What is a Voluntary Transfer?
A Voluntary Transfer is what happens when a person transfers some or all of their property to another person. There is no exchange of money with a Voluntary Transfer and the transfer is usually to a family member.
This includes, for example, transferring your family farm to one of your children. Or you may want to add a spouse/civil partner as a joint homeowner of the property you live in. You can also transfer property to children, such as a site to build a home on.
How Does a Voluntary Transfer of Property in Ireland Work?
The property is transferred by a legal document known as a deed of transfer. The person gifting the property is known as the ‘transferor’ and the person receiving it is know as the ‘transferee.’ No money is exchanged as the transfer is carried out “for the natural love and affection” of the parties.
Both parties must have their own solicitor to carry out the transfer. This is to show that the transferor is gifting the property of their own free will and are not under pressure to transfer it. The transferor also needs their own independent advice on issues like any taxes that arise on the transfer. This is because a tax return must be made where a person is disposing of (transferring) their property.
Please note that in some cases the ‘transferor’ may retain part of the property. Therefore, you should have an OSI map drafted by an Architect to carve off the portion that you are receiving in the gift. The map must be Land Registry compliant. Your architect will understand what exactly this means, but you can find out more here about Land Registry.
What About Mortgages or Charges on the Property?
If a mortgage is registered on the property to be transferred , then it can be settled in full in advance of the transfer process or alternatively, the parties must seek the consent of the financial institution holding the mortgage to the transfer. This financial Institution can then be joined in the deed of transfer.
Where property is transferred, it’s vital to carry out searches against the property to be transferred. This is to ensure that there are no charges registered against the property prior to the transfer being completed. An example of charge is a Judgement Mortgage
A Judgement Mortgage is where a creditor succeeded in a court action taken against you usually for a debt owed to them. They now want to register the charge granted by the court by way of Judgement Mortgage. If you decide to sell the property or transfer the property to anyone that judgement mortgage must be cleared first. A Judgement Mortgage lasts for 12 years.
Who May Consider a Voluntary Transfer?
Generally, farmers will consider transferring their land to sons or daughters during their lifetime. The main reason is that they would like the land to remain within the family. The farmer may also consider the possibility of one of their children building their home on the family farm so they may transfer a site to that child to build their home.
Sometimes a husband, wife or civil partner will decide to transfer property under a voluntary transfer to their spouse/partner. One spouse may own the property in their sole name, and wants to transfer the property into their joint names. Joint home ownership offers their spouse/partner stronger legal rights to the property, in the event of their death.
Taxes and Voluntary Transfer of Property
You should familiarise yourself with taxes, such as stamp duty, capital gains, and capital acquisitions tax. All of these taxes will raise their head where property is transferred. You should talk to an accountant or tax adviser for advice on tax exemptions available to you on the transfer.
Remember, no tax arises on voluntary transfers between spouses or civil partners.
Tax incentives available to the farming community, include Young Trained Farmers relief, Consanguinity relief, if you are eligible. We therefore advice you to seek specific tax advice when entering into a voluntary transfer. This helps to ensure that you fully understand any tax exposure involved.
Can a Voluntary Transfer be set aside?
In one word, yes. For instance, this can happen in cases like bankruptcy, or an intention to defraud creditors and NAMA. Where there is proof that a transferor intended to defraud creditors, a court can set aside such transfers.
If you need legal advice about voluntary transfer of property, please call us on 0749164906 or email firstname.lastname@example.org
This article is general in nature and cannot be regarded as legal advice, as it is commentary only. If you would like legal advice regarding how the law applies to your individual situation, then please do not hesitate to contact the Letterkenny office at Crawford Gallagher Solicitors. Contact details 074 916 4906 or email email@example.com
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