AFG LAW are solicitors who can advise on the transfer of property on a divorce or separation. There are different ways of dividing your home when you divorce or terminate your civil partnership. It’s important to understand the nature of your ownership of the home before you can decide how to split it.
Transfer of a Property on a Divorce or Separation
Home ownership and rights
Your property might be owned in one of these ways:
- by one partner
- jointly, by both partners – and there are different forms of joint ownership, or
- by someone else entirely (like a family member or trust)
When you and your ex-partner separate you need to know which of you owns the home, who has the right to live in it and how the nature of your ownership could affect your financial settlement. An important first step is to protect your property rights as soon as it is clear that you are separating.
What if the property is in joint names?
Joint owners can either be ‘joint tenants’ or ‘tenants in common’.
- Joint tenants both own the property between them without specifying their respective shares. If one partner dies, the other person will automatically own the whole property, no matter what is in their will or even if there is no will in existence.
- Tenants in common each owns a share in the value of the property, which can be equal or staggered. They can each leave their share to whoever they like; if there’s no will, their share would pass to the other joint owner if they were married (or civil partners) but not if they were only cohabiting.
Changing the ownership
You may choose to change your ownership of the property from ‘joint tenants’ to ‘tenants in common’. The advantage of doing so would be that if you were to die before the divorce or dissolution was finalised, your ex- partner wouldn’t automatically inherit your share of the property. However, this arrangement works both ways.
Severing the joint tenancy
The process of changing joint ownership is called severing the joint tenancy; doing so enables each of you to retain control of 50% of the property. You both would have to make a new will to set out who inherits each respective half of the property.
In England there’s no need to get the other party’s agreement in order to sever the joint tenancy.
What if the property is in one name only?
In the case of the property belonging to only one individual in its entirety the value of it is usually taken into account when deciding financial settlements.
If you are married (or in a civil partnership) and you are not the legal owner, you can legally continue living in the property until the divorce or dissolution is finalised. Once that occurs, you are no longer entitled to remain indefinitely; however, your ex-partner cannot simply evict you without proper notice if the property remains your home.
Property in someone else’s name
If your property is held entirely in someone else’s name, like a family member, a company or a trust, you may be unable to claim an interest in it. However, it could still affect your financial settlement depending on your particular circumstances.
What can the court order with regards to my property?
Regardless of whether you and your ex-partner intend to involve the court in dividing your assets, it may be worthwhile to know what the courts can order. They have several different options to choose from when deciding how the property should be divided.
- ownership stays the same and one of the partners is given the right to stay in the property until the children are 18 years old (for instance, or until they finish full-time secondary school or university).
- ownership is transferred to one of the partners – the other might surrender their share of the property in return for a bigger share of a pension or savings.
- ownership is transferred, but the other partner retains an interest to be cashed in (either as a lump sum or a fixed percentage) when the property is sold; interest can be protected by registering a charge against the property at the relevant land registry body.
- the property is sold and the proceeds are fairly split between both partners (following deductions of any mortgage repayments, estate agents costs and legal fees).
Thinking about the long term
You and your ex-partner need to decide whether one of you canafford to stay in the property or whether you will have to sell it, either immediately or in the future. It may even remain the family home for one of you.
Keeping up the mortgage payments
Whatever you decide for your property, make sure you maintain your mortgage payments. Any late payment or non‑payment could affect your credit rating and make it difficult for you, or your ex-partner, to get a new mortgage, loan or credit.
Mortgage companies accept that some couples end their relationship, speak to your lender as early as possible to explain the situation and explore your options.
Who is liable for the mortgage?
If you and your partner jointly own the property and the mortgage is in both names, you are both liable for the full amount of the mortgage. This means that if repayments are not kept up, the mortgage company could demand payment of the entire remaining amount from either of you.
If you were married or in a civil partnership, the courts have the power to order one of you to pay maintenance to the other; spousal maintenance can include the cost of mortgage repayments.
What are the options available to us for disposing of the mortgage?
You have several options for disposing of the mortgage on your property and they include:
Paying off the mortgage
Consider whether the mortgage can be paid off so that either you or your ex‑spouse or civil partner owns the property outright. If you can’t agree, a court can order you or your ex-partner to pay either:
- a lump sum, to pay off all or part of the mortgage straightaway, or
- maintenance, to help you pay the mortgage off over time
Mortgage lenders will normally accept maintenance payments as a source of income when assessing how much you can borrow; they may want evidence of the formal agreement for payment and how long it will last.
Transferring the mortgage
When a property is transferred from one partner to the other the mortgage is normally transferred into the name of the person who is keeping the property. Mortgage lenders will want reassurance that the person assuming the mortgage can afford the repayments.
Acting as a guarantor
Occasionally the person relinquishing their interest in a property will act as a guarantor; making them either partially or fully liable for the mortgage if the other person doesn’t maintain the repayments. Acting as guarantor can affect the amount that a mortgage company would offer you to buy a home of your own in the future.
Switching the mortgage
You may be able to make your mortgage more affordable byswitching to a different mortgage deal (for example a lower interest rate).
Selling the property
There is normally no capital gains tax when you sell your only or main residence. But there could be tax on your share if:
- you moved out more than three years ago
- you have already bought somewhere else and declared it as your main home, or
- you have been running a business from home
Contact AFG LAW residential property solicitors about transferring a property during a divorce or separation
If you require legal advice on property law, contact AFG LAW residential property solicitors for a no fee / no obligation quote in connection with your conveyancing matter.
Our property team can help you with a full range of legal services.
Contact firstname.lastname@example.org for further information or call us on 01204 920108.