How To Separate Properties In A Divorce
Property is normally the most significant asset in marriages. Sometimes this is just the matrimonial home, but it can include second homes and other property which may be either jointly or individually owned.
Working out how to divide up any property is often the biggest challenge in terms of achieving a divorce settlement which meets the approval of both parties. We will take a look at some of the options for separating properties in a divorce.
How does the family home get split in a divorce?
There are various options for sharing the value of the matrimonial home upon divorce. Deciding on a solution will often require significant negotiation and mediation, but some of the most common arrangements include:
- Selling the home – often the most straightforward option to achieve a clean break will be to sell the property and divide the proceeds. This is particularly useful if money is tight, as any cash from the sale can be put towards new individual mortgages etc.
- Buying out – if one ex-spouse wishes to remain living in the shared property, and has the financial resources to pay the full mortgage, they may be able to purchase the share from their former partner. This also provides for a clean break.
- Maintenance payments – if one party is in a stronger financial position, they may decide to leave the property to their ex-partner and continue paying their share of the mortgage. This is a more common scenario where there are young children from the marriage, and it may form part of the overall maintenance agreement.
- Transfer of ownership – if there is no mortgage on the property and one party is in a stronger financial position, they may transfer a jointly owned home to their former partner, as part of a financial settlement.
If an agreement cannot be achieved between the divorcing couple, a court may need to decide how to split property. A starting point of a 50:50 split will be assumed, but an overriding principle of fairness will be applied.
In particular, the court will consider the welfare of any children under 18, and will look at various other factors set out by section 25 of the Matrimonial Causes Act 1973, eg:
- the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;
- the financial needs, obligations and responsibilities which 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.
Separating multiple properties in divorce
Where there is more than one property (eg a holiday home or investment properties), if they were jointly purchased or acquired during the course of the marriage, these will generally form part of the ‘matrimonial pot’ and the equity will need to be shared between the parties.
This may mean transferring ownership of the properties so that both former spouses end up owning specific properties individually – or it may necessitate selling some or all of the properties and dividing up the proceeds accordingly.
If the properties were owned before the marriage, whether or not these will form part of the matrimonial pot depends on the length of the marriage and also if the properties were kept separate from other shared finances:
- Passage of time – in a long marriage, properties owned by either party before they married may gradually come to be viewed as matrimonial property (Miller v. Miller).
- Mingling of property – individually owned property can end up being mingled with matrimonial property over the course of the marriage – especially if it is used as a family holiday home or income generated from renting it out is added to joint bank accounts etc. The greater the mingling that occurs, the more likely that property owned before marriage will be added to the matrimonial pot (K v L).
So, if properties were owned individually before marriage, they may still need to be sold out or shared between the divorcing parties, as part of a financial settlement.
Why should I obtain a consent order?
A consent order with a clean break clause is essential, they ensure that any agreement regarding the division of properties in a divorce cannot be subject to a later claim.
A consent order enables you to write any agreement in regards to your property and ensure that it’s legally binding. This means that legal action can be taken if either party does not fulfil the requirements.
In the absence of a consent order with a clean break, properties owned by one party may become subject to financial claims from their former partner several years down the line.