House buying and selling - one solicitor or two to transfer title deeds between mother and son

Doxy66

Hello - please can someone help - would it be usual for both a mother and her son to each have to have a conveyancing solicitor to transfer a title deed ? Long story short is that after an inheritance from my parents a year ago I purchased a flat to help my son out ie for him to live in - I put it in my name (which cost me £10,000 in additional buildings tax as I already own a house that I live in)  - now I realise the better thing to do would be to transfer the deeds into his name with a declaration of trust/deed of trust documenting repayment details and he can start to pay the loan off now rather than him saving for a mortgage in the future. A solicitor has said we will have to pay to redo all the searches that were done a year ago (as it is like a new purchase) and that they can't act for both of us and my son will need a solicitor too - is this right?  Costs will probably be around £1000 each I guess.  Not complaining (tho I am only earning £50 a week atm due to COVID) just a bit shocked and checking that if you transfer deeds like this from a mother to a child (he has been living in the flat for a year) that we both need a solicitor ?Thank you 

MovingForwards

One solicitor each as you both need independent legal advice. Find a better one than who you have spoken with!

Sell the property to your son, have a private mortgage set up and registered on the deeds. That way your son can remortgage in the future to pay you off and you have the security knowing the mortgage debt to you is registered.

As there's no normal mortgage, it's up to your son if he wants searches done, same as if he were a cash buyer.

Be aware of capital gains tax as this wasn't your home you were selling and you never lived in it.

davidmcn

You don't need to have solicitors involved at all, it really depends what you (and your son) want advice on and to what extent either of you fancy the learning curve involved in doing your own conveyancing. If your son is paying you good money for the property then he may well want the same sort of due diligence to be done as with any other purchase - or he could opt to take a view on things. If there's no "normal" lender involved it's entirely up to him.

The private mortgage agreement is something where one solicitor definitely cannot give advice to both parties, so either one of you goes without legal advice or you talk to separate solicitors about it.

£1000 each sounds excessive if that's just the solicitors' fees rather than the other costs - is that actually a quote or just your guess?

SDLT_Geek

It sounds as if your son will need to pay SDLT on his acquisition from you.  I see you refer to a loan he is to take over and payments he is to make.

Thrugelmir

If you fall out for any reason. Then you need to ensure that the legalities are watertight. 

davidmcn

SDLT_Geek said:

It sounds as if your son will need to pay SDLT on his acquisition from you.  I see you refer to a loan he is to take over and payments he is to make.

Probably LBTT given the OP's reference to "buildings tax". I think the "loan" is a proposed private mortgage rather than lending the OP already has but maybe they could clarify.

AnotherJoe

Seperate solicitors is as much or more a protection for them than you and because if that they may insist. 

. You also don't need searches to be redone (as no mortage is needed). If you already own the house and know the area that's an expense you and your son can dispense with if you want. When I bought a place 5 minutes walk from me with cash I instructed the solicitor not to do searches, same for when my mum bought a place next to my brother, he knew the area what was going on searches woudl have been a waste of time and money. The solicitor will probably have you sign a disclaimer and ask you to reconsider but again that's for their protection not yours. You already know the house and presumably would be aware if the council was planning (for example) to build a motorway through the area or a sewGe farm or whatever. 

Doxy66

MovingForwards said:

One solicitor each as you both need independent legal advice. Find a better one than who you have spoken with!

Sell the property to your son, have a private mortgage set up and registered on the deeds. That way your son can remortgage in the future to pay you off and you have the security knowing the mortgage debt to you is registered.

As there's no normal mortgage, it's up to your son if he wants searches done, same as if he were a cash buyer.

Be aware of capital gains tax as this wasn't your home you were selling and you never lived in it.

Thank you so much that is very helpful - my son is currently in his final year at uni and so will not be in a position to get a mortgage for a while yet - hopefully he will be able to do so within the next decade - not clear what a private mortgage is or why you suggest that being registered now? Useful to now about the searches as they were all fine under a year ago so seems daft to redo them.  Presumably that it up to him to decide and to instruct his solicitor yes or no. Finally there has been minimal growth in flat price since I purchased a year ago and an accountant therefore said I wouldn't have to pay capital gains but I will clarity that - I paid £190,000 plus £10,000 additional building tax (ouch) so am charging my son £200,000 which is what the flat would probably sell for now so yes I do need to check I won't be hit for capital gains of £2800. Appreciate your time.  It's a minefield for the uninitiated - also Scottish law different from  English law adds a further complexity 

davidmcn

Doxy66 said:

MovingForwards said:

One solicitor each as you both need independent legal advice. Find a better one than who you have spoken with!

Sell the property to your son, have a private mortgage set up and registered on the deeds. That way your son can remortgage in the future to pay you off and you have the security knowing the mortgage debt to you is registered.

As there's no normal mortgage, it's up to your son if he wants searches done, same as if he were a cash buyer.

Be aware of capital gains tax as this wasn't your home you were selling and you never lived in it.

not clear what a private mortgage is or why you suggest that being registered now? 

You said "a declaration of trust/deed of trust documenting repayment details and he can start to pay the loan off now" - do you mean you're lending him the price (or some of it) and he's making repayments to you? If so that's a private mortgage, not a "deed of trust" - so you have a loan agreement setting out what's mean to be paying, and a standard security deed registered over the title to give you a charge on the property (i.e. so he can't flog it off without your involvement, or allowing you to repossess if you had to), like a normal mortgage.

Doxy66

davidmcn said:

You don't need to have solicitors involved at all, it really depends what you (and your son) want advice on and to what extent either of you fancy the learning curve involved in doing your own conveyancing. If your son is paying you good money for the property then he may well want the same sort of due diligence to be done as with any other purchase - or he could opt to take a view on things. If there's no "normal" lender involved it's entirely up to him.

The private mortgage agreement is something where one solicitor definitely cannot give advice to both parties, so either one of you goes without legal advice or you talk to separate solicitors about it.

£1000 each sounds excessive if that's just the solicitors' fees rather than the other costs - is that actually a quote or just your guess?

Hmmm - don't really fancy the learning curve in all honestly - I need to figure out what work I am going to do more urgently post COVID - will chat through with my son - I was quoted as below:
 Sale Fee - £800
VAT thereon - £160
Outlays
Property Multi Search - £174
Advance Notice - £10
I rang another solicitor for a second opinion and was told it would cost between £1800 - £2000 for all costs for both parties combined to include the transfer of deeds, land registry, searches (which I am not sure necessary less than a year on)  and making up the documentation (which my son and I will provide wording for as he and I are in accord) 

Doxy66

davidmcn said:

SDLT_Geek said:

It sounds as if your son will need to pay SDLT on his acquisition from you.  I see you refer to a loan he is to take over and payments he is to make.

Probably LBTT given the OP's reference to "buildings tax". I think the "loan" is a proposed private mortgage rather than lending the OP already has but maybe they could clarify.
Oh hell more SDLT yes I had to pay that at a high rate last year as second property - my son is a first time buyer so will get relief of up to £175,000 but if I sell flat for £200,000 he will have £500 to pay - not sure what you mean about a proposed private mortgage - basically it is cash from an inheritance that I used to buy the flat but due to a change in circumstances I need it paid back sooner rather than later and have been advised best way to do this is transfer title and hold security until paid back - wish I had known a year ago what i know now but hindsight a wonderful thing