During divorce, you will need to consider the division of your belongings and assets. There are several assets that can be considered during the divorce financial settlement process and this includes your family home. However, this isn’t always as straight-forward as you might expect.
Who gets the house in a divorce?
There is no standard split of assets for divorcing couples – it depends on many factors and is divided based on fairness and the needs of both parties. As the family home is treated as a matrimonial asset, it will be subject to division in the financial settlement.
There are several ways you can agree to split your property, including:
- Buying the other out: One party buys the other out of their share of the property
- Selling the house: Selling the property and dividing the money gained through sale
- Deferred sale (Mesher Orders): Postponing the sale to a specific date, for example, until children are older
- Transfer with a charge back: Ownership is transferred to one spouse while the other retains a percentage share (a charge) on the property that is paid out when the property is eventually sold
As the property is looked at in conjunction with all assets, it may be possible to leverage the value of other assets to keep the house. For example, if one party wanted to keep the house, they can offer more in other assets in the marital pot such as pensions, investments or other properties.
During this process, you can voluntarily come to an agreement about the property between yourselves or through a form of non-court dispute resolution (NCDR). If you cannot do this for any reason, the court will decide for you. If the court has to step in, the welfare of any children will be its absolute priority in the outcome, and it will be primarily concerned with minimising any disruption to children’s living arrangements. Factors like each party’s earning capacity and the length of the marriage are also carefully considered.
What happens if you have a joint mortgage?
Many couples divorcing or dissolving their civil partnership will still have an active joint mortgage, making dividing the value of their property more difficult.
It is worth noting that during the divorce process, monthly mortgage payments are still a legal responsibility of both parties, which can take months to finalise. So, seeking a quick long-term solution to this is imperative to avoid juggling multiple home costs or any negative credit scores for missed payments.
Many couples try to arrange matters so that only one party has their name on the mortgage after separation, if the mortgage has previously been in joint names, but this depends entirely on the finances of one or both parties. There are a number of solutions to dealing with a joint mortgage in divorce:
- Pay off the mortgage: If you are reaching the end of your mortgage term, you can pay off the remainder of the mortgage
- One party buys out the other (transfer of equity): If one party wants to keep living at the property and can afford the payments alone, they can buy the other partner out of the mortgage. You will need to refinance the loan with your lender and pass any affordability checks or create an agreement with the other party
- Sell the property and pay off the mortgage: If one party can’t be bought out by another, it may be necessary to sell the property to pay off the remainder of the mortgage. Any excess equity left after the sale will then be added to the matrimonial pot and split. If it is in negative equity, both parties will need to take on the debt
Zanariah Webster, Senior Associate at our family law office in London, says:
“If the parties agree to any of the aforementioned scenarios, it is important that this is dealt with as part of the financial agreement and incorporated into a Consent Order.
“As part of the disclosure process and negotiations, it is advisable that assets are not dissipated ahead of a financial agreement. This not only protects the individual but also ensures that the financial agreement reached is fair.”
Who lives in the house during the divorce?
Before reaching a final financial settlement, both parties will have equal rights to occupy the property. This is called home rights and only applies to married couples, not those in a civil partnership. One party cannot be forced out by the other without a court order, even if the property is only in one of the parties’ names.
Any agreements must be made between yourselves as to who stays in the property, but it is usually the primary caregiver for any children remaining in the property. However, this is not legally enforceable. If you decide to move out during the process of divorce and settling your finances, your rights to the property will not be affected.
You can apply for a home rights notice if you are staying in a property during the divorce that is owned by the other spouse to legally ensure they can’t sell it. This is done by contacting the Land Registry.
Legal ownership – how is a house divided in a UK divorce?
It is important for any divorcing couple to have a clear understanding of how they own their property.
