The term “legal transfer” is used in two different senses. Both involve the transfer of assets from one person or entity to another and refer to the legal standards which must be met to ensure that the transfer is valid. If a transfer is not conducted legally, there can be problems in the future which may include disputes over legal ownership. It is important for people to make sure that asset transfers occur legally to avoid such problems.
In the simple sense, a legal transfer is simply a transfer of assets which is recognized as valid because it was voluntary and goods, services, or money were exchanged. For example, if Mary sells her car to Joe, it's a legal transfer because Joe pays money for the car, and Mary signs the title over voluntarily in exchange for the money. On the other hand, if Joe takes possession of Mary's car without paying, the transfer is not legal. Likewise, if Mary is coerced into selling, the transfer is not valid.
For certain types of registered securities, in order to be legal, a transfer must be accompanied by proper documentation. The classic example is a situation in which someone wants to transfer assets such as securities from someone who is deceased. The deceased is not around to consent to the transaction and as a result legal documents must be filled out for a legal transfer. A beneficiary who wants to re-register securities in his or her name will need to make a legal transfer.
Usually the selling broker is responsible for supplying the paperwork which demonstrates that a transaction is legal. However, the buyer also has some responsibility to avoid deals which seem obviously questionable. For example, if someone offers to sell a car without a title, the buyer should be suspicious about the transaction. Likewise, someone selling securities in someone else's name should be deemed suspicious until demonstrated otherwise.
The standards which determine whether or not a transfer is legal vary from country to country. As a general rule, the transaction must not involve coercion, must involve some sort of parity in exchange or be clearly designated as a gift, and must accord with the laws of the area. If a transfer of assets would break the law, it is not a legal transfer even if the first two conditions are met. People who are not sure about the legality of a transaction should consult a lawyer.