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Matthew J
Matthew J, Solicitor
Category: UK Law
Satisfied Customers: 671
Experience:  4 y PQE (Partner) - Commercial / Residential Property & Property and Civil litigation experience
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My husband and I own our property jointly. Can I gift my

Customer Question

My husband and I own our property jointly. Can I gift my half to him so that he is the sole owner?
Submitted: 1 year ago.
Category: UK Law
Expert:  Matthew J replied 1 year ago.

HI there. Happy to help. Do you have a mortgage against this property?

Customer: replied 1 year ago.
Expert:  Matthew J replied 1 year ago.

Have you spoken to your lender about this? and if so what did they say?

Customer: replied 1 year ago.
No, my mortgage is interest only and has expired. I intend to pay it off. Would this be the time to act?
Expert:  Matthew J replied 1 year ago.

OK, if you have or will pay this off then it make things easier as, if it remained on there then you would need their permission. If you pay this off there you can do whatever you wish with your property, and if you wish to transfer to your husband then you may. There may be implications if there is an underlying reasons behind this however so can I ask why you wish to do this?

Customer: replied 1 year ago.
I do have a particular reason for my question. I have a claimant who may try to take a charge on this property and I want to prevent this. The debt is mine alone, not my husband's.
Expert:  Matthew J replied 1 year ago.

OK, you do need to be a bit careful with this. If you transfer an asset out of your name to "deliberately" defeat a creditor then a Court can order (in certain circumstances) that the transfer is reversed. In the case of Bankruptcy / Insolvency a Trustee in Bankruptcy also has wide ranging powers. It may be that the Claimant may not have the judgement yet, but you just need to take care as it may be a waste of money.

Customer: replied 1 year ago.
What do you suggest? There is no question of bankruptcy, the debt is £79,000 and the property is worth £600,000 and the mortgage is £172,000.
Expert:  Matthew J replied 1 year ago.

Do you need to pay off the mortgage?

Customer: replied 1 year ago.
the term expired two years ago. I am taking out a commercial mortgage to pay off the domestic mortgage, also some other loans.
Expert:  Matthew J replied 1 year ago.

I see, is the Commercial mortgage going to be secured against the residential property?

Customer: replied 1 year ago.
against the whole property, which is a bungalow, twelve acres and a zoo run as a business.
Expert:  Matthew J replied 1 year ago.

and finally your husband, if necessary, can take this commercial mortgage on his own if he becomes the sole owner?

Customer: replied 1 year ago.
Well, yes because he would then have the whole income.
Expert:  Matthew J replied 1 year ago.

thanks. It is always difficult advising someone in the protection of their finances in circumstances like this. remember you are essentially manufacturing your financial position to disenfranchise yourself of assets, for no real reason (i.e. there is not an arms length transaction behind this), and so whatever I advise potentially a Court court drive a coach and horse through it it matters are looked at forensically. Therefore the best I can do is to give you a best endeavours approach to the situation. If the property is encumbers by a commercial mortgage it certainly make it less attractive (from a creditors perspective I mean) and so to re-mortgage is a wise idea. To transfer your husband as the sole owner could be useful, but there are the risk I have outlined above. Plus when you transfer your assets the solicitor acting for the lender will ask you to sign a "declaration of solvency" saying that your assets outstrip your debts and that potentially may not be the case (once you have divest yourself of the property. If you remain as the owner the creditor/claimant can only come after your assets and so will only ever be able to secure their debt against your portion of the equity, and will be very unlikely to be able to force a sale of the property.

Expert:  Matthew J replied 1 year ago.

If the creditor obtain the judgement one way they could enforce it could be by way of a Charging order. this would secure as an equitable interest agasint your part of the equity

Customer: replied 1 year ago.
Please give some more thought to this problem and give me your best advice. I am away this weekend and will return Monday.
Expert:  Matthew J replied 1 year ago.

I am afraid there really is no magic formula to this. I have a lot of experience in this area and advising client and this is the best advice

Expert:  Matthew J replied 1 year ago.

HI there, Can I hope further? r do you have further questions on this matter?

Customer: replied 1 year ago.
Please assume that I want to transfer my assets to my husband simply because I am 76 years old and could not get a mortgage because of my age. However he is only 56 years old and with all the income could obtain a mortgage if we wished. Does this improve the position?
Expert:  Matthew J replied 1 year ago.

This is a perfectly reasonable explanation as to a transfer of assets between husband and wife, and so on this assumption of this of circumstances alone then all would be well. The issue of however is the back ground of a potential debt that may or may not affect your assets. I am not saying don't attempt this, however if we assume the worst case scenario; the Claimant wins the case and you transfer the property (or transfer just before they win); because you have no assets and cannot meet the judgement debt the creditors apply to declare you bankrupt; the trustee in bankruptcy scrutinises this transaction. At this point you will have to declare before the court why the transaction happened. You have be careful that you are telling the Court the truth or risk further problems. It will be up to the Court to decide if your version of the transaction is acceptable.

Customer: replied 1 year ago.
Right, you may be misunderstanding me, my intention is not to avoid this debt, only to prevent the Claimant from taking a charge on this property. I am content to continue to pay in instalments. I will still have my pensions and will pay monthly, albeit rather less than the claimant might like.
Expert:  Matthew J replied 1 year ago.

Thanks. I wasn't suggesting that you were going to avoid, I was only giving you worse case scenario. It will in the first instance prevent a charge being put on the property. In order to look deeper into the transactions they will need to apply for bankruptcy however please note that anyone owing more than £5000, without the means to immediately pay a debt is technically "bankrupt". The creditor may, if they see fit, apply for a bankruptcy petition if they do not agree with your instalment proposal. (I have to say this is unlikely because bankruptcy cost money and end up involving all creditors which brings in a degree of uncertainty - and also instalment proposals may be considered by them the "bird in the hand " conclusion, however it is a possibility). If they do then the trustee can look at what are called "antecedent transactions" such as the one being proposed.

I hope this is clear. I am not suggestion don't do the transaction proposal but, there are always risks involved, and nothing it without the chance of being unwound in the circumstance I have outlined above