Property transfer of equity

   

 

 

Here is a clear, simple explanation of Transfer of Equity in property, including what it means, when it happens, costs, legal steps, and examples.

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What Is “Transfer of Equity”?

Transfer of Equity means adding or removing someone from the ownership (title) of a property without selling the whole property.

It changes who owns how much of the home but does not usually involve a full sale.

✔ You can transfer the whole share
✔ Or only part of your share (e.g., transferring 50%)

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Common Situations Where Transfer of Equity Happens

1. Marriage / Relationship

   • Adding a spouse/partner to the property title.

2. Separation / Divorce

   • Removing a partner from the ownership.

3. Family Transfers

   • Parents adding children to the title

   • Transferring part of a home for inheritance planning

4. Buying out a Co-Owner

   • One owner pays another to take full ownership.

5. Tax or Asset Planning

   • Moving shares to reduce tax liability (consult a tax professional).

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Who Must Be Involved?

✓ A conveyancing solicitor

Handles the legal work.

✓ Your mortgage lender

If there is a mortgage, the bank must approve the transfer.

• If someone is being added → they must pass affordability checks.

• If someone is being removed → the remaining owner must qualify for the mortgage alone.

If the lender refuses, you may need to remortgage.

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Basic Steps of a Transfer of Equity

1. Instruct a solicitor

2. Apply for lender consent (if there’s a mortgage)

3. Solicitor prepares transfer deed (TR1 form)

4. Sign the deed

5. Pay Stamp Duty (if required)

6. Land Registry updates the ownership record

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Costs Involved

1. Solicitor / Conveyancing Fees

Typical range: $300 – $1,000+, depending on complexity.

2. Mortgage Fees (if applicable)

• Lender’s administration fee

• Remortgage charges (if refinancing)

3. Stamp Duty / Taxes

You may owe stamp duty only if money or mortgage debt is being transferred.

Example:
If your partner takes on half the mortgage, that half counts as “consideration.”
Depending on your country’s tax rules, this can trigger stamp duty.

4. Land Registry Fee

Usually small, based on property value.

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Examples (Easy to Understand)

Example 1: Adding Your Spouse

House value: $300,000
Mortgage: $200,000
You add your spouse to the title. No money exchanged → likely no stamp duty.

Example 2: Divorce – One Buys Out the Other

Two owners each own 50%.
One partner buys the other’s 50% share.
Stamp duty may apply if the buying partner takes on part of the mortgage.

Example 3: Parent Adding a Child

Parent adds child to the title for inheritance planning.
If no money changes hands → often no stamp duty, but tax implications exist.

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What Documents Are Used?

• TR1 form – main transfer deed

• ID1 form – identity verification

• Mortgage deed – if refinancing

• Stamp Duty Land Tax return (if applicable)

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Important Notes

• A transfer of equity is not the same as selling the property.

• Anyone added becomes legally responsible for the mortgage.

• Tax and legal consequences vary by country—always seek professional advice.

floating freeholds

   

 

 

A floating freehold is a type of property ownership arrangement in England & Wales that can create practical and legal problems.

✅ What it means

A floating freehold occurs when:

• A part of one freehold property physically overhangs, underlies, or is otherwise supported by another freehold property; and

• There are no legally enforceable rights of support, access, or repair between them.

Common example:

• A first-floor room belonging to one house extends over a passageway or ground-floor room belonging to a neighbour.

• Each portion is owned as separate freeholds instead of being in one freehold with a lease between them.

✅ Why it’s a problem

Lenders often dislike floating freeholds because:

• There may be no guaranteed right of support, meaning one owner could legally alter their structure and undermine the other.

• There may be no right of access to carry out necessary repairs.

• It can be hard to insure, as neither party is fully responsible for shared structural parts.

• It can complicate buying, selling, or remortgaging.

✅ How the issue is usually resolved

Options include:

• Deed of Grant to provide rights of support, access, and repair.

• Mutual covenants between owners.

• Converting the arrangement to one freehold with a long lease to the other party.

• Title indemnity insurance (a last resort for lenders).

✅ Should you be concerned?

If you’re buying or selling a property and the solicitor says there is a floating freehold, it’s important to:

• Understand exactly what part is affected.

• Check whether rights already exist.

• Confirm your lender is satisfied.

• Get proper legal advice before exchanging contracts.

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If you want, I can explain:
✅ whether your situation likely counts as a floating freehold
✅ if a lender will accept it
✅ how complex the fix is
✅ how to negotiate with the seller or solicitor

I can check whether your situation counts as a floating freehold — I just need a description of the layout.

Please tell me:

1. What part of your property overhangs or sits under someone else’s?
   (e.g., “the first-floor bedroom extends over my neighbour’s passageway”)

2. Are the parts owned under separate freeholds?
   (If you’re not sure, say so — we can figure it out.)

3. Has your solicitor mentioned anything about rights of support or access?

Once you give me those details, I can tell you very clearly whether it’s a floating freehold and how serious it

When lenders usually accept a floating freehold

Most mainstream lenders will consider it if all of the following apply:

1. There are proper legal rights in place

• A Deed of Grant or similar document gives:

  • Right of support

  • Right of access (to inspect, repair, maintain)

  • Right of shelter / protection from weather

If these exist and are enforceable, many lenders are satisfied.

2. The floating part is not too large

As a rough rule:

• Lenders are okay if the overhanging/underlying area is under 20% of the total floor area.

• If it’s a whole floor, lenders become more cautious.

3. The arrangement is common in the area

Example: Victorian terraced houses where a flying freehold bedroom sits over a neighbour’s alleyway — lenders accept these all the time if rights exist.

4. Indemnity insurance is available

Some lenders accept a floating freehold if:

• A Flying Freehold Indemnity Policy is taken out.

• Your solicitor confirms risks are minimal.

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❌ When lenders may refuse it

A mortgage is likely to be rejected if:

• There are no rights of support or access, and the neighbour refuses to sign anything.

• The floating element makes up a large structural portion of the property.

• There is a history of disputes between the properties.

• The lender has a strict policy (Nationwide & Santander can be stricter).

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✅ What most big lenders say (general guide)

• Barclays, HSBC, NatWest: Usually OK if rights are in place.

• Nationwide: More cautious; often require strong legal rights or may decline.

• Santander: Case-by-case; often require indemnity insurance.

• Halifax: Generally reasonable if solicitor gives a clean report.

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