‘TOE’ stands for ‘Transfer of Equity’. The TOE process is used to transfer the ownership of a property from one party to another, such as when a property owner gets married and wishes to add their new spouse to their property’s title documents.
A general overview of the TOE process is as follows:
1. Agree on the TOE terms.
Before proceeding with a TOE, it’s crucial to ensure that all parties have a clear understanding of the terms. For example, if you are divorcing your partner and wish to remain in the family home, you may need to agree on a price for buying them out. We would recommend matrimonial advice from a Family Solicitor if the transfer is due to a divorce.
2. Secure the existing mortgage lender’s consent or obtain a new mortgage.
If there is an existing mortgage on the property, you must seek the lender’s consent to the proposed TOE. If the lender does not believe the new owner can afford the mortgage repayments, they are unlikely to agree to the TOE. If the new owner cannot secure an alternative mortgage, the transfer cannot proceed.
3. Carry out all necessary searches and checks.
You must review the title deeds to check that there are no restrictions that may affect the proposed TOE. Your solicitor or conveyancer will do this for you.
4. Draft the legal documentation.
The key document in a TOE is the transfer deed. Your solicitor or conveyancer will prepare the document, outlining the TOE and stating who will own the property going forward.
5. Sign the legal documentation.
Once your conveyancer or solicitor has prepared the transfer deed and any other legal documentation, they will send it to you and the other parties to sign.
6. Complete the TOE.
Your solicitor will complete the TOE by dating the signed documentation and arranging for the payment of any money.
7. Pay any necessary Stamp Duty Land Tax (SDLT)
Whether or not SDLT will be payable on the TOE depends on the circumstances. If the transfer is a gift, no SDLT will be due. However, SDLT can be payable even if no money changes hands. For example, if your new spouse transfers half of their property to you and you take on half of the mortgage, you will need to pay SDLT if your part of the mortgage exceeds the SDLT threshold, currently £250,000. There may also be other tax implications when disposing of property, even for no consideration, and it’s wise to obtain advice from a tax expert before proceeding.
8. Update the property register
After the TOE is complete, you’ll need to apply to the Land Registry to update the property register to reflect the change in ownership. Once they have made the necessary amendments, the land registry will send you a copy of the updated register.
