What happens to the house in a divorce?

How is a house divided in a UK divorce?

In the UK, a house is considered part of the overall financial settlement in a divorce. The court will consider each party’s financial contribution to the home, among other factors, when deciding how to divide the property.

One spouse might buy the other’s share of the property to retain occupancy, or the house may be sold and the proceeds split. If the divorcing couple cannot agree on their own or through mediation, the court will decide on their behalf.

This can result in a court order stipulating how the home should be dealt with. The court has wide discretion and will consider all the circumstances of the case.

The outcome of what happens to the house in a divorce can be influenced by various factors, including the length of the marriage, the standard of living during the marriage, the age and health of each party, contributions made (financial or otherwise), and potential future earnings.

Given the complexity and the potential for long-term consequences, it’s advisable for individuals going through a divorce to obtain legal advice specific to their situation.

How can a property be divided in a divorce? (Your options)

Whether the matrimonial property is jointly owned or the deeds are just in the name of one spouse, both divorcing parties will normally have a certain degree of entitlement to any equity.

Let’s look in more detail at six different ways to divide property in a divorce.

1. Sell the property

One of the most popular ways of separating the equity held in the marital home is to put it on the market and split the proceeds of a sale.
This is perhaps the most straightforward option and helps to achieve a clean break, whereby there are no ongoing obligations for either spouse towards each other beyond the date of their divorce.

A big advantage of selling the property is that any money released from the sale can be put down in the form of deposits on new mortgages, or else used for rental payments as both former spouses get back on their feet.

But selling up may not always be a good option. Recently purchased property that is quickly sold may actually result in a financial loss.

Furthermore, if the property has gone down in value since it was purchased, this will leave the owners in a state of negative equity – in which case it’s often best that they wait until the market improves before trying to sell up.

2. One party buys the other out

If either divorcing party wishes to remain living in the property, and have sufficient financial resources, they might offer to purchase any equity held by their former spouse. If there is still a mortgage on the property, this will necessitate reconfiguring the mortgage agreement (see below).

The advantage of one person buying the entirety of the property from their ex-partner is that, just as in the case of selling up, it results in a clean break. Furthermore, it’s often a cheaper option compared to the costs associated with selling and buying a new home.

However, many divorcing couples will struggle to raise the funds required to buy the whole property, particularly in the current buoyant housing market where housing prices keep rising year on year.

Also, the memories of a marital home where the marriage has failed will be off-putting to many people.

3. “Charge back”

A divorcing couple can agree that the legal and beneficial ownership of the property will be transferred to one of the spouses.

However, rather than a transfer of property ownership without any conditions attached, it is possible to register a charge against the title deeds, which requires a portion of the proceeds of any future sale to be shared with the other former spouse.

This type of transfer of equity is commonly called a transfer with a “charge back”. A transfer with a charge back can be useful where one party wants the security and flexibility which comes with holding the legal title of the property, but their former spouse still wants to retain a share of the equity.

There will typically be a “trigger event” in the case of a transfer with charge back arrangement – such as the youngest child of the family reaching 18 years of age – in which case the property will need to be sold and the relevant portions of proceeds divided up.

4. Mesher order

A Mesher order is similar to a “charge back” arrangement, except for the fact that the title deeds of the property are not transferred into the sole name of one party.

In effect, both former spouses will continue to own a legal share in the property, but one party will be entitled to sole occupation until a “trigger event” occurs, at which point the property will be sold and the proceeds divided between the former couple.

It’s also worth mentioning another order, similar to the Mesher order – called a Martin order. The rules of a Martin order are essentially the same as Mesher order, except that it provides for an indefinite postponement of the sale of the property.

Although there will often still be certain trigger events, these are uncertain (eg remarriage or voluntarily vacating the property) and will often allow the former spouse to remain living in the property for the rest of their life.

5. Share the house

Certain modern marriages may end because a relationship has morphed into a friendship. Although the change in feelings between the couple might precipitate a divorce, if they continue to stay friends, it can be possible for them to carry on living together.

If they have recently bought a house together, it will often be practical to continue to share the property, either temporarily or even indefinitely, as housemates and friends.

Although the decision to share a marital home after getting divorced will mean there is no clean break, it can be the most straightforward and least expensive option. It may also be necessary if they are unable to obtain separate mortgages or pay individual rents.

6. Reconfigure existing mortgage

In the scenario where one party can’t buy their ex out, and where the property was purchased so recently that selling up is not a viable option, it might be prudent to continue with a joint mortgage, at least temporarily.

But if the divorcing couple intends to carry on paying into a joint mortgage, it may nevertheless be necessary to change the details of the mortgage in order to reflect the terms of a financial settlement.

One example of reconfiguring a mortgage may be to alter the share of the equity that is held by either spouse. This could mean changing the co-ownership structure from that of “joint tenants” to one of “tenants in common”. It will be necessary to discuss any such intentions with the mortgage provider and/or a lawyer.

