Deed of Assignment, change split of beneficial ownership between spouses: does HSBC need to be told?

JohnTravoltage

I'm looking to change the split of my wife's and my ownership of our house via deed of assignment. We're currently joint owners but will become tenants in common and via this deed of assignment I'll transfer 45% of my 50% beneficial interest to her so she has 95% beneficial interest. Essentially to reduce overall tax liability as she's on a lower slab than I am. 

Our mortgage is with HSBC (residential with consent to let) and in our joint names. 

Do we need to inform HSBC about this? The solicitor doing the deed of assignment says we don't as the deed doesn't affect legal ownership of the property. I'm still wary as the solicitor is going by logic and precedent and haven't actually reviewed our mortgage conditions. I'm worried there may be something in our mortgage conditions that requires us to inform/ask HSBC before we do something like this. 

Our mortgage is governed by 'HSBC Mortgage Loan Terms & Conditions 2018v2'. I've tried to pore over it myself but it's quite dense and not something I'd want to interpret myself. 

We'll check with HSBC too but as it could be a while before they confirm, I'm looking for any experience or insight into this? 

Has anyone done such a change in beneficial ownership (among the borrowers) on an HSBC mortgage and have any experience or insight to share?

K_S

@JohnTravoltage I can't tell you what to do in your specific case, but I've done multiple DoTs+Form 17s over the last many years while the property was mortgaged with several different lenders (none of them HSBC), it's never been necessary to inform them of the same.

JohnTravoltage

Thanks @K_S. This is helpful input.

I'd imagine HSBC would be no different.

After poring through their Ts&Cs to look for anything that may address beneficial interests or assignment or ownership, I don't see anything that clearly obligates us to do this, but being cautious

JohnTravoltage

K_S said:

@JohnTravoltage I can't tell you what to do in your specific case, but I've done multiple DoTs+Form 17s over the last many years while the property was mortgaged with several different lenders (none of them HSBC), it's never been necessary to inform them of the same.

@K_S, I have a couple of related queries on this, hoping you might be able to comment on these: 

As my wife and I are currently joint tenants, the solicitor drawing up our deed has indicated that in order for the deed to be valid, we will need to sever the joint tenancy so we become Tenants in Common, and for this to be done, a 'Form A' restriction will have to be registered on the property at the Land Registry. 

1. When the Form A restriction is registered, isn't this likely to be flagged to the lender regardless of whether we separately inform them or not (I presume lenders monitor land registry activity on mortgaged properties)? 

2. Is a mortgage lender likely to have a problem with the registration of a Form A restriction on a property they've lent on?

3. Is the existence of a Form  A restriction on the property likely to hamper remortgaging the property in the future?

For reference, the Form A restriction is worded as follows (I believe this is standard language):

"No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court"

JohnTravoltage

@Land_Registry - perhaps you might be able to comment on the above too, in addition to perspective from @K_S?  

K_S

@JohnTravoltage It's a good few years ago but I remember the same process of severing the joint tenancy when we did it (it was a property that we previously used to live in). I am fairly confident that I didn't inform the then lender nor did I have any queries from them. I've subsequently remortgaged a few times, no questions came up during these remos.

Hopefully I'm not misremembering, your case may or may not be the same. I'm definitely not an expert in this area, just speaking from what I remember of my personal experience.

JohnTravoltage

That's helpful @K_S. Thank you for your inputs. It looks straightforward, but want to avoid any issues with my current lender or subsequent remortgaging esp with interest rates rising rapidly. 

Anyone else who has any experience or insight into this? Would appreciate any pointers 

kingstreet

As a mortgage remains joint and several regardless of changes to the ownership I don't see why any lender would be interested, TBH.

Land_Registry

JohnTravoltage said:

K_S said:

@JohnTravoltage I can't tell you what to do in your specific case, but I've done multiple DoTs+Form 17s over the last many years while the property was mortgaged with several different lenders (none of them HSBC), it's never been necessary to inform them of the same.

@K_S, I have a couple of related queries on this, hoping you might be able to comment on these: 

As my wife and I are currently joint tenants, the solicitor drawing up our deed has indicated that in order for the deed to be valid, we will need to sever the joint tenancy so we become Tenants in Common, and for this to be done, a 'Form A' restriction will have to be registered on the property at the Land Registry. 

1. When the Form A restriction is registered, isn't this likely to be flagged to the lender regardless of whether we separately inform them or not (I presume lenders monitor land registry activity on mortgaged properties)? 

2. Is a mortgage lender likely to have a problem with the registration of a Form A restriction on a property they've lent on?

3. Is the existence of a Form  A restriction on the property likely to hamper remortgaging the property in the future?

For reference, the Form A restriction is worded as follows (I believe this is standard language):

"No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court"

Applying to register a form A restriction is an option. Whether you do or not doesn’t change the fact that you’ve already made the arrangement you have. Making the arrangement has in itself severed your joint tenancy 
It’s not a ‘disposition’ so the lender wouldn’t need to consent if you applied. Whether they monitor the register is something only they can confirm 
A form A restriction will hamper any disposition by one of you if the joint owner has died - that’s kind of what it’s there for in some ways. If you are both alive and remortgaging it won’t hamper you 

JohnTravoltage

kingstreet said:

As a mortgage remains joint and several regardless of changes to the ownership I don't see why any lender would be interested, TBH.

That's the way I'm looking at it too @kingstreet but just wary of falling foul of some mortgage condition or causing trouble with future remortgages. 

Worst case, can we roll-back the change and become joint tenants again if there is a problem with remortgaging in the future?

I realise this will almost certainly mean we will revert to the current ownership of beneficial interest with all the associated tax implications, but thinking we could just become joint tenants again if required at the time of remortgaging.

JohnTravoltage

Land_Registry said:

A form A restriction will hamper any disposition by one of you if the joint owner has died - that’s kind of what it’s there for in some ways. If you are both alive and remortgaging it won’t hamper you 

Got it, thanks @Land_Registry. 

So in case of death of one of us, we'll now need to explicitly write it into our wills so the other can inherit the deceased's share?

Also, I understand the mortgage liability is deemed to be owned in the new proportion of beneficial ownership, so I'd need to pay SDLT on the reduction in my mortgage liability even though there's no money changing hands? Can you confirm this?