When land or property is owned jointly by two or more people, circumstances may sometimes dictate that one of the owners must transfer their share to the one of the other joint owners which is known as an equity transfer. The ‘equity’ in a property, owned by any individual, is the net value of their share and is calculated after deduction of any outstanding loans or mortgages that are legally secured on the property. A transfer of equity is the process wherein a co-owner of a property wishes to relinquish his claim on the property and transfers all rights to one of the other owners, either in exchange for the payment of money or as part of a larger and usually more complicated arrangement. This process, if carried out by solicitors, which is advisable for the protection of both parties, usually entails legal costs and disbursements for the conveyancing services that are carried out on behalf of both the transferor and the transferee.
An equity transfer may be required for various reasons however the most common reason is when a couple decides to divorce or separate. When this happens, the normal course of action is for the couple to make an agreement for one to buy the other out for a fixed sum however where agreement cannot be reached it may be necessary for the property to be placed on the open market for sale with the net proceeds of sale being divided between the parties either in accordance with their agreement or if no agreement can be reached in accordance with a court order. A transfer of equity usually involves the passing of money however there are many cases where property transfer is affected as a gift as part of a larger more comprehensive agreement. In these cases, it is essential that the conveyancing services are carried out using separate solicitors acting on behalf of the transferor and transferee to ensure that the parties are treated fairly and to avoid possible conflicts of interest.
As part of an equity transfer, any existing mortgagor must be informed of the process and in many cases the transferee will request that the mortgage continues in their sole name after the transfer is completed. Unless the transferee can show proof of ability to pay off the mortgage, some lenders may not agree to continue funding the loan unless both parties continue to be financially responsible for the ongoing loan. Provided that the new sole owner can show an ability to service the loan then the previous owner may be released from the mortgage.
Where possible conveyancing solicitors deal with matters electronically and there is no need for any of our clients to ever attend a solicitors offices. Clients who do not have access to a computer can still be dealt with efficiently by use of post and telephones and will find that the service still proceeds at a fast pace due to use of modern technology again without the necessity to attend any law office.