What is a deed of assignment and when is it used?
A deed of assignment can be used by owners of property to assign their beneficial interest to someone else, either a legal owner or a non-legal owner. The most common transfer is between husband and wife on a buy to let for tax purposes. An assignment is used when you already own a property and wish to assign some or all of your ownership to another party. A deed of trust, on the other hand, is drafted at the point of purchase. The objectives of both are to give joint owners a share of the beneficial interest in a way that is tax efficient, for receiving income from the property, such as capital gains or rent or for inheritance tax planning.
Why use a deed of assignment?
Deeds must be physically signed and witnessed in person. This gives an additional level of assurance as it is difficult to query the legitimacy of the document in the light of evidence that it was agreed and signed on a particular date.
In addition to being used for physical property, a deed of assignment can also be used for intellectual property, such as a logo. The graphic designer would assign the logo to you, meaning you own the copyright. If you are selling a business, you can transfer your contractual relationships to the purchaser. The rights and obligations of existing contracts would be transferred to the new owner of the business.
A deed of assignment ensures you no longer have any ongoing obligations or rights as a signatory to the contract. This means you are no longer liable or accountable for a contract as it has been assigned to someone else.
How do I create a deed of assignment?
A solicitor such as Parachute Law can draft your deed and get back to you within hours of you supplying your complete intentions.
When can’t a deed of assignment be used?
If you don’t already own the property, you’ll need a deed of trust instead. If you own a property as joint tenants, you co-own it and have equal rights to the property, so you can’t assign any part of it. You would need to sever the joint tenancy and become ‘tenants in common’ in order to assign an equitable interest to another person.
How does a deed of assignment differ from a transfer of equity?
When you assign equitable interest, the legal title does not change. A transfer of equity does change the legal title, which requires consent from the mortgage lender. For owners who do not want to change or are not able to change the legal title, an assignment allows them to assign their interest to someone else without consulting the mortgage lender.
What is the maximum share I can assign?
You can assign 100% of the beneficial interest and this is known as a ‘Declaration of no interest in property’.