At AFG LAW our experienced divorce solicitors understand that one of the biggest worries on divorce is what happens to the family home when your marriage breaks down. For most divorcing couples the biggest asset is the family home and usually the most significant ‘need’ for each spouse on separation is a need to be housed.
This usually means that housing needs are the starting point for dividing the assets of the marriage, this is especially the case if there are children of the marriage. It helps to understand this prior to starting negotiations or mediation so you can ensure this is the focus to begin with before considering other needs.
There are lots of different options depending on the circumstances of the divorcing couple; we have tried to set out the most common scenarios to explain what can happen as part of a financial settlement and how our divorce solicitors can help.
- The assets of the divorcing couple are enough to allow one spouse to stay in the family home and the other spouse can rent or live with family or friends
- The assets of the divorcing couple are not enough to allow either spouse to stay in the family home
- The assets of the divorcing couple are enough to allow both the spouses to buy a smaller home
- The assets of the divorcing couple are enough to allow both the spouses to buy similar properties to the original family home.
- The parent who cares for the children day to day remains in the house with the children until a “triggering event” when the property is then sold.
One spouse can stay in the house and the other spouse can rent or live with family or friends
The family home is normally the biggest expense for a family both in terms of being the most valuable asset but also in terms of mortgage and running costs. When a marriage breaks down there are often not enough funds to allow a second property to be bought. If there are children of the family then the parent who will be providing the majority of their care will have their need to be housed prioritised as the welfare of the children is the first consideration in financial order proceedings.
If it is financially possible it may mean that the children can stay in the house although sometimes it may be necessary for the parent caring for the children to downsize to a more affordable home. The court’s priority will always be to ensure the children are properly housed; if there are no children it is unlikely that it will be considered a fair outcome for one spouse to keep the house unless the other spouse can be bought out with capital from another source.
Neither spouse can afford to stay in the family home
Sometimes the financial position of the divorcing couple means that the house must be sold and the parties must either return to live with family members or friends or find rented accommodation. This may be because the size of the mortgage, the couples’ debt and the level of their individual incomes mean that neither can afford to keep the house on their own.
Once the property is sold the mortgage and costs of sale must be paid and then any money remaining will be divided between the divorcing couple. If there are children of the family then the parent who is caring for them the majority of the time is likely to get a larger share so they can provide for their needs.
The family home must be sold to allow each spouse to buy a more modest property
If it is not financially possible for one of the spouses to remain in the home and the other spouse to rehouse themselves from the remaining funds then the family home may have to be sold to allow both spouses to each buy a smaller or more modest property. The property required by each of the divorcing couple will depend on whether there are children of the family that need to be housed in a property with sufficient bedrooms.
If there are no children, the divorcing couple have similar income, mortgage capacity etc then an even division and equally sharing the proceeds may be appropriate. If one spouse is caring for the children the majority of the time, does not have the same income level or borrowing capacity because of their parenting responsibilities then division may reflect this and the other spouse may have to have less equity and a larger mortgage.
The family home is sold and both spouses can purchase another property that is similar to the family home
The court will always strive to achieve a fair settlement and if there are sufficient matrimonial assets then the court’s aim is likely to be to leave each of the divorcing couple in a similar position to the one they were in during the marriage. However, the court will also look to needs and if one of the couple is in a large property above their housing needs, and in order to remain in that type of property, maintenance is required the court is likely to say that this is not appropriate.
We have discussed spousal maintenance in depth here but the court’s aim when granting spousal maintenance is for it to allow the other spouse to become financially independent and therefore it is not intended to be a long term support in most cases. If there are no children of the family, it is a short marriage and one of the divorcing couple can show that a large portion of the assets are not matrimonial then it may not be considered fair for the other spouse to maintain a standard of living that they have only experienced for a few years and a more modest level of housing may be considered appropriate.
The parent who cares for the children day to day remains in the house with the children until a “triggering event” when the property is then sold.
The court will always put the children’s needs as the first consideration when considering a financial settlement and the children’s biggest need is likely to be housing. If it is possible to keep the family home and allow the children, and the parent who cares for them the majority of the time to remain in the home, that is often the best outcome for the children.
The house is usually the biggest asset of the marriage, if one spouse is able to stay there with the children the other spouse is likely to be in a situation where there is insufficient money for them to have much capital at the time of separating and starting again. One of the mechanisms the Court has for dealing with this situation is called a Mesher order. This is an order which provides for the spouse who is leaving the home to have a percentage share of the value of the home payable at a certain point or “triggering event”.
