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What is a Transfer of Equity?

A transfer of equity is the legal process of changing property ownership without selling the property. It usually involves transferring a share or the entire ownership from one party to another.  

The most common scenarios for a transfer of equity include: 

  • When a couple separates and one partner becomes the sole owner of the property. This is called a 2-1 transfer of equity. 
  • When a couple are married or become a civil partnership, or a sole owner wants to give ownership of part to another person. This is called a 1-2 transfer of equity. 
  • If one partner in the relationship is replaced immediately by another, such as a new husband or wife. This is called a 2-2 transfer of equity. 

Equity can also be transferred through a gift, which involves the transfer of ownership without any form of valuable consideration. Valuable consideration refers to cash, assets, services, or the assumption of debt. 

There are several reasons why equity may be transferred as a gift. Whether it’s safeguarding your loved one, planning for future generations, or minimising inheritance tax.  

FAQs

The duration of a transfer of equity can differ based on different factors including the complexity of the transfer, the efficiency of the parties involved, and any legal requirements. Typically, a simple transfer of equity can be finalised within 4 to 6 weeks. Nevertheless, more complicated situations might require more time.

All parties gather required paperwork and come to an agreement, usually with the help of legal representatives. If there is an existing mortgage, approval from the lender is necessary. Legal experts create documents outlining the transfer process, which are then signed by everyone involved and filed with the Land Registry. After this process is finished, ownership is officially transferred, and any mortgage details are adjusted accordingly.