FA03/Sched3/Para 3A (relating to transactions exempt from charge to SDLT) states:
(1) The acquisition of property by a person in or towards satisfaction of his entitlement under or in relation to the will of a deceased person, or on the intestacy of a deceased person, is exempt from charge.
Sub-para (2) provides that this does not apply if any consideration is given other than ‘the assumption of secured debt’.
My question concerns a situation where a beneficiary is entitled to an estate where virtually the sole asset is a property subject to a mortgage and wishes to acquire the property intact rather than the executors selling the property to pay off the mortgage.
As I understand it, there is no reason in law why the property could not be transferred subject to the existing mortgage with the beneficiary assuming the position of mortgagor and indemnifying the executors (if the lender does not release them). The consent of the lender would be required (a) in order to register the transfer of title and (b) in all probability under the terms of the mortgage.
This would appear to meet the criteria for exemption. However the problem is that, in my experience, the lender will not agree to a transfer subject to an existing charge, but requires a re-mortgage. If the beneficiary raises a mortgage in order to discharge the existing mortgage, contemporaneously with the transfer by assent to him of the property, will this still meet the criterion for '‘the assumption of a secured debt’ and be eligible for the exemption from SDLT?
In this case the beneficiary also proposes a Deed of Variation so that the property passes to a limited company (see your thread on DoVs in favour of a limited company). Para 4 of Schedule 3 states that a transaction subsequent to such a variation also qualifies for exemption, but does not include the exception of assumption of a debt. However a note in the HMRC SDLT Internal Manual states that ‘consideration does not include any secured debt assumed’.
Does anyone have a view on whether it counts as assuming a secured debt if this can in practice only be effected by remortgage?
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