There are lots of different “events” used such as when the youngest child finishes education, if the spouse remaining in the property cohabits for a period of time, or remarries. When the triggering event occurs the spouse remaining in the property will have to have sufficient money to “ buy out” their former spouse or the property will have to be sold.
These orders need careful consideration as they can have a big impact on the spouse who is remaining in the property, potentially at a time of life where their borrowing capacity has reduced, when the triggering event occurs. This can cause difficulties in circumstances where children have finished university, haven’t been able to secure their own property due to increasing housing prices, the need for a sizeable deposit, are on lower wages etc and remain living with their parent meaning downsizing can be difficult.
If one of these orders is considered it is important that the spouse staying in the property thinks not just about the immediate future but what will happen when the triggering event happens. Mesher orders are complicated; what percentage should the spouse who is leaving the house receive, what should the triggering events be, will the mortgage company agree for the property to be transferred to one spouse with a charge in place for the other, what will happen to the mortgages, running costs and repairs?
Our divorce lawyers at AFG LAW can help guide you through all of these questions to get the best possible outcome for you.
The house isn’t in my name, what can I do?
Generally speaking it doesn’t matter in whose name the house is owned, the court will include all matrimonial assets when looking at achieving a financial settlement on divorce. The financial remedies court has the power to transfer assets to the other spouse in order to meet ‘needs’.
I don’t know what the house is worth. How do I work this out?
It is really important that you understand what assets are available before you start negotiation or mediation. The Court will require it should it be necessary to go to court for a financial settlement on divorce. You will need to get an up to date valuation of the property, an up to date figure from the mortgage company confirming how much is owed on the mortgage and also whether there are any charges for repaying the mortgage early. You will also need to check whether there are any other debts or liabilities and get a repayment schedule.
I want to try and stay in the house with the children. What can I do?
It will depend on the assets of the marriage and whether the mortgage and running costs of the house are affordable to you on your own. Divorcing couples, especially with children, should always consider whether the family home can be kept for one of the spouses to live in as it reduces disruption and costs of future purchase.
The children are living with me, will the court take into account our need to have enough bedrooms for the children and I?
When the financial remedy court is asked to make a decision about finances the welfare of any children of the family is the first consideration. This includes their need to be housed and it means that the parent with whom the children are living with for the majority of the time will have their housing needs, and the housing needs of the children, prioritised.
It is still important to consider the housing needs of the other parent and if the children are going to be staying with the other parent this needs to be taken into account so there is appropriate accommodation for the children when they stay.
You will need to make enquiries about your mortgage capacity so you know how much you can borrow in your sole name
Does the house always have to be sold?
Every situation is different, there is no “one size fits all” answer. If the family home can be kept for one of the spouses to live in with the children then this can be better for the children as it means there is less disruption for them during an already difficult time. Sometimes it is not possible to keep te family home as the assets of the marriage mean the family home needs to be sold to house the two spouses separately.
I have a disability and the house has been adapted for my needs. Will this be taken into account?
One of the factors the court looks at is the health of the divorcing couple. The physical or mental disability of a spouse may impact on their housing needs and this can be raised during negotiation, mediation or court proceedings.
What happens if you rent your home?
Our specialist divorce solicitors understand that when you have made the decision that the marriage has come to an end you may be worried about what will happen to the family home especially if it is rented. Our divorce solicitors will be able to discuss the different options open to you depending on the type of tenancy you hold and who is named on the tenancy; as with most areas of family law we will try and help you reach an amicable solution.
During the divorce process we understand that usually one spouse or civil partner will leave the property but it is important to remember that if your name remains on the tenancy, you are responsible for paying rent until the tenancy is transferred to your spouse or civil partners name or the tenancy comes to an end. If you can’t reach an agreement about who is named on the tenancy, as part of reaching a financial settlement on divorce, it is possible to make an application to transfer the tenancy on divorce. The court will look at the housing needs of both spouses and any children when making a decision.
Sometimes the legal issues with rented properties go beyond what divorce solicitors can deal with under the Matrimonial Causes Act 1973 and it is important that you seek help from a housing solicitor or a charity such as Shelter.
I am staying in the house with the children but the tenancy is in my spouse’s name – what should I do?
Whilst you remain married, which is until a final order is made in your divorce not when the divorce process is started, you have a right to remain in the property whilst the tenancy is continuing. If you are worried about being in this position speak to our specialist divorce solicitors.