What court orders can help with dividing property in a divorce?

A divorcing couple will need a consent order drawn up by a solicitor to provide legal standing to any financial settlement that involves dividing up a marital home.
If the couple cannot agree on how to split the property, the court can make a property adjustment order. This order sets out how the matrimonial home should be dealt with following the divorce.

Court orders can include:

• Transfer of property – the court might require full ownership of the matrimonial home to be transferred to one spouse. This may involve transferring a mortgage.
• Sale of property – a court can decide that the best solution is to put the property up for sale and divide the proceeds between the divorcing parties.
• Mesher order – this provides for the postponement of the sale of the family home, allowing one of the divorcing parties to remain living in the property for a certain period of time or until a ‘trigger event’. For example, a Mesher order can allow a former spouse to remain living in the property with the children until the children finish full-time education or reach the age of 18.
• Martin order – this provides for an indefinite postponement of the sale of the property. The former spouse who is granted residency in the home under a Martin order will often be able to carry on living there for the rest of their lives, subject to certain ‘trigger events’ such as remarriage or if they voluntarily vacate the property.

A family court can impose a Property Adjustment Order as part of the overall financial order.

However, this will normally be a result of a failure to agree on how to deal with the property between themselves or via mediation.

What happens to property owned before marriage?

Any non-matrimonial property, inherited assets, and other assets that were already owned by one party before the marriage are called pre-marital assets and are treated as distinct from joint finances for purposes of divorce; as such, they will often not be counted as part of the matrimonial pot and may instead be retained in full by the relevant party.

The rationale behind this distinction was set out in the case of White v. White, in which the court acknowledged the view, widely but not universally held, that property owned by one spouse before the marriage, and inherited property whenever acquired, stand on a different footing from what may be loosely called matrimonial property.

But whether or not a court will decide to exclude property owned before marriage from the matrimonial pot depends on various case-specific facts, including:

• Passage of time – in a lengthy marriage, where either party owned property before getting married, this property may gradually come to be viewed as matrimonial property (Miller v. Miller), even if it is not used as the matrimonial home, especially if it is not kept separate (see ‘mingling of property’ below).
• Mingling of property – where a property was bought before marriage, it can end up being mingled with matrimonial property over time (e.g., if it is used as a family holiday home or income generated from it is used within the marriage). The more mingling that occurs (and the greater passage of time), the more likely that property owned before marriage will be added to the matrimonial pot for purposes of calculating a divorce settlement.

The starting point is generally a 50:50 split, but the court will consider section 25 of the Matrimonial Causes Act 1973, which sets out the various factors that should be taken into account when deciding how assets should be divided, for example:

• the welfare of any children under the age of 18 (this is the primary consideration);
• the income, earning capacity, property, and other financial resources that each of the parties to the marriage has or is likely to have in the foreseeable future;
• the financial needs, obligations and responsibilities that each of the parties to the marriage has or is likely to have in the foreseeable future;
• the standard of living enjoyed by the family before the breakdown of the marriage; and
• the age of each party to the marriage and the duration of the marriage.

What happens to a joint mortgage when you divorce?

There are various options for dealing with a joint property with a mortgage when owners decide to divorce. These can range from one spouse selling their equity to their ex-spouse to both selling the property outright.

Another option may be for one spouse to remain in the family home while the other moves out.

Selling a joint property after divorce

Putting the property on the market may be the best way of achieving a clean break. Proceeds can be divided to help both parties find their own homes and make a new start. Normally the money from the sale will be split 50:50 but this can be negotiated – or decided by a court.

NB: If there has been a housing crash and the property has gone into negative equity, selling up may not be an option, as it will potentially lead to hefty personal debts. In this case, it may sometimes be best to carry on paying the mortgage until the market improves.

Buying out jointly owned property

Another common method for dealing with a joint mortgage upon divorce is for one ex-spouse (who wishes to carry on living in the property) to effectively take on the mortgage of the other party by buying them out.

This method also provides for a clean break, but it is dependant on one of the joint owners being in a financial position to take on the entire mortgage.

Maintenance order

In marriages where there are young children, sometimes the husband will move out upon separation but carry on paying his share of a joint mortgage, leaving his wife and kids in the former matrimonial home (or vice-versa).

This arrangement can carry on upon divorce and may form part of the overall maintenance agreement. Although this does not lead to a clean break, it can work in the case of amicable breakups where one party is in a stronger financial position.

NB: In this scenario, the party who has moved out may want to remove their name from the mortgage even though they are continuing to make payments (as this can make it easier for them to get a new mortgage), but this is subject to the financial situation of both parties.

Carry on paying and living at the property

In the case of very amicable separations, both ex-spouses may decide to carry on paying off their joint mortgage whilst living together in the same home as friends.

This is an increasingly common scenario in today’s inflated housing market, where it is often impossible to get a mortgage without a partner or live independently. There is obviously no clean break but this is a straightforward option.