Transfer of Property Ownership From Joint to Single
Thinking of transferring your jointly owned property into sole ownership? Whether you’re separating, planning your estate, removing a person from the title deeds, or redistributing for tax purposes, transferring equity is the way to go.
However, you need to approach this process cautiously and consider:
- If you can afford a mortgage alone.
- If you can manage the sole legal responsibility for the property.
Why would you transfer a property into sole ownership?
- When couples part ways through a divorce, civil partnership dissolution, or simply break up, they usually need to divide assets such as property which might be in their joint ownership.
- In the event of a joint owner's death, the surviving owner may wish to hold the property solely; it typically automatically transfers to their sole name but the death will need to be registered through a DJP Form.
- If a tenant in common passes away, the inheritor may choose to transfer the property to the surviving tenant in common.
- Some individuals may choose to transfer property to a single owner for tax benefits like inheritance tax avoidance or to simplify the inheritance process.
- Family disputes or disagreements can kickstart a transfer of ownership to avoid future conflicts.
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Transferring a house to sole ownership during a divorce requires careful consideration and cooperation between all parties. If the property is jointly owned, you'll need to reach an agreement with the joint owner and it needs to be legally recognised.
However, if there's a dispute about ownership then it's best to wait until settlement. Alternatively, you could sell the house, divide the profits and go your separate ways. However, if you're not interested in that route, you might have to take legal action.
This applies even if your ex-partner has moved out and stopped helping with mortgage payments; they could reappear after some time and claim ownership as their name is still on the title at the Land Registry. Although a solicitor will look out for your best interests if this should happen, you're likely to incur a lot of legal costs in the process.
The surviving joint tenant automatically becomes the sole owner if the property was jointly owned. However, you must inform the HM Land Registry and provide a death certificate to update the title. You'll also need to complete a DJP Form (Deceased Joint Proprietor).
Reaching an agreement on a division of assets (the property)
Often, parties can agree to divide assets amicably without involving lawyers or the courts. However, if mediation or arbitration is required, an independent third party can help reach a mutually agreeable solution or make a final decision. This approach is often quicker and less expensive than court proceedings.
- A mediator is an impartial third party who helps parties reach a mutually agreeable solution.
- An arbitrator can make a binding decision in a family law dispute, often providing a quicker and more affordable solution than court proceedings.
Sole ownership: is it the right choice?
- Sole ownership grants you complete control over the property; you can undertake renovations or improvements without seeking approval from your joint owner.
- Certain legal procedures, such as selling or remortgaging, may be simpler. If you go through a separation in the future, dividing a solely owned property is less complex than dividing a jointly owned property.
- Additionally, upon your death, the property can be transferred to your beneficiaries without the joint ownership restrictions.
- While tax laws can change over time, you could use them to your advantage and transfer ownership of a buy-to-let property to your spouse in a lower tax bracket. This potentially reduces the amount of income tax payable. Additionally, as long as there's a single resident living in the property, most councils offer a single-resident discount on council tax.
- As the sole owner, you are solely responsible for all costs associated with the property, including the entire mortgage payment, all property taxes, and all maintenance and repair costs.
- You might struggle to meet lending criteria for a new mortgage if applying alone either now or if you decide to remortgage in the future.
- You are personally liable for any debts or legal issues associated with the property. For example, if someone is injured on your property, you could be held liable. If you default on your mortgage or other property-related debts, your personal assets could be at risk.
- If you decide to remortgage in the future, you might need to meet specific financial criteria for approval.
What restrictions can stop a transfer?
Form A Restriction
If you hold the property as tenants in common, restrictions imposed by a Deed of Trust may need to be satisfied.
A Form A restriction may prevent you from transferring the property to sole ownership without the consent of the lender or other interested party.
For example, if you have a mortgage on the property, your lender may have a Form A restriction in place to protect their interest.
Form LL Restriction
Form LL restrictions are anti-fraud measures implemented by the Land Registry to protect against fraudulent property transactions. They are designed to prevent identity theft and other fraudulent activities.
To comply with Form LL restrictions, you may need to provide additional identification documents or proof of your identity to the Land Registry. This can add extra time and complexity to the transfer process.
Form B Restriction
A Form B restriction is a legal document that indicates that there are non-legal owners with an interest in the property.
This often occurs in situations where a property is purchased jointly with a mortgage provider, such as a Joint Mortgage Scheme Product (JMSP).
If you have a Form B restriction on your property, you will need to obtain the consent of all non-legal owners before transferring the property to sole ownership. This also applies if you intend to transfer a share of ownership to a family member.
This can be a complex process, especially if the non-legal owners are no longer involved in the mortgage or have passed away.
Leasehold Properties
Freeholder consent may be necessary, and you'll need to ensure ground rent and service charges are up-to-date. There'll be a notice fee to pay as well to inform the freeholder of the owner post removal. The lease agreement may contain covenants that restrict the transfer of ownership, such as limitations on who can purchase the property.
- Experts in removing a charge, bankruptcy order, Form LL, Form A, and Form B.
- Can draft a Deed of Trust to protect your interest in a property within 1-2 days.
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Our solicitor will review your restriction to help you determine your next steps for a fixed fee of £99 INC VAT.
The process of transferring property ownership from joint to single
The following process is for a Transfer of Equity with a mortgage when removing a party. The process to follow if you do not have a mortgage is the same as below but without the mortgage offer and lender consent.
- 1If you have a mortgage, obtain consent from your lender or apply for a new mortgage in your name. You need consent whether you're adding or removing someone from the title deeds, and it can take around 10 working days to get this from the lender.
- 2Consult and instruct a qualified solicitor to help you understand the legal implications and guide you through the process.
- 3Reach a mutual agreement on the terms of the transfer with the other joint owner, including any financial settlements.
- 4Determine how you'll finance the transfer, whether through a mortgage, savings, or other means. The proof of funds is required to start the transfer of equity process.
- 5Complete the TR1 form and ID1 form with your solicitor's assistance. Once signed, these forms are sent to the Land Registry to confirm the equity transfer; it can take around 20 working days for this part of the process.
- 6(If leasehold) notify your freeholder of your intention to solely own the property and make sure any ground rent or service charges are paid. You may also have to answer any enquiries that the freeholder raises. This can be the longest part of the transfer, with freeholder replies typically taking between 15 to 30 working days.
- 7Prepare to pay transfer fees and Stamp Duty Land Tax if applicable - your solicitor will help with this.
- 8Your solicitor will prepare a transfer report and update the Land Registry to reflect the new ownership structure. They usually send this within 5 working days of the receipt of title documents including the transfer details, the consideration, and the Stamp Duty Land Tax form (if applicable).
- 9Completion takes place to finalise the transfer. Insurance providers, utility companies, and other relevant parties are notified of the ownership change.
The cost of changing property ownership from joint to single
SAM's fees start at £413 for a Transfer of Equity with a remortgage, and £399 without a remortgage.
While the specific costs can vary depending on individual circumstances, here's a breakdown of the potential expenses associated with transferring property ownership:
- Solicitor fees for handling the legal aspects of the transfer. This includes reviewing documents, preparing the legal paperwork, and liaising with the other party's solicitor and the Land Registry. Additional fees will be payable if a restriction (Form A, Form LL, Form B) needs to be removed.
- If required, fees for a property valuation.
- Stamp Duty Land Tax (if applicable). The amount will depend on the property's value and your circumstances.
- If you're obtaining a new mortgage, fees related to the mortgage application and arrangement. Potentially an early exit fee from your previous mortgage too.
- Fees for updating the Land Registry to reflect the new ownership.
- You may incur additional costs if you need to buy out the other joint owner's share.
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