Title deed amendment - mortgage obligations?

predator12051981

Hi everyone,

I presume this thread may not be in the best area but it seemed to be the most logical that I could find so feel free to reassign.:)


I am looking at removing my sister from the title deeds on my apartment, it is a mutual agreement and no money will be exchanging hands. I have the details on Land Registry procedures/forms etc so fine with that side.


As the mortgage is in both our names I would like to leave that as is (as the rate I have is ridiculously good) and just do the deeds bit.
I have spoken to my lender (Alliance & L) and they said its fine to leave the mortgage as joint and have the deeds in just one name but the guy on the phone twice advised that I would need to engage a solicitor as it is "a legal document" that needs to be done.


I presume he is referring to the title deeds process but as it is purely a name removal then other advice suggests that this can be done without involving a solicitor, and as I am keeping the mortgage as is then I don't see why a solicitor will be required for that as nothing is changing.


Anybody have an idea on this? I suspect the guy at A&L was just assuming I didn't do much research so was just advising as protocol.


Many thanks.


Chris

Senior_Paper_Monitor

The lender will almost certainly insist (I would) on legal representation to ensure that no deprivation, insolvency etc involved - and that sister takes independent legal advice.

Joe_Bloggs

Will there be Stamp Duty Land Tax to pay ?

Quote from HRMC:-

Property given as a gift

If the property is received as a gift there's no SDLT to pay, so long as there's no outstanding mortgage on it. But if the person who receives the gift takes over some or all of an existing mortgage, then SDLT may be payable if the value of the mortgage is over the SDLT threshold.

J_B. (It really is a stupid tax.)

predator12051981

Senior_Paper_Monitor wrote: »

The lender will almost certainly insist (I would) on legal representation to ensure that no deprivation, insolvency etc involved - and that sister takes independent legal advice.

Thanks, however as the mortgage will remain the same and A&L will still have a Registered Charge on the deeds then it seems excessive for a solicitor to be involved.
I can understand if we were looking to remove my sister from the mortgage but that is not the case and any such notices as bankruptcy or insolvency will be added to the deeds which are held at A&L so they would know as soon as something like that happened.

My sister is happy to come off the deeds as she has not made any contributions since the purchase (all of which was my money) due to marrying herself off so regardless of legal advice she would still proceed.

predator12051981

Joe_Bloggs wrote: »

Will there be

Quote from HRMC:-



J_B. (It really is a stupid tax.)

I agree, quick research tells me that my mortgage is way below the threshold so I should be fine on SDLT :T

Thrugelmir

predator12051981 wrote: »

Thanks, however as the mortgage will remain the same and A&L will still have a Registered Charge on the deeds then it seems excessive for a solicitor to be involved.

Its your sister that needs the advice. As the implications of doing this need to be clearly spelt out to her. A&L are merely covering themselves in the correct manner.

holly_hobby

A&L are happy to have your sister remain on the mge, as she will still be jointly and severally liable with you for the debt to maintain the servicing of the mge for its duration (so there is actually no financial risk to them in her being removed from the deeds). Which essentially means that any arrears and possession order will also affect her and her credit record (even though she has no equittable benefit of the property itself), includling lawful pursuance of any shortfall on disposal for up to 12 yrs.

Futhermore, remaining joint mortgagor with you will affect her max mge borrowing capacity for her own future mge requirements.

As current joint owners, with no exchange of consideration on the TOE, and importantly the mortgage liability between you remaining unchanged despite the TOE (which would otherwise be classed as consideration)- there shouldn't be any SDLT exposure or return reqd.

IF your sister is removed from the mge as part of the TOE, this situation will obv change, as the tsf of mge debt between parties will be classed as consideration - check with your sol/HMRC for more details, and what the situation will be if she is subsequently removed from the mge in the future (ie post completion of the TOE & nil SDLT liability at the time of tsf).

To be honest .... this is not something I would be comfortable with unless I was certain she understood the implications, and thats why she needs to obtain independent legal advice on this, for everyone's piece of mind and future family harmony !

Effecting a TOE with regards to LR isn't really too complicated, forms are readily available on their site - however I would advise using a solicitor, as this isn't a straight cut TOE, with your sister actually remaining a mortgagor/ party to the mge).

To which it is vital that you ensure your will is updated to reflect the change in ownership, with a sufficient term (life) assurance policy effected in respect of the mge debt, which if a single name policy should be written in trust, to ensure quick hassel free payment on your death - so that your sister may redeem the mge in joint names on your death.

If Term assurance is not effected, then I guess the property will have to be sold to permit redemption of the mge upon your death before the scheduled end date - unless you bequeth it to her via your will, and she continues to maintain the mge repayments until redemption (if affordable, suitable and appropriate to her of course - or she may elect to rent it with the appropriate permissions or change of mge to a BTL arrangement) .

