We often receive instructions from clients who have been told by their mortgage company or their matrimonial solicitor to instruct a Lawyer to deal with their transfer of equity and it is often the case that the client does not understand the procedures involved nor the reason why.
“This situation commonly arises when a couple divorces or cohabitees split up, the former matrimonial home is held in their joint names and one of the parties wishes to retain the house” says Edwina Ashworth, property specialist at Kirkham Legal, “so in such a case, and assuming the parties have reached an agreement, the remaining party needs to obtain the Lender’s consent (if there is indeed a mortgage) to the other party being released from the mortgage covenants. This often forms part of the negotiated settlement as it then allows the departing party to obtain a mortgage in their own right in the future. The remaining party may also have to raise the funds (if any funds are being paid to the departing party) to buy out the other, either by their own savings, a loan from “the bank of mum and dad” , a new mortgage or a further advance from the existing mortgage company. Once these issues are dealt with, your Lawyer will then prepare the Transfer document for signature by the departing party, and, if required, draw down the funds from your mortgage company (or receive the funds directly from you). Your Lawyer can then pay off your old mortgage, in the case of you taking out a new loan, or transfer the old mortgage into your sole name (both of which release the departing party from the mortgage), pay any settlement moneys to your former partner and then register the house and mortgage in your sole name with the Land Registry, all of which are done simultaneously so as to protect the interests of both parties and the mortgage lender.”
It can therefore be seen that this can be a complicated process so please feel free to contact us to discuss any queries you may have.
Our Practice Licence Number is 11250.