Where parties are unable to reach an agreement in respect of how the Family Home (or any property) should be dealt with on divorce, the Court may be asked to intervene and decide how best to divide the asset when sold, if it should be transferred to one party in exchange for a money or for some other financial benefit such as spousal rights to a pension.
It is important to note firstly that there is no ‘one size fits all’ approach to this and that what is decided in one case will not necessarily be applied in another similar case.
One of the benefits of this is that often arguments can be made on either side about how assets should be dealt with on divorce and there is sufficient flexibility for the Court to decide each matter on its individual merits.
However, Court proceedings are costly and with the risk of uncertainty many parties prefer to attempt to reach an agreement with the benefit of legal advice, taking into account in their negotiations the way in which a Court might approach dealing with the assets, to ensure that their agreement is fair.
It is important the parties consider this as they will want their agreement to receive the seal of approval from a judge for it to become legally binding in what is called a ‘Consent Order’.
Which approach the Court chooses to adopt will depend on whether there are other liquid assets available, or assets which can be realised, such as money in bank accounts, investments or where retirement is imminent, funds from a pension commutation.
How does having children affect the settlement?
The first matter for the Court to consider is whether there are any children of the family (under 18) who need be housed, the Court will always look to address their housing needs first as this provides stability in what can be an unsettling time. For the Court, the children’s welfare is paramount.
Beyond this, the Court will look to try to meet the parties’ reasonable needs; in cases where there is a surplus of funds, the Court will do so taking into account contributions that each of the parties have made and the standard of living they enjoyed before separation.
While the Court will try to maintain the status quo where possible, it is regularly the case that both parties will suffer financially to some extent in the aftermath of divorce. It is the Court’s job to ensure that both parties’ are left in as equal a position as is possible, so that if for example, one party has a greater income the other party is left with sufficient capital in the Family Home or otherwise to compensate for their lack of capacity to raise a mortgage in their sole name.
The Family Home – will it be sold?
In many cases, there are insufficient assets and indeed debts to be dealt with, such as a mortgage, credit cards and overdrafts. In cases where neither party has sufficient income or assets to meet their outgoings it may be that there is no option left other than to sell the family home and divide any equity that is left between them so that they may use this towards alternative accommodation such purchasing a smaller property or renting, for example. This may also be the only option where one party cannot afford to buy the other out, or simply refuses to do so.
Can the sale be delayed?
In cases where there is large disparity between the parties’ financial positons, or if one party has been out of work for a while, this is not necessarily a bar to them retaining the Family Home.
The Court can put in place a ‘Mesher Order’ which will allow one party, say the children’s primary carer, to remain in the Home until a trigger event occurs, such as the children turning 18, or finishing education, or until the main carer remarries.
The Court may also consider the appropriateness of spousal maintenance to cover rent/mortgage payments. The disadvantage to this type of order for many going through a divorce is that it does not provide a total clean break as you are likely to remain jointly tied to the property and any mortgage for the foreseeable future.
When can a Court order be made?
A final important point to note is that for the most part, financial orders, whether entered into by consent or as part of issued Court proceedings, will only be available where divorce proceedings have already started and will not usually take effect until Decree Absolute. However, it is never too soon to seek legal advice or begin negotiations, as in most cases the earlier matters are discussed, the better.
If you’re thinking obtaining a divorce and you want to find out more information about how we can help, give us a call on 0161 930 5151, e-mail familyteam@gorvins.com or fill in our online form at the top of this page.