Transferring property in NSW, is the legal process of changing the Certificate of Title from one party to another via the NSW Land Registry Services. As of July 1 2019, this will occur digitally (read our article on e-conveyancing here), as a result, the physical Certificate of Title is being phased out and will be replaced with a digital equivalent.
The Certificate of Title is a legal document, which outlines the boundaries of a parcel of land, and lists the official owner(s) of that land.
Transferring the Certificate of Title is performed for many reasons such as marriage, inheritance, relationship breakdown, selling property, buying property, taking out a mortgage, discharging a mortgage or simply transferring the property to a family member for any reason.
Under most circumstances the transferee (recipient) of the property, is required to pay stamp duty, based on the market value of the property, which will be obtained by a licensed valuer for these specific purposes.
In addition to calculating stamp duty, the transferring party may wish to consider
- Calculating capital gains tax. If you are transferring an investment property, it is likely you will pay CGT.
- Understanding the legal costs, transfer of title costs and possible valuation fees.
If you would like further preliminary advice, or would like a flat fee quote on our transferring property service, please phone us and we can help you.
The below diagram represents the process a person will go through when transferring a property.
TRANSFERRING PROPERTY IN NSW - WHAT YOU NEED TO KNOW
You will need to complete a Transfer Form (formally Transfer Form 01T), which can be found at the NSW LRS website here. A conveyancer can help you complete this form. If the property is held by multiple parties, then they will all need to sign this form.
Property transfers due to marriage or separation are usually exempt from stamp duty fees, assuming the home is their matrimonial property .
Property transfers to family members for other reasons usually incur stamp duty fees, such as transferring the property to a cousin or sibling.
First home buyers will receive stamp duty concessions for property transfers.
In the case of separation, this can create many complexities, such as calculating contributions to a property, caring for children, et cetera. In this circumstance, it would be beneficial to engage legal representation from a firm offering both conveyancing and family law as a service.
Types of property ownership
Outright Ownership - Is when an individual holds the Certificate of Title in their name alone.
Joint Ownership - Is when a property is owned equally by multiple parties, and each person has an equal share in the property. This equal share, is not necessarily defined by the amount of monetary contributions. For example, person A contributed 80% and person B contributed 20% of the mortgage, land registries will still view these as equal owners.
In the event of death, a property with joint ownership may be able to be transferred by way of a Notice of Death to the surviving party, without a Grant of Probate.
Tenancy In Common - In contrast to joint ownership, tenants in common is when multiple people own varying amounts in each property. For example, person A could hold 95% of shares of a property, and person B could hold the remaining 5%.
In the event of death, tenants in common do not possess a right of survivorship. Therefore, the Will will need probation to decide upon the new ownership structure.
Trust Ownership - This is an arrangement where the property is owned by an individual or organisation, for the benefit of another party. A common instance of this is when a property is being transferred to a younger family member. There are many considers when planning trust ownership, such as trusts created by a will and tax planning, be sure to have professionals help you.
Company Ownership - Is when a company or business holds the Certificate of Title. An example of this, would be a mechanic purchasing a piece of land to conduct business on. There are many considerations here, such as land zoning, insurance and taxation.
HOW WE CAN HELP
We can offer the following to assist in property transfer:
- Help you strategise and structure the property transfer to align with your goals
- Perform a Title Search on the property (to confirm the owner of the property, mortgage status, existing caveats, existing leases etc)
- Maintain regular communication with all parties, such as banks, NSW LRS and the transferrers to ensure we’re all on the same page.
- Prepare all the necessary legal documentation required and manage the process
- Provide ongoing support. At the end of the transfer, we’ll compile the documentation and send you a digital copy
Can a property be transferred if there is an existing mortgage?
When there is a mortgage on a property, a bank holds the Certificate of Title until the loan is repaid in full and a Discharge of Mortgage process is completed. Consequently, the Certificate of Title would then be re-issued in the owner(s) name.
A property with an existing mortgage can still be transferred to a new owner, providing the bank consents to the transfer.
With this knowledge, it is usually up to the individual bank’s policies regarding transfers. They may require the owner to restructure and secure the mortgage against another asset, therefore allowing the property to be transferred.
If a party has recently repaid their mortgage in full, they will complete a Discharge of Mortgage form and submit this to NSW Land Registry Services. One to two weeks later, they will receive a newly issued Certificate of Title. From this point, the agreement with the bank has concluded and the property can be transferred easily.
Contact your bank, NSW Land Registry Services and a licensed conveyancer to work it out.
Will my relative have to pay stamp duty if I transfer the property to them, and they are a first home buyer?
Generally not. If they are an eligible first home buyer, and the property is valued at under $800,000, the transferee will receive a stamp duty concession or discount. The transferee will need to complete the normal First Home Buyer Assistance Scheme Form with the assistance of their conveyancer or solicitor and satisfy the eligibility criteria.
Can you help me define an ownership structure (such as transferring the property into a trust or company ownership) based on my circumstances?
Yes. We receive a lot of questions relating to different forms of ownership. We are able to help with outright ownership, joint ownership, trust ownership, company ownership and any other complex arrangements.