Selling you home due to separation or divorce

SELLING YOUR HOME DUE TO SEPARATION OR DIVORCE

By Pete Martin

INTRO

Unless you’ve got a Picasso above the mantelpiece, chances are your family home will be the largest shared asset you possess. So it’s no surprise that, along with childcare, it can be the biggest cause of issues in the event of a marriage break-up. Invariably, adding further stress to an already painful situation.

And we’ve not even mentioned the lawyer fee’s yet… *gulp*

If you’re in the process of separating or getting a divorce you have our sympathy. It’s a horrible time, there’s no getting away from it. Most of the pain you can’t avoid but we can give you some advice here to at least prepare you for what to expect and maybe even save you a few quid with those fee’s too…

DIVIDING MONEY AND PROPERTY DURING A DIVORCE

When you decide to divorce, you and your ex-partner need to come to some agreement regarding the matrimonial assets, namely: any property, savings, pensions and investments. Ideally you come to an amicable decision between yourselves (such as a separation agreement) but with emotions running high in a break-up, unfortunately, this isn’t always the case.

If you haven’t been able to agree on a split of the assets then an impartial third party needs to either guide and help negotiate (in the case of a mediator) or even make the decision for you (in the case of a judge).

Mediation

Mediation costs about £120 an hour and, as well as being the friendlier way to proceed, is also a great deal cheaper than the fee’s- and often the animosity- that result from leaving it in the hands of the court.

Mediators listen to both sides of the story and try to help you come to an agreement that suits both parties (or that both of you can live with!) An impartial go-between to let you know your options, help you keep the lines of communication open (though you don’t necessarily have to be in the same room as your ex-partner if you don’t want) and hopefully find a solution to avoid or minimise any time in court. They’re not there to advise, they’re skilled experts in communication, there to let you know your options and help you guys find your own solution.

Mediation has a high success rate (between 50-80%, depending on where you get your figures) so our advice is to always make this the first port-of-call if you’re unable to come to an agreement between yourselves. It’s cheaper, quicker and nowhere near as messy as the alternative…

Court Ruling

If it does make it as far as the judge then the costs can soon spiral to eye-watering proportions. Five-figure legal bills are far from uncommon, rubbing more salt onto that open wound. You might have heard the old joke: “What’s the cost of a good divorce lawyer? Far less than a bad one”. In our experience, only the lawyers leave the court-room smiling so if you can somehow put your emotions to one side for the sake of a peaceful resolution (and lord knows it’s not always easy…), this is the time to do it!

WHAT ARE YOUR OPTIONS WITH THE PROPERTY?

Put simply: sell up or stay put.

If you decide to sell, you need to agree on the split of the sales returns. In a perfect world you agree on the split, sell it quickly for a good price and both have enough to move on for your fresh start elsewhere. In a perfect world…

The most clear-cut next option is probably when one partner stays and buys the other one out. Again, this allows for a nice, clean break and minimises the upheaval (for any children, especially). However, this might not be financially possible. If the person staying can’t afford to buy the other one out then there is the option to take over the mortgage themselves or continue sharing it’s obligations between you, with the person moving out due their share when the house is sold at a later date. Several legal steps can be taken to help formalise this arrangement: a Mesher Order and a Martin Agreement.

What is a Mesher Agreement?

Otherwise known as an ‘Order For Deferred Sale’, this means the spouse that moves out maintains their share of the property but that the property itself can’t be sold until an event is triggered at a later date- typically, the children reaching 18 years of age/ moving out. A legal agreement sets out what the triggering event will be, how the mortgage and maintenance will be paid for, and how the proceeds will be split.

What is a Martin Agreement?

A Martin Agreement also sets a date for a deferred sale but it is used if there are no children under the age of 18. Here another event is used to trigger the sale- for example when one party dies, moves out or begins co-habiting with someone else.

The final option is that the party leaving the house moves out AND still pays for all the mortgage. However that, of course, depends on the leaving party having the means to do this, never mind the motivation…

HOW IS A HOUSE DIVIDED IN A DIVORCE?

If a court is needed to help decide how a house is divided in a divorce, there are several factors they take into consideration. These include:

·         Any children under the age of 18, their needs and who the primary ‘care-giver’ will be

·         The ages of the respective spouses/ civil partners

·         How long the marriage/partnership lasted

·         The value of the couples assets: both what they brought into the marriage/partnership and what they had when it ended

·         The earning potential of the spouses/ civil partners, as well as their respective responsibilities while they were still together and after the relationship ended

·         What each party contributed financially throughout the relationship and the agreed responsibilities after

·         The standard of living throughout the relationship

·         Whether either of the parties has any disabilities

WHO GETS THE HOUSE IN A DIVORCE WITH CHILDREN?

Whilst all these factors are used to make a decision, the welfare of the children is always the most important; the aim, to maintain as much stability and continuity as possible amidst all the other inevitable changes. So the decision as to where the house goes is usually tied-in with the one made regarding the custodial rights. The ‘primary care-giver’ (whoever is responsible for their everyday care) is usually favoured with the option of staying in the property.

