- Solicitors For Business
- Solicitors For You
- About Us
- News & Events
The Matrimonial Home in a Financial Settlement on Divorce
In divorce or civil partnership dissolution proceedings, the family court will decide an appropriate financial package in cases where the parties cannot agree terms. Ancillary relief used to be the general term applied to financial provision and property adjustment orders made by the court. Since 2011, these orders have been known by the term 'financial remedy'. For many separating couples a large part of their financial settlement will be concerned with the matrimonial home. This is centrally important for two reasons. First, the home is usually the most valuable asset available to the parties and second, everyone needs somewhere to live.
The courts will be concerned to provide a home for both parties. However, the welfare of any minor children and the provision of a suitable home for them will be at the forefront of the judge's mind. The court is obliged to consider the factors set out in section 25 of the Matrimonial Causes Act 1973 or its civil partnership equivalent. This involves a look at all the circumstances of the case. This can put the court in a difficult position as it tries to achieve multiple aims that may be inconsistent and mutually exclusive. These aims might include:
- providing a home for the minor children and the parent they live with - in many cases the children spend substantial time with both parents
- providing secure homes for both parties
- bringing about a fair division of the family assets
The court has the power to do a number of things with the family home. It can:
- order the house to be sold so that the proceeds can be divided between the parties in whatever percentage is appropriate in the circumstances
- order a transfer of the property to either party, with or without the payment of a lump sum to 'buy out' the other party
- create a trust of land (more of which below)
Selling the matrimonial home
The court will take into consideration a whole range of issues:
- Whether there is sufficient equity in the home to provide two new homes for the parties or at least for them each to put down decent deposits on a new home. If there is not sufficient equity for this to happen the court will have to look at the fairest way of meeting the parties' housing needs with the available resources and consider what sacrifices the parties can or should make
- Where there are young children, the court will consider how moving house might affect the children and how best to minimise disruption
- The parties' ability to get a mortgage will be highly relevant. One party may argue that they should stay in the home and 'buy out' their ex. This would only be feasible if they have sufficient earnings and borrowing capacity to take over the existing mortgage and raise an additional lump sum. If they cannot do this, then a sale would be more likely
Transfer of the property
The court can order the family home to be transferred into either party's name, with or without a lump sum being paid to the other party. A transfer could be part of a clean break settlement and it may be that the house is transferred to a party instead of receiving ongoing maintenance. Again, issues such as the amount of equity in the property, the parties' respective abilities to raise a mortgage and keep up repayments will be highly relevant. There are very many options.
Trust of land
This is a far less common way of dealing with the family home than a sale or transfer. However, there are certain situations in which it is a useful option, for example where a home needs to be provided for one of the parties until the children leave education and there is no other way of achieving this.
The two most common arrangements are named after the divorce cases in which they were established:
- a Mesher order whereby the property is sold and the equity released when an event occurs such as the youngest child leaving full time education
- a Martin order whereby the property is sold upon the death of the party living there
In both cases, a sale will usually be triggered by the remarriage of the party living in the property or their deciding to leave voluntarily.
Orders of this kind can be difficult to manage for a variety of reasons. There is an inherent unfairness in one party having to wait, sometimes decades, for their share of the equity to be made available. The parties may find it difficult to agree who should pay for work to be carried out on the house while the order is in place. The person who is living there will get the immediate benefit of the work but the other person's future share in the proceeds of sale may be made more valuable by it. It is not straightforward but in a small number of cases, it is the only feasible option.
Drafting of orders
Whatever measures are required or agreed by each party to the divorce in order to deal with the matrimonial home, the details should be accurately and formally incorporated in a court order compiled by a divorce solicitor and then presented to the court for approval. All other elements of the financial settlement such as provision for maintenance, lump sum payments, or pension sharing orders would be included in this order.
Advice on property division in a divorce financial settlement from JMW
The JMW family law team has a wealth of experience in complex financial settlement cases and has access to valuation, taxation and all relevant financial expertise to assure clients achieve the best property settlement possible.
Wherever feasible we approach property claims on a conciliatory basis, however, should it not prove workable to use this approach, for example due to unreasonable demands made by the other party, we believe in bringing a positive, cost-effective contribution to resolving a financial settlement on divorce through the application of swift, no-nonsense legal actions.
You can also read more about financial settlements and how we can help you here.