This is a potentially very messy arrangement (and I wouldn't recommend it be on a long term basis due to the above issues), unless you tie off all loose ends which will arise as a result of the planned action, which as you can see is more far reaching than just having her taken off the deeds.

Hope this helps

Holly

predator12051981

holly_hobby wrote: »

A&L are happy to have your sister remain on the mge, as she will still be jointly and severally liable with you for the debt to maintain the servicing of the mge for its duration (so there is actually no financial risk to them in her being removed from the deeds). Which essentially means that any arrears and possession order will also affect her and her credit record (even though she has no equittable benefit of the property itself), includling lawful pursuance of any shortfall on disposal for up to 12 yrs.

Futhermore, remaining joint mortgagor with you will affect her max mge borrowing capacity for her own future mge requirements.

As current joint owners, with no exchange of consideration on the TOE, and importantly the mortgage liability between you remaining unchanged despite the TOE (which would otherwise be classed as consideration)- there shouldn't be any SDLT exposure or return reqd.

IF your sister is removed from the mge as part of the TOE, this situation will obv change, as the tsf of mge debt between parties will be classed as consideration - check with your sol/HMRC for more details, and what the situation will be if she is subsequently removed from the mge in the future (ie post completion of the TOE & nil SDLT liability at the time of tsf).

To be honest .... this is not something I would be comfortable with unless I was certain she understood the implications, and thats why she needs to obtain independent legal advice on this, for everyone's piece of mind and future family harmony !

Effecting a TOE with regards to LR isn't really too complicated, forms are readily available on their site - however I would advise using a solicitor, as this isn't a straight cut TOE, with your sister actually remaining a mortgagor/ party to the mge).

To which it is vital that you ensure your will is updated to reflect the change in ownership, with a sufficient term (life) assurance policy effected in respect of the mge debt, which if a single name policy should be written in trust, to ensure quick hassel free payment on your death - so that your sister may redeem the mge in joint names on your death.

If Term assurance is not effected, then I guess the property will have to be sold to permit redemption of the mge upon your death before the scheduled end date - unless you bequeth it to her via your will, and she continues to maintain the mge repayments until redemption (if affordable, suitable and appropriate to her of course - or she may elect to rent it with the appropriate permissions or change of mge to a BTL arrangement) .

This is a potentially very messy arrangement (and I wouldn't recommend it be on a long term basis due to the above issues), unless you tie off all loose ends which will arise as a result of the planned action, which as you can see is more far reaching than just having her taken off the deeds.

Hope this helps

Holly

Many thanks for the detailed response and valid points.

Based on this and to make it clear for any other posters:

The mortgage has been paid solely by myself for the past 7 years (so since inception) with no default.

My sister is fully aware of the potential implications but as she married herself off 7 years ago she has no need for her own mortgage so the reduced potential in this area is of no concern.

I do not at present have a will and I expect if the worse did happen then the property would be sold, current value £130k, the mortgage is £50k so no issues there.

There are no restrictions or notices on the deeds and as suggested the deeds do not have a direct impact on the mortgage or vice versa.

I'm hoping someone who has been in the same situation can answer, or one of those lovely conveyancers who sometimes frequent these forums :money:

holly_hobby

predator12051981 wrote: »

The mortgage has been paid solely by myself for the past 7 years (so since inception) with no default.

Well goodness willing there won't be any future employment or long term illness issues which will affect your income and impact upon your future servicing of the mge - which may have a direct impact on your Sister.

Provision for such evens would be achieved via Critial Illness, Permanent Health Ins, and ASU/MPPI policies.

predator12051981 wrote: »

My sister is fully aware of the potential implications but as she married herself off 7 years ago she has no need for her own mortgage so the reduced potential in this area is of no concern.

Thats great, and hopefully her marital situation, and/or her future mge requirements won't be change, and be negatively impacted by remaining party to your mge commitment.

predator12051981 wrote: »

I do not at present have a will and I expect if the worse did happen then the property would be sold, current value £130k, the mortgage is £50k so no issues there.

Single with no dependants, a will in my professional opinion is essential ... in order to ensure that your estate goes where you want it to, as oppossed to following intestacy laws.

Furthermore, effecting a term assurance IN TRUST for your sister, to repay the mge on your death, will be a responsible approach to your Sister's financial interest (as she will remain legally responsible for maintaining the mge, post your death, and until the property is sold in order to redeem the mge).

A TA in trust will also ensure that issues relating to the delay of redemption of the mge (and her continuing liability) and bequeath of the property (via the probate process) will be largely expedited which will be of her benefit.

If you have a C&I mge, and you want the most cost effective protection, a simple Decreasing Term Assurance (DTA) will be sufficient for the purpose.

Hope this helps

Holly

The_J

Why can't you take the mortgage over in your name alone? You can keep the rate.

predator12051981

The_J wrote: »

Why can't you take the mortgage over in your name alone? You can keep the rate.

Really? i thought it would have to be remortgaged into just my name which would be based on current rates.