A couple will hold multiple assets, and if their relationship breaks down, the financial ties need to be unwoven. This means a couple will need to decide what will happen to any properties. We are often asked how to transfer property from joint names to one person after divorce.
Below, Estelle and Sian explore the practicalities involved.
The divorcing couple
Harry and Megan have been married for 12 years and have decided to proceed with a divorce. They have two children aged 8 and 10. Both parties agree their marriage has irretrievably broken down, and they wish to proceed with an amicable divorce.
They jointly own Bluebell Cottage, which has a mortgage. They both have pensions and various investments. They seek guidance on the process to divide their assets; particularly to transfer their jointly owned property from joint names to Megan solely.
We have decided to divorce, what do we do?
The no-fault divorce was introduced by the Divorce, Dissolution and Separation Act in April 2022. The process is conducted online and there is a court fee of £593. One person can make a sole application, or you can now apply jointly.
To make the application, you will need a copy of your marriage certificate and some basic information about you both and your marriage.
A solicitor can help you with this, but you can also make the application yourself.
The process is straight forward and was designed to remove the previously combative nature of a divorce, and instead allows you to proceed amicably. This in turn, it is hoped, will lead to less combative discussions surrounding the financial claims which arise from divorce.
How do we reach an agreement about the distribution of our assets?
It is becoming increasingly common for a couple to agree the division of their assets between themselves, and then seek a solicitor’s advice for what to do next.
For those who need guidance on dividing their assets, there are a number of processes, including:
Mediation
A mediator is an independent and impartial third party, who facilitates conversations and helps you reach an amicable agreement in a respectful and open way.
Find out more about family mediation
Arbitration
An arbitrator can be appointed who specialises in family law, and they will decide for you. The arbitrator is chosen by you and is someone who is impartial. An award is binding and is quicker (and cheaper) than the court process.
Collaborative Law
Collaborative law is where each person appoints a lawyer who has had specialist collaborative training and the couple, and their lawyers all meet to work towards reaching an agreement.
Find out more about family collaborative law
Accord
If the couple is amicable, one lawyer may be able to act for both in helping to reach an agreement.
Find out more about Accord – Divorce using the same lawyer
As you work through one of the processes above, you will be guided as to the legal principles which govern the division of assets upon divorce. When an agreement has been reached, it is important the required legal documents are drawn up. Read this blog Securing your future: An essential guide to Consent Orders in divorce to find out more
If you are unable to reach an agreement, there is a court process which can be initiated, but it is expensive and there are substantial delays due to the lack of resources.
Once the agreement has been reached, and the documents sealed, the implementation of the terms is required; which for Harry and Meghan, will involve a property solicitor as they are seeking to transfer the ownership of the property.
How do I determine the value of the property?
Professional Valuation
One of the most accurate ways to determine the value of your property is by obtaining a professional valuation. You can instruct a chartered surveyor who will assess your property’s condition, location, size, and other relevant factors to provide you with an estimate of its value. This valuation will incur a fee but it will give you a precise figure.
Estate Agent Valuation
An estate agent can provide you with a valuation. This analysis involves comparing your property to similar properties that have recently sold in your area. This method provides a good estimate based on current market trends and the actual sale prices of comparable properties. It is always a good idea to get more than two estate agent valuations so you can compare.
Online Valuation Tools
Several online tools and websites offer property valuation services. These tools use algorithms and data such as recent sales prices, property size, location, and other factors to estimate your property’s value. While these tools can give you a rough idea, they will not be as accurate as an estate agent valuation.
Consider Market Conditions
Property values can fluctuate based on market conditions. Factors such as interest rates, housing supply and demand, economic growth, and government policies can influence property prices. Keep these factors in mind when determining your property’s value.
What do I need to transfer the property?
It is advisable to instruct a legal representative experienced in property to handle the transfer process. Your representative will ensure that all legal requirements are met, and the transfer is conducted smoothly.
If one person is keeping the property, the other person can transfer their share of ownership to them. This is known as a transfer of equity.
Your representative is likely to need the following documents at the outset:
- Identification (exact requirements should be discussed with your solicitor)
- Full names of both parties
- The property address
- The value of the property
- Whether there is a mortgage on the property and whether the lender has agreed to the transfer of equity (see below section on mortgages)
- The details of the other parties’ legal representative
- Whether the property is leasehold or freehold
- The consideration of the transaction – whether any money is changing hands
Your representative will prepare a Transfer Deed (TR1 form), which transfers ownership from one person to another, and will organise any other relevant documents required by the Land Registry.
What happens to the mortgage?
Release of Liability
If one person is being removed from the property’s ownership through the transfer of equity, they will also need to be released from their liability under the mortgage. This means that they will no longer be responsible for repaying the mortgage debt. However, the lender’s consent is required for this to happen.
It is important to obtain the lender’s consent for any changes to the mortgage arrangement and this should be done prior to instructing a solicitor. The lender will assess the financial circumstances of the remaining person to ensure that they can afford the mortgage payments on their own. They may also require additional documentation, such as proof of income and credit history.
It’s important to note that the transfer of property following a divorce can be complex, especially if there are outstanding financial matters or disagreements between you. Consulting with a solicitor early in the process can help ensure that your interests are protected and that the transfer is conducted in accordance with legal requirements.
How can Moore Barlow help?
Our expertise allows us to provide clients with an all round service; ensuring all of their needs are met.
Sian and Estelle work collaboratively to help divorcing or separating couples, who as part of their separation or divorce need to make changes to how property is held. They work in both the Lymington and Southampton offices.
Moore Barlow offer comprehensive tax advice tailored to meet the individual needs of our clients. We can provide guidance on inheritance tax planning, helping to mitigate potential tax liabilities through effective estate planning strategies such as trusts and lifetime gifts. If you need assistance then please do contact Sian or Estelle, and they can ensure your enquiry is dealt with by the right person.
