putting a charge on a property divorce

For many divorcing couples, the family home is the asset at the centre of most settlement disputes. This largely comes as a result of worries about how the family is to rehouse and also because the home is a central part of family life.

It is a myth that in all cases the family home will automatically be sold upon divorce. The courts have the power to be more creative as to how it is dealt with and there are various options open to spouses whether their settlement is being negotiated out of court or they are involved in court proceedings.

Order for Sale

In cases where there are no minor children to consider or where both parties agree the house should be sold, the Court has the power to order a sale. A house may also be sold if it is simply unaffordable to both parties if it is retained.  If a house is to be sold, and it is held in joint names, generally speaking both parties will have joint conduct of the sale. This means the selling agents and conveyancing solicitors must follow the instructions of the husband and the wife. Both parties must be kept informed and they have equal decision making power. Once the house is sold, the net proceeds of sale, after the costs of sale and any other agreed deductions are made, will be divided between the parties in proportions to be agreed. It is important to note that the proceeds will not always be divided equally.

Transfer of Property

In some cases it may be possible for one party to retain the family home with it being transferred into their sole name. In many cases, this will be conditional on the person retaining the property releasing their spouse from the mortgage. It is preferable that a new mortgage or re-mortgage is taken out by the person retaining the house because otherwise, the other party will continue to be liable under the existing mortgage. We will discuss your mortgage capacity with you and if necessary get expert advice on this. Mortgage lenders are unlikely to consent to the transfer of the property into one person’s sole name if the couple are still to be jointly named on the mortgage.

In most cases where there is to be a transfer of property, the spouse retaining the house will “buy-out” the other party’s interest in the property by paying them a lump sum. The lump sum will either be paid simultaneously with the transfer of the house or in instalments after the transfer has taken place.

Mesher Order or Charge Back

This is where the former matrimonial home will continue to be held jointly by the parties and a sale is postponed. One spouse (often the party with primary care of young children) will occupy the property until the sale. Even though the sale is deferred, the agreement and Court Order will also set out how the proceeds of sale are to be divided once the eventual sale occurs. The advantage of using a Mesher Order is that it allows one party and the children to remain in the home, but the other party retains an interest and some security which will be realised at a later date.

A charge back is where the house is transferred to the person remaining in the property but their spouse has a charge secured against the property protecting their interest.

The Order will set out the various “triggering events” which will trigger a sale in the future. Typically this would include the death, remarriage or voluntary vacation of the person who has remained in the home or, the youngest child of the family reaching 18. The Order does not defer the sale forever.

This option still gives certainty as the division of the value is decided at the time of the agreement, not when the sale occurs. The disadvantage of the Mesher Order is that it prevents a proper clean break being achieved because the property will remain in joint names. Additionally, one party will invariably have to wait quite some time for their money.

We will discuss with you all the options which may be available to you in respect of the family home which will take into consideration your priorities and the needs of you and any children.