Transferring a house with no solicitor

mo786uk

Hi

I will try and simplify this query much as I can.

Matt and Rob buy a house together (they are family). Only Matt's name is on the title and the mortgage is fully in his name.

Both have paid bills over the years and it is agreed they each own 50% equity as they have paid equally to bills (even though the Land Registry gives full ownership to Matt).

The house is worth about 200,000. They've lived together for 7 years.

Rob has also lent Matt quite a bit of money over the years. It has been agreed that Matt will give full ownership of the house to Rob.

This consists of the 50% equity Rob owns anyway and the further £100,000 value to write off loans that have been given.

There will not actually be any exchange of any real money to progress the sale because it is also done on historical stuff and 'unofficial' agreements.

Matt is in a position now to full pay off the mortgage and get full title to the house.

I understand the simplest way would be for Matt to just transfer over the house to Rob and this could potentially be done quite easily directly with the Land Registry.

Rob does not want or need any checks to be done because he has lived there for 7 years and knows all about the building/structure etc and the checks were done when they first moved it.

My queries are

1) the house will essentially be provided as a gift. Is there any reason why this should not be done this way? i.e should there be a legal document drawn up to show why the gift is being made in this way? or to confirm historical payments/loans have been made between the parties?

Matt and Rob are not bothered about getting things in writing in terms of their own involvement but would questions be asked by HMRC etc about such large gifts if it is not documented somewhere?

2) my understanding is that if there is actual change of money and you use a solicitor you will have to pay a bit more and it adds delays because of financial checks. If it is done as a gift but based on historical lending - would this negate the need for all that?

3) the house is ex-council and it says on the title that the council have first opportunity at a resale -it should be easy to confirm this with the council (that they will not). But when the form goes to the land registry will they want confirmation of this ?

Would they generally expect the solicitor to sort it? And if the documents came from a solicitor would they assume all was in order?

Or if no solicitor was used would land registry just do register it anyway and the new owner takes the risk?

4) I presume there should in any event be a separate document drawn up explaining the transfer and signed by both parties - including stating the contents of the house transfer - but this does not need to go to land registry? This document may well say that x money has changed hands but at the land registry it will just say gift or £0.

getmore4less

Will they both be living there after the transfer?

phillw

To add someone on the land registry, you will need permission from the mortgage company. To gain that permission they will probably need to go onto the mortgage.

You will have to pay stamp duty on 50% of the outstanding mortgage, because you have essentially sold half of it. If "hypothetically" the 50% being transferred is in consideration of money given in previous years, then it's not a gift and you will have to pay 50% on the value of the money that has been given. Trying to provide proof of why the gift would be made could land you with a larger bill, or a prosecution for tax evasion.

However either of the two figured may be below the stamp duty threshold.

I wouldn't have thought right of first refusal would apply if moving the property into joint names, however it wouldn't hurt to get something in writing. It would be strange if someone could be forced to sell their house back to the council because they got married.

To me it sounds like you need a conveyancer. However if you go in asking questions like this, then they would probably be under a duty to report you.

G_M

mo786uk wrote: »

Matt and Rob buy a house together (they are family). No. They did not.Only Matt's name is on the title and the mortgage is fully in his name. Matt bought a house.

Both have paid bills over the years and it is agreed they each own 50% equity as they have paid equally to bills (even though the Land Registry gives full ownership to Matt).
Agreed where? How? Verbally? In a Deed of Trust?

Who paid the deposit?
Who has paid the mortgage?

The house is worth about 200,000. They've lived together for 7 years.

Rob has also lent Matt quite a bit of money over the years. It has been agreed that Matt will give full ownership of the house to Rob.
How much was leoned? On what terms?

This consists of the 50% equity Rob owns anyway and the further £100,000 value to write off loans that have been given.
OK

There will not actually be any exchange of any real money to progress the sale because it is also done on historical stuff and 'unofficial' agreements.
OK

Matt is in a position now to full pay off the mortgage and get full title to the house.

I understand the simplest way would be for Matt to just transfer over the house to Rob and this could potentially be done quite easily directly with the Land Registry.
Not unless the mortgage is paid off first.

Rob does not want or need any checks to be done because he has lived there for 7 years and knows all about the building/structure etc and the checks were done when they first moved it. OK


My queries are

1) the house will essentially be provided as a gift.
That's not what you said. You said it was repayment of loans.

Is there any reason why this should not be done this way? i.e should there be a legal document drawn up to show why the gift is being made in this way? or to confirm historical payments/loans have been made between the parties?
* the mortgage must be paid off first
* if the loans etc are undocumented, then the repayment can be undocumented...... and vice verse

Matt and Rob are not bothered about getting things in writing in terms of their own involvement but would questions be asked by HMRC etc about such large gifts if it is not documented somewhere?
The potential issue is SLT

2) my understanding is that if there is actual change of money and you use a solicitor you will have to pay a bit more and it adds delays because of financial checks. If it is done as a gift but based on historical lending - would this negate the need for all that?
Since the transfer is in fact repayment of a loan, it is effectively a transfer of £ I believe. Thus SDLT.

3) the house is ex-council and it says on the title that the council have first opportunity at a resale -it should be easy to confirm this with the council (that they will not). But when the form goes to the land registry will they want confirmation of this ?
If it's a Charge on the Titel, I imagine yes.

Would they generally expect the solicitor to sort it? And if the documents came from a solicitor would they assume all was in order?
LR don't care whether a solicitor is involved or not provided the documentation is correct and IDs checked.

Or if no solicitor was used would land registry just do register it anyway and the new owner takes the risk?
As above

4) I presume there should in any event be a separate document drawn up explaining the transfer and signed by both parties - including stating the contents of the house transfer - but this does not need to go to land registry? This document may well say that x money has changed hands but at the land registry it will just say gift or £0.

That would be fraud, since money has effectively changed hands.

mo786uk

G_M wrote: »

That would be fraud, since money has effectively changed hands.

Will they both be living there after the transfer?

It is not clear – possibly!

To address other points

The house will be mortgage free at the time of title change so hopefully all mortgage issues become irrelevant.

It has been agreed they have 50% equity in an informal agreement.

The total money loaned or given is approx 100k

The council almost certainly will not want to buy back the house so it is not going to be an issue - the issue is how you prove that to the LR. Would a simple email do?

So in the land registry document would it state that the house has essentially sold for 100k with 100k as gift then?

G_M

mo786uk wrote: »

The total money loaned or given is approx 100k

The council almost certainly will not want to buy back the house so it is not going to be an issue - the issue is how you prove that to the LR. Would a simple email do?

So in the land registry document would it state that the house has essentially sold for 100k with 100k as gift then?

Which? Loaned or given? How much of each?

You will need to go through the council's process. I imagine they will give you a response by letter.

As for the TR1 I believe you need legal advice in this case, including advice on the SDLT due.

mo786uk

G_M wrote: »

Which? Loaned or given? How much of each?

You will need to go through the council's process. I imagine they will give you a response by letter.

As for the TR1 I believe you need legal advice in this case, including advice on the SDLT due.

As if often the case with family it is not always clear whether it is given or loaned but the point is the 'gift' of the equity is now effectively a total repayment.

So essentially you could argue it is payment for old loans.