Concept for - selling a property on divorce

Properties are often the largest asset to deal with on divorce, and often one of the most contentious assets. The timing of selling a property on divorce is something to really consider.

A common priority for separating couples is separating physically, and this can mean selling the former matrimonial home.

Who owns the property?

Firstly it is important to understand who owns the property, i.e. whose name is on the title with the Land Registry.

If the matrimonial home is held in one party’s name, the other is likely to have a beneficial interest in the property by way of the marriage. This means they have a right to reside in the property (unless they have already vacated or there is a Court Order to the contrary) and have the ability to register a Home Rights Notice against the title. As the owner of the property this can be problematic as such a notice can cause concern for buyers, as it will need to be removed before the sale completes. If the spouse with the benefit of this notice refuses to cooperate, or before the Final Order in the divorce is pronounced, this could impede and ultimately jeopardise the sale.

However, an agreement can often be reached that the Home Rights Notice will be removed provided the proceeds of sale are held by a solicitor pending an overall financial agreement in the divorce.

If the couple jointly own the property, either as tenants in common or joint tenants, this does not necessarily mean the equity in the property can just be split equally. The equity in the property will be divided in accordance with an agreement reached in the finances on divorce or as determined by the Court. This should take into consideration the factors set out in section 25 of the Matrimonial Causes Act 1973.

Splitting the equity when selling a property on divorce

The former matrimonial home, or any additional properties, will be just one of the assets. When reaching a financial agreement, it is important to look at the asset pool as a whole, to understand the full picture. In dealing with the sale of a property in isolation, before the overall finances are dealt with, it isn’t possible to know exactly how the proceeds of sale should be split.

Whilst solicitors are able to hold sale proceeds until a financial agreement is reached (including how the proceeds are to be divided), where the former matrimonial home has been sold, both parties will need to rehouse and likely need access to those funds in order to do so.

In addition to the risk of splitting the sale proceeds without the context of a full and final agreement, if parties make onward purchases using those funds, or utilise the money in another way, it can then be difficult to access those funds should they later be needed in the overall settlement. Onward purchases before matters are finalised can also impact how a party’s needs are assessed. For example, if a party’s case was that they require a three-bedroom property to rehouse themselves of a particular value, but in the interim they have purchased a one-bedroom flat, their spouse may argue this has set a precedent for what is required to meet their needs and suggest they need a smaller share of the matrimonial assets.

The Court’s approval

A financial agreement is only fully binding once the Court has approved it by way of a Consent Order. It is within the Court’s discretion as to whether it considers a financial agreement to be fair and reasonable, and we would always advise against implementing any agreement until the order has been approved. Undoing an agreement that has been implemented can prove very difficult.

In addition, until parties have an approved Consent Order, their claims against each other remain open, and so technically, if a party were to purchase a new property before matters are finalised, the other could attempt to argue that they have a claim to the new property and that it should form part of the “matrimonial pot” to be divided.

Buying the other out

Even if parties are not selling the property but one is looking to buy the other out, the same risks apply and legal advice should be sought before any steps are taken.

Market considerations

When is the best time to sell and when is the best time to buy? The UK housing market and the rise of interest rates has certainly not made these easy questions to answer.

Whilst from a legal perspective there are reasons to hold off on any sale until a Consent Order has been approved, the market and personal circumstances may force those plans to change. It is important to consider how the best price can be achieved upon sale, but also the affordability of each party looking to rehouse, considering borrowing capacity and the affordability of repayments. This is a matter for individuals to consider and we would recommend seeking financial advice in this respect.

Saving money – losing money

Whilst seeking legal advice may be seen as an expense parties would prefer to avoid, it is important parties fully understand the implications of any agreement they reach.

Speaking to a solicitor before making any big decisions, such as selling a property, will provide you with the information you need to make an informed decision. The expense saved on not seeking legal advice could cost a lot when it comes to the overall settlement, by which point, it might be too late.

If you have any questions relating to selling a property on divorce, please contact the Family team or email