Transferring property following the breakdown of a relationship

When a relationship breaks down, a decision will have to be made as to what should be done with the family home.

It will often be the case that one owner decides to take on the other owner's share of the property and this can give you a sense of normality throughout what will undoubtedly be a period of upheaval and change. If you decide to go down this route, there are a number of important considerations to be taken into account:

1. Payment for your co-owner's share in the property

When a couple are divorcing, the Court will make an Order relating to the division of the marital assets. This will include whether the home is to be sold or transferred to one of the owners.

Where the separation is amicable, the parties may reach an agreement where one person pays the other for their share. This payment will most likely be a cash sum, but could also be taking on sole responsibility for any debt secured against the property.

2. Mortgage Lender Consent

If you have a mortgage which you will not be paying off then it will be a condition of the loan that you do not transfer the property without the lender's consent. This means that you have to obtain your lender's approval to transfer the property into your sole name. Your lender will reassess your financial position and will only consent to the transfer if your meet their lending criteria.

3. Registering the Transfer

In order for you to become the sole legal owner of the property, you must register the transfer with Land Registry. Simply preparing and signing a Transfer Deed will not make you the legal owner of the property.

4. Stamp Duty Land Tax

If you are buying somebody else's share in your property, Stamp Duty Land Tax applies just as it would when you were purchasing the property - so if the amount you are paying for the property is over £125,000, you will have to pay tax.

It is also important to remember that if you are assuming sole responsibility for a mortgage previously in joint names, this forms part of the purchase price as well as any cash payment.

5. Insolvency Provisions

If you are being gifted the share in the property, or if you are paying less than the share of the property is worth, then you need to check that the person transferring you their share in the property to you is solvent. HM Revenue has the power to set aside a transfer not made for full market value if they believe the transfer was made to put the property out of the reach of creditors. This could have an impact when you come to sell the property.

As with all property transactions you should seek the advice of a qualified property solicitor.

If you like to speak to one of Emsleys' property experts, call us today on 0113 264 4414.