What is the process for transferring property without a sale?
Transfer to an individual
Homeowners may decide to transfer a property to a family member while they are still alive, to minimise any inheritance tax which would otherwise be due. In order for this to be effective, the transfer must take place at least 7 years before they die. There are various other reasons for transferring property to an individual as a gift.
Transferring property into one name or into joint names
Homeowners will often decide to add the name of their spouse to their property deeds when they get married. The opposite may take place upon divorce or separation. In either case, a solicitor will need to be involved to carry out the necessary legal work associated with changing a title deed, and to record the new information in the relevant Register. Ask a lawyer for advice on changing the title deed of a property.
If a property is inherited as part of the estate of the deceased, the regular confirmation process will cover the transfer of property. Confirmation involves applying for a grant of confirmation. For more information, read Confirmation.
What is the process for conveyancing if the property is being sold?
There are various different aspects to conveyancing, but the main aspects which relate to the transfer of property involve the exchange of contracts, resulting in completion.
What must be included in the conveyancing contract?
Once an offer has been accepted, the seller (or their lawyer) must draw up a contract that includes details about:
fixtures and fittings
planning and other legal restrictions
services (eg drainage) to the property
When is an offer accepted?
A lawyer must be involved in the process of accepting an offer for the sale and purchase of a property. After an offer has been accepted, there will usually be a period of negotiation between the solicitor acting for the buyer and the solicitor acting for the seller. While this is ongoing, the agreement is not yet legally binding and either party can withdraw from the agreement.
What is concluding the missives?
The property sale will not be concluded until a full agreement regarding the terms of the contract has been reached between the solicitors acting for the buyer and seller. Such an agreement is reached by a number of formal letters passing between both solicitors and is referred to as ‘concluding the missives’. Once this stage has been reached, neither the buyer nor the seller can withdraw from the agreement without breaking it and becoming liable to pay compensation to the other party.
What is completion?
Completion takes place on the ‘date of entry’ to the property. This means the date on which the seller has left the property and has handed the keys over to their solicitor. The seller’s solicitor must then hand the keys to the buyer’s solicitor along with a formal document known as a ‘disposition’, which transfers ownership of the property. The buyer’s solicitor must then, in return, deliver the full amount of the agreed-upon purchase price to the seller’s solicitor.
For more information about the conveyancing process, Ask a lawyer.
Purchases by overseas entities
If land (ie real property) in the UK is bought, sold, or transferred by a company or similar organisation (ie an entity) that’s run (ie governed by the laws of a country) outside of the UK, the entity may have to register on the Register of Overseas Entities.
What is the Register of Overseas Entities?
The Register of Overseas Entities was introduced on 1 August 2022 by the Economic Crime (Transparency and Enforcement) Act 2022. The Act requires that all overseas entities that intend to buy, sell, or transfer land in the UK must register with and give certain information to Companies House. For example, they must inform Companies House who their ‘registrable beneficial owners’ and their ‘managing officers’ are. The register is intended to increase transparency in UK land ownership.
Beneficial owners are individuals who have significant influence or control over the entity. They can be:
governments or public authorities, or
other legal entities
The rules for determining whether an owner has significant influence or control differ depending on what type of owner it is. For example, an owner of a company will usually qualify if it:
holds (directly or indirectly) at least 25% of the shares or voting rights in the company
can remove or appoint a majority of the board of directors of the company, or
it otherwise exercises (or has the right to exercise) control over the company
If those running an entity cannot identify all of its beneficial owners, they must inform Companies House of the identity of its managing officers. These are the company’s directors, managers, and company secretaries.
The requirement to register also applies to companies that have bought land in the past, ie on or after 8 December 2014 in Scotland. A company that sold land or property after 28 February 2022 will also have to register (ie even if it no longer holds the property).
Entities must also update the Register annually with information about any changes to registrable beneficial owners. This must be done within 14 days following the anniversary of the entity’s initial registration. An update must be submitted even if no changes have occurred.
For more information, read the government’s guidance on the Register.