Formalizing the transfer of property to someone

Formalizing the Informal

Transfer of ownership between family members can seem like a smart idea that allow families to keep assets amongst themselves. Whether its for tax purposes or to help a grown child off get a foot on the property ladder, even informal contracts between family members need to be made formal.

What to Know When Formalizing the Transfer of Property

Look at it this way, purely economically: there is a buyer and a seller. Don’t be fooled by the word, “transfer” as this is merely a legal term. There is a “transfer” of ownership occurring but, even if no money is passing between the members, formalizing the transfer of property may include land tax transfers. There is a tendency for the process of formalizing the transfer of property between family members to follow a more informal and “good faith” process. But this is a mistake. In any transaction, relationship ties can be given standing but cannot be substituted for legal proceedings. In other words, if the registration process is long and complicated, a legal contract must outline whose responsibility it is to follow through.

Aspects of Property Transfer and Registration

Depending on where the property exists and what the specific property laws are in that State, additional obligations like appraisals, surveys on the conditions of the land, and registration of these surveys with the State may be part and parcel of the land transfer process. Besides simply signing the deed in front of a notary public, individuals must fulfill these obligations or risk having the ownership annulled because these details were simply not followed. The question of formalizing the transfer of property, especially between family members, seems to fall into a very specific category: land and property law. And, while this may be true at a very primary level, sometimes, the [i]conditions[/i] under which the transfer is occurring could also pay a role. That is to say, is the transfer under an “eleventh hour” contract such as a will? Is it intended as a gift? Must it be passed as a consequence of another legal contract?

One solid piece of advice: don’t rely on middlemen to take care of the formalization process or to handle the transfer of ownership without presiding over it. Signing a sales and purchase agreement is only one part – often, the commencement – of the transfer of property. Besides payment, a quitclaim deed drawn up by a trusted legal expert is the best way to protect transfers through common statements and safeguards.