iLA | Gift, Transaction at Undervalue or Transfer of Equity

Gift, Transaction at Undervalue or Transfer of Equity

iLA Network

What is a Transfer of Equity?

In terms of a transfer of equity, the ‘equity’ in a property is defined by market value less the amount of outstanding mortgage. ILA is required when there is a change to the mortgage/ownership of the property.

An example of this would be the transfer of equity into joint names as a result of marriage. Alternatively, there may be a need to transfer equity from joint to sole ownership.

What is gifting a deposit or equity in a property?

More people are using gifts (usually from family members) to fund all or part of their deposit for a house purchase. As part of the mortgage process, a lender will normally ask for confirmation that it is a gift, that no part of the gift is repayable and that each gifter will have no stake in the property or live at the property.

As the gifter will effectively be giving up any rights to repayment or entitlement to the property,, a lender may not allow the mortgage to complete until they have received confirmation that the gift giver has taken independent legal advice.

What is a transaction at an undervalue?

A transaction at an undervalue is, in simple terms, a transaction where an individual or corporate entity acquires a property for less than its market value.

For example, parent’s gifting property to their children to help them onto the property ladder, a gift between family members as part of estate planning or even a transfer between husband and wife following divorce proceedings. These may all be considered a transaction at an undervalue.

Whilst there are benefits for the seller and buyer in each of the above scenarios, it carries inherent risks whereby a lender may ask for independent legal advice to be provided prior to completion of the mortgage or loan facility.

Why do I need independent legal advice?

The third-party formality is required to protect you from entering into any of these transactions without knowing the potential risks involved. iLA’s independent advisor will ensure that you are not being “induced” (persuaded or convinced) into the transaction and that you understand what it is you are agreeing to (your obligations and associated risks).

Whilst having ILA can feel like an inconvenience and an additional cost, it is important to bear in mind that it is not just a formality - it is a serious legal requirement to make you fully aware of future risks and possible liabilities, and without the ILA, you will not be able to complete the wider legal transaction.

How can you help?

Our dedicated team is here to make sure that you do not experience any delays or inconvenience and, by using our decades of expertise helping clients with banking, finance and property matters, and deploying leading technology, we can deliver the ILA need in the most fast, efficient and cost effective way

  • Step 1 - BOOK YOUR ILA

    We offer a same day service, and our team of dedicated experts are available 7 days a week between 8am - 8pm.

    You can book your ILA online now, or request an immediate call back to arrange a convenient time for your ILA. You can also just call in to speak to one of our dedicated iLA team members.

    We will help guide you through the process and explain what documents we will need to provide your ILA.

  • Step 2 - ONLINE MEETING

    Once we have received the ILA documents and on-boarded you as a client (using leading technology to ensure the process is as quick as possible) we can usually provide you with your ILA (via an online meeting) within 2 hours. Or you can let us know a day and time that suits you best.

    We will provide you with the advice online, via our iLA personalised meeting room. You will just need a laptop, phone or tablet to join the meeting. From our years of experience, the meetings tend to last for no more than 30 minutes

  • Step 3 - SIGN AND RETURN THE DOCUMENTATION

    During our online meeting, you will sign the relevant documentation.

    We can guarantee that your ILA will be compliant and your documents are correctly witnessed, and we will also help you to return the documents to the correct party in the transaction. Our dedicated team is here to make sure that you do not experience any delays or inconvenience.

    Following our meeting, we will immediately contact the lender to advise that the ILA has been provided and so the whole process can be completed, from start to finish, in less than a day.