There are two ways that a person can own a property:
- Joint Tenants: This means that you and your spouse both own 100% of the property. It also means that if you die before your house is sold/ your financial matters are concluded, your entire share in the property will pass to your spouse in full, irrespective of whether or not you have left your share to someone else under your Will
- Tenants in Common: This means that you and your spouse own distinct shares of your property. The default position for tenants in common is that each owns 50% of the property in full. However, this is not always the case, and you should check the copy of the Transfer Deed that you signed during the conveyancing process (TR1) to check. In this instance, if you were to die before your house is sold/your financial matters are concluded, then your entire share in the property will pass to whomever you have left your share to under your Will
You may want to consider ‘severing’ your title if you are planning to divorce your spouse and you currently hold your property as joint tenants. When you sever a title, your joint tenancy will change to tenants in common on a 50:50 basis.
What if the house is in my spouse’s name?
If your family home is in your spouse’s name, but not your name (regardless of whether you pay towards the mortgage or the bills), it is important to protect yourself legally on the title. If you do not take steps to make the Land Registry aware that you have an interest in the property, then your spouse may be able to sell the house without your knowledge/consent, especially if you no longer live there.
If this is the case, then you should consider registering your Matrimonial Homes Rights against the property, which involves telling the Land Registry that you are married to the owner of the property and therefore you have an interest in the property, because it is your family home. This will prevent your spouse from selling the property without your knowledge and consent.
If the property is not your family home, but rather a rental property, or another property that you have a beneficial interest in, then you cannot register your matrimonial home rights against it. You can, however, tell the Land Registry about your interest in another way, by registering a Notice or a Restriction against the Title. Again, this will warn any potential buyers that you have an interest in the property which needs to be addressed before sale if your spouse tries to market the property without your knowledge.
How are any other properties divided outside of the family home?
Like the family home, any other property owned can be classified as a matrimonial asset, even if just one of you own the property. Property acquired before the marriage is often classified as a non-marital asset, however factors such as the length of marriage can change this.
Typically, the longer the marriage, the more likely that the ‘financially weaker’ spouse will likely to be awarded half or more of the assets or spousal support (in monthly or lump sum payments) to ensure their ongoing financial security.
If the marriage is long (a long marriage is considered to be lasting over 20 years, in some cases 10-15 years), any property acquired before or during the marriage may well be considered property of the marriage – both parties could be entitled to a share. Whereas a shorter marriage would mean a lower likelihood of dividing property equally.
High-rise flats
If you live in a high-rise flat, or you own such a property as part of an investment portfolio, you need to be aware that the property’s structure (specifically cladding) can seriously affect the value of the plot and your ability to sell, as many of these properties have been classified as unmanageable at first instance.
You may need to consider whether a formal valuation should be conducted on the property to take the structural issues into consideration before you engage in negotiations about how you are going to divide your assets.
In addition, you may need to make enquiries/obtain an EWS1 (External Wall System form that independently certifies that your building meets UK Gov standards) before you consider selling the property. This is also vital if you are thinking about buying your spouse out, as this could affect your remortgage.
Escalating ground rent
If you own a leasehold property, then it is worth instructing a conveyancer to briefly review your lease before engaging in any financial negotiations or indeed valuations (as 9/10 valuers will assume good Title and will not do this ground work as part of the valuation process).
Again, escalating ground rent can have a serious impact upon the valuation of the property and mortgage potential, so it is essential that this is addressed first, before agreeing to a sale or transfer of the property.
Help to buy scheme
If you brought your property with the assistance of the help to buy scheme with your spouse, you must remember that you require the scheme’s authority for only one party to be released from the agreement, which is vital if you are considering making/ accepting an offer to transfer the property to one or other of your sole names.
If you are calculating the equity, be mindful that the scheme will require repayment before any sale/transfer, and this will have an impact upon the funds that are left in the property to be divided. There could also be repayment fees to consider.
Get in touch
If you would like to find out more about properties in divorce, please do contact our Client Services Team to speak to one of our specialist family lawyers.
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Originally written January 2022
I have worked with several lawyers over a 10 year period costing in excess of£20000 and I’m still struck in the legal system.. now I only want a solicitor to advice and look over the paperwork I do. Signing contracts have crippled my financial situation.