. Law firms such as https://www.parachutelaw.co.uk/transfer-of-equity-solicitor have lots of experience in dealing with transfer of equity.
You own a property and enter a new relationship and you want to add that person to the title deeds of your property. This means the transfer of equity is going from one to two.
Another example is when a former partner is removed from the title of the property and replaced with someone else, making the transfer of equity from two to two.
How it works
When a person gives up ownership of a property, they receive their share of any equity. If there is a mortgage on the property, they’ll need to get the lender’s consent first or if there is no equity, the remaining owner can remortgage or get a new one with a different lender.