Transfer of equity

What is a transfer of equity?

A transfer of equity is the legal process of changing who owns a property. In divorce, this typically means:

• Transferring from joint names to one person’s sole name
• Adding or removing someone from the property deeds
• Changing the ownership shares

The transfer doesn’t change the property itself – just who legally owns it.

When is transfer of equity used in divorce?

One person keeping the home

If you’ve agreed that one spouse will keep the family home, the other’s name needs to come off the deeds. This might happen when:

• One person can afford to keep and maintain the property
• Children need to stay in the family home
• The property transfer is offset against other assets

As part of a buyout

When one spouse buys out the other’s share, the transfer of equity formalises the change in ownership alongside the financial payment.

Immediate vs deferred transfer

The transfer can happen:

• Immediately – as soon as the consent order is approved
• Deferred – at a future date or trigger event (like children turning 18)

If deferred, both names may stay on the deeds with a legal charge protecting the departing spouse’s interest.

The mortgage complication

The transfer of equity only changes who owns the property. But if there’s a mortgage, you also need to deal with who’s responsible for the debt.

If there’s no mortgage

Straightforward – you just complete the legal transfer.

If there’s a mortgage

The person keeping the property usually needs to:

1. Remortgage in their sole name – take out a new mortgage that pays off the joint one
2. Get the lender’s consent – to keep the existing mortgage but remove the other person (difficult to achieve)

Mortgage lenders won’t simply remove someone from a joint mortgage. The remaining borrower must prove they can afford the debt alone.

The transfer process

Step 1: Agree terms

Your consent order should specify:

• What’s being transferred
• When it’s happening
• What payment (if any) the departing spouse receives
• Who pays the costs

Step 2: Arrange the mortgage

If there’s a mortgage, the person keeping the property needs to:

• Apply for a new mortgage in their sole name
• Pass affordability checks
• Receive a formal mortgage offer

This can take 4-8 weeks.

Step 3: Instruct a solicitor

A conveyancing solicitor handles the transfer. You can use:

• One solicitor acting for both parties (if no conflict)
• Separate solicitors for each party

Step 4: Complete the transfer

The solicitor:

• Prepares the transfer deed (TR1 form)
• Obtains signatures from both parties
• Registers the change with the Land Registry
• Handles any money transfers

Step 5: Update records

After completion:

• Land Registry shows the new ownership
• Mortgage is in the new owner’s sole name
• Home insurance updated
• Council tax records changed

Costs involved

Legal fees

Solicitor costs for a transfer of equity: typically £500-£1,000 plus VAT and disbursements.

Land Registry fee

Currently around £40-150 depending on property value.

Mortgage costs

If remortgaging:

• Arrangement fee (£0-£2,000)
• Valuation fee (often free with mortgage deals)
• Mortgage adviser fee (may apply)
• Early repayment charges on old mortgage (if applicable)

Stamp duty

Transfers between spouses as part of a divorce settlement are usually exempt from stamp duty. This applies if the transfer is made:

• Under a court order
• At any time in connection with divorce proceedings

Your solicitor can confirm whether the exemption applies to your situation.

Transfer without a consent order

Technically, you can complete a transfer of equity without a consent order – the conveyancing can happen independently.

However, this is risky:

• The financial settlement isn’t formalised
• Future claims remain possible
• There’s no enforcement mechanism if things go wrong

Always complete a consent order alongside the transfer to properly document the financial settlement.

What happens to the departing spouse’s interest?

The departing spouse might receive:

Cash payment

A lump sum representing their share of equity, funded by the other spouse remortgaging.

Nothing (offset)

No immediate payment, but they receive more of other assets (like pensions or savings) to compensate.

Deferred payment

A legal charge on the property securing their right to a future payment (when the property eventually sells).

Ongoing share

They retain an ownership percentage but not the right to live there, receiving their share when the property sells.

Deferred transfers (Mesher orders)

Sometimes the transfer is delayed – for example, the property stays jointly owned until children finish education, then one person has the option to buy out or the property is sold.

In these cases:

• Both names stay on the deeds
• One person has the right to live there
• The other retains a beneficial interest
• A legal charge may protect the non-resident’s share

Problems that can arise

Mortgage refusal

If the person keeping the property can’t get a mortgage alone, the transfer can’t complete. Options include:

• Selling instead
• Reconsidering the settlement
• Delaying until their finances improve

Non-cooperation

If one party refuses to sign the transfer documents, the other can apply to court for an order compelling them, or for the court to sign on their behalf.

Hidden defects

Issues discovered during the conveyancing (boundary disputes, missing documents) can delay or complicate the transfer.

Timeline

A straightforward transfer of equity takes approximately:

Complications can extend this significantly.