Protecting property during divorce is a key aim for many people going through or contemplating divorce. Some are worried about the consequences of the family home not being in their name, and are concerned about where they and the children might live. Others own a portfolio of buy-to-let properties and for tax purposes have held some of the properties in the name of their spouse, and are now concerned about maintaining the value and tenants of that portfolio through a turbulent time. Indeed, this is an issue that touches almost everyone, since in almost every case the properties are – whether emotionally or financially – amongst the most valuable assets of the family.
Where the legal title to a property is held solely by your spouse, they will have the right to sell, transfer, dispose of, and mortgage the property without your knowledge or consent. In circumstances such as divorce, it will often be appropriate to restrict the rights your spouse has over the property, pending the outcome of financial proceedings.
There are three main courses of action we can pursue to protect the interests of our clients in those circumstances.
- The first course of action is the registration of Home Rights. Where the matrimonial home is in your spouse’s name, but you have an entitlement to live there (this entitlement is statutory for married couples), an application may be made to the Land Registry at any time for a notice in your favour to be registered against the property. This notice is registered on the property, giving the beneficiary of the notice the right to enter and occupy the property, or prevents eviction if you are already in occupation. This has the effect of preventing unwanted disposal of the home, because if your spouse tried to sell or dispose of the property, you will automatically be notified and the appropriate action can be taken. The house cannot be sold whilst the notice remains registered.
However, Home Rights may only be registered in respect of a home that is or has been the matrimonial home. Consequently, such a charge may not be used to protect properties other than those that have been occupied by the married couple.
- The second course of action is to register unilateral notices against those properties, for instance those in a portfolio, which are in your spouse’s sole name. A unilateral notice is similar to a Home Rights notice in that it takes the form of a notice registered against the property, but requires more detail in proving your interest in the property. Usually the fact that there are ongoing or impending divorce proceedings will provide sufficient grounds for the unilateral notice to be registered.
The registration of a unilateral notice prevents disposal or mortgage of the property without the consent of the person with the benefit of the notice, and is consequently invaluable to a divorcing spouse looking to retain control and protect property through the divorce.
- Finally, even where unilateral notices are not an option, there is a third option to protect the properties. Undertakings (legally binding promises) may be sought from your spouse’s solicitor, to the effect that they will not dispose of or mortgage the properties without your consent. Such undertakings serve the same purpose as a unilateral notice, but will not appear on the public register, and so will not warn off prospective buyers or mortgagees in quite the same way. There is no obligation for your spouse to agree to give such undertakings, though the Court’s powers which follow a refusal and subsequent dissipation of assets is often sufficient to encourage agreement.
One benefit of undertakings is their flexibility. In particular, they can include things that are outside the Court’s jurisdiction to Order, such as regulating the conduct of the spouse in relation to tenants or prospective tenants of your properties. We may recommend using undertakings in conjunction with formal notices to protect property as much as possible in the context of a divorce.
Between these three courses of action your property can be protected, pending conclusion of the financial settlement in a divorce, whether by Home Rights notices, unilateral notices, undertakings, or a combination of all three. It is critical that notices are registered at the earliest opportunity and this is why these issues should be addressed in the initial meeting with one of our solicitors.