Dealing with the home

Dealing with the home

Contents

The court has absolute power to deal with the home in a way that achieves a just and fair solution. The most important consideration is providing a home for any children. This is followed closely by providing a home for both of the spouses. A home is usually the spouses' largest financial asset.

Overview

The matrimonial home is usually the most important capital asset of spouses in a divorce or judicial separation. It also represents a liability as it has to be maintained and will usually be subject to a mortgage.

Although the court will take into account the financial contributions made by both spouses to buy the home, this is often not the most important consideration. The court will look at the housing needs of both spouses and the needs of any children. The court will also look at the pensions of the spouses.

The court has a wide discretion to determine what should happen to the home and the share that each spouse will receive when it is sold. The home will not be looked at in isolation from the other family assets and the future earning power of the spouses.

The court may make any one of following orders for the home:

  • An immediate sale and dividing the sale monies in a specific way
  • An outright transfer from one or both spouses to the other
  • Putting off the sale until a point in the future and then dividing the sale monies in a specific way
  • A transfer from one or both spouses to the other and a sale at a point in the future with a lump sum being paid to one or other spouse

Immediate sale

If both of the spouses are relatively young and there are no children, this is the most appropriate order. In all cases, the court will attempt to achieve a clean break. However, often this is not possible. By ordering a sale, the court is effecting an immediate clean break.

The mortgage will be paid off. Both spouses will be free to use the money available to buy separate homes. The court may order that the estate agents and solicitors be paid from the proceeds. It may also indicate the solicitors to be instructed in the sale and how the price is to be fixed.

If children are involved, the court must consider their welfare and will not readily order a sale of their home. It will have to be satisfied that if the home is sold, they will be suitably accommodated. The effect of the move on their schooling will be considered.

Sometimes a sale may be ordered out of necessity. If the spouse's finances were already stretched before the breakdown, it will certainly not be possible for one spouse to remain in the home and the other to accommodate themselves separately. It could be that both will have to rent properties.

If one spouse wishes to sell the property and the other wishes to remain in it, the remaining spouse will 'buy out' the leaving spouse by paying a lump sum. If there is enough equity, this sum may be raised by a mortgage. This 'buy out' could be attractive because it avoids the delay and expense of a sale on the open market.

Outright transfer

The court may order the transfer of the home from one spouse to the other. This will achieve a clean break in respect of the home. It determines immediately and finally who owns the home.

The court is unlikely to order an outright transfer unless the spouse is able to pay the outgoings on the home including the mortgage. In addition, the court will ensure that there is suitable alternative accommodation for the spouse transferring the home.

An order for an outright transfer might be coupled with a lump sum payment between the spouses. If one spouse earns significantly more than the other, an outright transfer may compensate for any loss of maintenance that would have otherwise been ordered.

However, the court cannot release a spouse from an obligation to pay maintenance for their children. Similarly, any agreement to forgo any claim of maintenance for the children will be unenforceable.

Putting off the sale

Putting off the sale of the home is a compromise arrangement. The court would make this type of order where it would be too harsh on one spouse for the home to be transferred to the other without an interest being retained.

The court will order that one or both spouses will continue to own the home. The home will be sold at some date in the future. The order will say how the sale monies are to be divided between the spouses when the home is sold.

The court may say that the home is sold upon:

  • The occupying spouse dying
  • The occupying spouse remarrying
  • The occupying spouse cohabiting with a new partner
  • The occupying spouse voluntarily leaving the property
  • The youngest child reaching a specified age (usually 17 or 18 years)
  • The youngest child ceasing full-time education

If the triggering event is the occupying spouse cohabiting with a new partner, there may be difficulty because there is no proper definition of cohabitation. Also, there is no obligation on the cohabitee to maintain the occupying spouse or the family.

Since the order cannot be altered once made, it is important to consider all the future implications of the order.

Transfer and future sale and lump sum

The court may order a transfer from one or both spouses to the other and a sale at a point in the future with a lump sum being paid by the other spouse. This allows one spouse to remain in the home with the children. The home will be transferred into the sole name of the occupying spouse with the non-occupying spouse having a charge on the property. The charge will be like a mortgage. The charge will not be payable until a specific event occurs. The court will state the specific triggering event.

The triggering event may be:

  • The occupying spouse dying
  • The occupying spouse remarrying
  • The occupying spouse cohabiting with a new partner
  • The occupying spouse voluntarily leaving the property
  • the youngest child reaching a specified age (usually 17 or 18 years)
  • The youngest child ceasing full-time education

If the triggering event is the occupying spouse cohabiting with a new partner, there may be difficulty because there is no proper definition of cohabitation. In addition, there is no obligation on the cohabitee to maintain the occupying spouse or the family.

If the occupying spouse cannot pay the charge, the property must be sold. The charge will be expressed as a proportion of the net proceeds thereby allowing both spouses to benefit from any increase in the value of the home. The charge will be registered against the home and be paid before any subsequent liabilities on the home or incurred by the occupying spouse.

Sole ownership

If one spouse is the sole owner of the matrimonial home, the other spouse may not be obliged to leave the home without a court order.

A spouse may register a caution against the home. A caution is a formal note placed on the title to the home held by the Land Registry. This caution is known as the 'matrimonial homes caution'. Once a caution has been registered, the owning spouse will not be able to sell or mortgage the home without the other spouse's knowledge and permission.

This caution will end as soon as the marriage is dissolved by a decree absolute. Should the non-owning spouse require further protection against their spouse selling or mortgaging the matrimonial home, they must register a further caution. This further caution is known as a 'pending action caution'. Before this caution is registered, the court must have been asked to make an order in respect of the home. This will be done either in the petition, the answer, a notice.

Finally, if a spouse is about to get rid of some property to prevent the other spouse having a claim on it, the court may make an order stopping the spouse getting rid of the property.

Rented property

If the spouses rent a property jointly, the court can order a transfer of the tenancy from one spouse to the other. If the tenancy agreement contains a provision whereby the tenancy must not be transferred without the permission of the property owner, the court will not order a transfer unless the property owner agrees.

If the tenancy agreement has ended, it is not possible for the court to order a transfer because there is nothing to transfer. This will arise when someone exercises their statutory right and continues to live in a home after the tenancy agreement has ended.

Lenders and mortgages

Where both spouses have signed the mortgage, they will be responsible for the monies lent under the mortgage. If the court orders an immediate sale of the home, the lender or mortgagee will require that their loan together all interest due will be repaid when the property is sold.

The lender or mortgagee will generally allow the home to remain in the joint names of both spouses with the sale monies being divided in a certain way.

However, if the court transfers the home from one or both spouse to the other spouse, the lender or mortgagee may object. Before allowing any transfer to take place, they will want to be confident that the spouse will be able to make the repayments due under the loan. Usually when the property is transferred, the lender or mortgagee will release the spouse who not longer owns the home from their responsibility to repay the monies under the loan. However, they are not obliged to release them.

If the lender or mortgagee is not prepared to release the spouse no longer owning the home, this may prevent a clean break taking effect. The lender or mortgagee must be told about any possible transfer before a court makes any order. This will give an opportunity for objections.

Third party rights in the matrimonial home

If both spouses own the home with another, the court will have to allow this person to take part in the proceedings. They will be allowed to make representations to the court.

Often this person will be a parent of one of the spouses. If a sale is ordered, the parent may be offered the right to buy the home. If they are, the price will be based on the price that the home could fetch should it were offered for sale on the open market.