Often the family home is the most valuable asset owned by the parties. The parties are likely to feel a strong emotional connection to the property and dealing with what will happen to the home following a divorce is often one of the most difficult issues to grapple with on a sentimental and practical level.
Divorce law in England and Wales aims to reach a fair outcome, considering all the circumstances of the case. Section 25 of the Matrimonial Causes Act 1973 sets out a list of eight factors that the court should consider when looking at a fair division of the finances on a divorce, which includes the needs, resources and contributions of both parties, whilst prioritising the well-being of any children involved. There is no set formula for dividing assets and the courts have wide discretion to make orders that reflect the specific circumstances of each case. As such, what is considered to be “fair” will be different for each family and there is no “one size fits all” outcome.
When it comes to deciding what should happen to the family home, usually the starting point is that the equity in family home should be divided equally, unless one party needs or (in some circumstances) contributed more. It’s important to note that the family home cannot be looked at in isolation, and what happens to it depends on what other assets and resources the couple have, and also their respective income and pension positions. Often the key consideration is the parties’ future housing needs, and for the children of the family to have a suitable home with both parents.
When it comes to deciding what to do with the family home on a divorce, there are a few paths that a divorcing couple can take:
1. Sell the house
There is no rule that the family home has to be sold on a divorce, but sometimes this may be the cleanest way to ensure both parties get their fair share of the family home and can have a fresh start, and it avoids arguments or resentment about who gets to keep the family home. As mentioned above, the proceeds may be split 50:50 in some cases, but this is not always the case and the matter is not always straightforward. The key consideration is how both parties will be able to meet their future housing needs and that any children of the family have a comfortable home with both parents where applicable.
2. One person buys the other out
In some circumstances, it may be possible for one party to buy the other out of their fair share (as mentioned above this will not always be a 50:50 split). This can happen if one partner is particularly attached to the home, or it is agreed that this would be beneficial for the children to provide stability. Whether this is possible depends on whether the person staying has the necessary finances to buy the other out and then continue to service the mortgage (and other outgoings) on their own, and also being able to secure the release of the other party from the mortgage, if there is one. The court would also need to be satisfied that the party moving out is able to meet their reasonable housing needs and be able to accommodate any children with their share of the net proceeds.
If a couple wish to go down this route, they would need to agree the value of the property, and possibly have a formal valuation if this cannot be agreed, in order to agree how much the party keeping the property needs to pay the other in order to buy them out.
3. One person keeps the property, and the other is compensated
If the couple have other assets and properties, it may be that when considering all the assets wholistically that one party is able to retain the family home, on the basis that the other party would be able to live in another owned property or using other resources. Again, whether this is possible depends on whether the person staying has the necessary finances to continue to service the mortgage on their own and secure the release of the other party from any mortgage, and also whether the party moving house would be left with sufficient funds to be able to meet their (and any children’s) reasonable housing needs.
Again, if a couple wish to go down this route, they would need to agree the value of the property (as well as their other assets), and possibly have a formal valuation if this cannot be agreed, in order to assess whether one party keeping the family home is a fair outcome.
4. Sell the house at a later date
Some couples agree to delay the sale of the house until a specific event or end date, such as when the youngest child turns 18 or 21 years old ( a “Mesher Order”) or even indefinitely, allowing one spouse to live in the house for life or until they remarry (a “Martin Order”). The Mesher Order is the most common of these and is primarily about ensuring stability for any children, where finances are tight and the parties cannot both afford to buy a suitable house from their fair share of the house.
These types of orders are generally less common these days as it was found that the stability in living arrangements provided by a Mesher Order was only temporary, and the person who retained the house faced uncertainty at the time in came to sell the house. These orders also mean that the other party would have to wait many years before receiving their fair share of the house, impacting their ability to purchase a new house and move on. In many cases therefore, it may be best to sell the house now, rather than wait until the youngest child reaches 18 or 21 years old.
Get In Touch
As mentioned above, there each case in unique so it is important to receive legal advice at the outset to avoid any pitfalls. If you would like to arrange a meeting with a solicitor in our family team follow the link here: https://hedgeslaw.co.uk/family-law/
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