16th January 2020
What are the options for dealing with the former family home on divorce?
The family home is usually the biggest and most important asset that a divorcing couple will own. This article will consider the ways in which the property can be dealt with on divorce.
Selling the family home
Wherever possible, the court will look to achieve a financial clean break for the parties when deciding how the matrimonial assets should be divided on divorce. This means the parties’ assets are split between so that they can both move on with their lives without any ongoing financial ties to the other party.
If there is sufficient equity in the property to sufficiently rehouse both parties’ needs then the courts are likely to order the marital home to be sold and the sale proceeds to be divided in a split that meets the parties’ needs.
If there is not enough money available to enable one of the parties to take over paying the mortgage and utility bills themselves, then a sale is probably going to be unavoidable.
Transfer of the family home
A transfer of the property means the transfer of the legal and beneficial ownership of the property into the sole name of one of the divorcing couple. This would facilitate a clean break.
An outright transfer of the matrimonial property could occur when a spouse still residing in the family home “buys out” the other spouse. Alternatively, a spouse residing in the family home may wish to forego any entitlement to maintenance payments or pension entitlements in order for the property to be transferred outright to them because the main priority is to secure the family home. This would facilitate a clean break.
Another possible scenario is when an ex-wife has a residence order or is the agreed main carer in respect of the child/children to the marriage and the ex-husband has limited financial resources other than his share in the matrimonial property. In such circumstances, it would be unlikely that he would be able to support his ex-wife and children and the best way of stabilising the children and the ex-wife’s future would be for the ex-husband to transfer his interest in the property to the wife outright.
Trust of Land (Mesher Order & Martin Order)
Sometimes a clean break simply isn’t practical. For example, when a home needs providing for one of the parties (and their children) and their financial circumstances do not allow for a sale or an immediate outright transfer of the former matrimonial home. It may be possible to postpone the sale of the house until a future event is triggered. These types of orders are most commonly known as “Mesher & Martin Orders”, following the names of the first legal cases in which these types of orders were made.
A Mesher Order is made to provide a home for the children of the marriage. It is an order that postpones the sale of the family property until a specified triggering event occurs e.g. when the youngest child turns 18.
A key advantage of this type of “deferred trust” is that it enables one of the parties and the children to remain in the former family home following the divorce and but also retains a financial interest in the family home for the non-occupying spouse which will be realised at a later date.
A Martin Order is a similar to a Mesher Order but the triggers for sale are not based upon the children. The future sale of the house could be triggered if, for example, the occupying spouse remarries, cohabits for a specific period of time, chooses to leave the property or dies.
Mesher orders can understandably be an attractive option in the short term because they allow the occupying spouse to provide security and minimum disruption to the children’s home life at a time which is already very emotionally difficult for the family. However, a spouse considering this option should think very carefully about the longer-term implications. What may appear a sensible financial decision now may not transpire to be such a sensible decision when the trigger event eventually arrives and it is time to pay out the former spouse for their interest in the property.
Mesher Orders have been criticised by some on the basis that they only delay the inevitable and often result in problems for the occupying spouse at the time the property must eventually be sold. It may be the case that there is simply not enough equity in the property at a later date to allow the occupying spouse to be re-housed. They may also find obtaining a mortgage at a later stage of life simply may not be an option.
It is certainly always prudent to consider other options during negotiations and if it is possible to facilitate a clean break by reaching a negotiation for a transfer of the property then that is certainly a more secure option.
With offices in Sunderland and Newcastle, our family lawyers and divorce solicitors work with clients across the North East. For a free no obligation first discussion or to arrange an initial consultation, please get in touch:
Family Solicitors in Sunderland: 0191 5682050
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