Of course, the other party will still likely have their mortgage obligations and, later, rights to the proceeds from it’s eventual sale.

CAN I BE FORCED TO SELL MY HOUSE IN A DIVORCE?

If your case has made it as far as the court room than, yes, the judge has the power to enforce a sale of the house. However, as we mentioned, the welfare of the children is the critical factor here. More specifically, consideration is given to their age(s), who the primary caregiver is and how best to ensure their security and stability. Other considerations include who bought the house, the amount of equity, the reasons for the divorce and the respective financial circumstances of the two spouses. These are all, however, secondary to the concerns for the children.

SHOULD I SELL MY HOUSE BEFORE OR AFTER A DIVORCE?

Well this is a decision only the two spouses can make and a lot hinges on the relationship that remains between them and, again, the intentions regarding the children. They both have their benefits and drawbacks…

SELLING YOUR HOUSE IF YOU ARE SEPARATED/ BEFORE A DIVORCE

Selling before has it’s obvious plus-points. You can agree selling terms and you can both move on, cutting the big financial tie and with some money to help you both make your fresh start. However, you are at the mercy of the housing market at the time of sale and many people end up taking less than market value if it means getting a quick sale and cutting the ties.

SELLING A HOUSE AFTER DIVORCE

Selling after the divorce has the benefits that time allows: more scope to make the best decision financially, not driven by the emotion of wanting to cut your ties and be done with it. Again, this is all dependent on the relationship between the two spouses. Indeed, what can be amicable when this agreement is made may be the source of regret and contention after the waters have been muddied in the court-room. Those are drawbacks that time also allows…

WHO GETS TO STAY IN HOUSE DURING SEPARATION?

Until the divorce process is settled and finalised, both sides are entitled to remain in the property. That’s the legal standing- in practical terms, that’s very rarely an option. The common-sense solution is that one party leaves to help reduce the potential for tension and conflict. Once again, an amicable agreement as to who stays is the best option. But don’t worry, if you decide to be the one who moves out this won’t affect your legal position when you comes to settling your entitlement (see ‘What Is A Mesher Agreement’ and ‘What Is A Martin Agreement’ on page 2).

WHAT STEPS DO I NEED TO TAKE WHEN SELLING A HOUSE DURING DIVORCE OR SEPARATION?

Assuming you have arrived at an agreement to both vacate and sell the property then, firstly, well done for keeping things so friendly! When emotions run high, the lines of communication and decision-making often suffer. Hopefully this choice sets the tone to help make the rest of the process as painless as possible for you. That will make you one of the lucky ones…

But where do you go from here?

Once you have made the decision to sell it and get it sorted before the divorce itself, the next question is how/where?

Assuming you are set on a fairly quick sale you have three options.

1.      An Estate Agent

This one boils down to timing and luck. You could be lucky with the market conditions and get a great price for your house. Or the market could be a stagnant one and it could be sat there for months, as you hold tight with your valuation or start to drop it to try and entice some interest. There are also the estate agents fees to take into consideration.

Basically, this is the best option to maximise the selling price but there are no guarantee’s you get the favourable market or the timescale you want.

2.      Sell via Auction

So long as you haven’t set your reserve too high you can almost guarantee a sale at auction, though again you are at the mercy of the market conditions when you decide to sell. There are also the auctioneer fee’s to consider (usually about 2.5% of the final selling price).

However, if all goes well here it should be sold within a few months.

3.      Use a Quick-Sale Property Company

I’m sure you have seen the adverts. TheyBuyAnyHouse. If you are set on a swift and guaranteed sale there are many companies who will take your property off your hands, often in as little as a week. The drawback? They typically offer about 75% of the current market value- most using their own surveyor to value it then making you an offer based on that. So here you have to weigh up just how badly you want that quick sale…

UNDERSTANDING YOUR PROPERTY RIGHTS

Like we said above, while you are still married, both parties have equal rights to live in the property. However, if your name is not on the title deeds you may want to take the precaution of establishing your ‘matrimonial home rights’. A quick check with HM Land registry e-services will confirm this for you. If your name isn’t there then you need to fill out a HR1 form on the gov.uk website to get a Class F Land Charge. This prevents your previous partner from selling, transferring or increasing the mortgage without your knowledge. The Family Act of 1996 also means that:

·         You can stay in your home unless ordered out by the court

·         You will be notified if any repossession action is taken by the mortgage lender

·         You’ll be informed of any intention to sell by your ex-spouse

·         You have the option to pay the mortgage to stop repossession if your ex stops making their payments.

Home rights are useful protection in the short-term (before anything is finalised in the courts) but they don’t have any bearing on the longer-term decisions, such as who gets to live in the property after or whether it will be sold or not. That will rest with the judge.

CONCLUSION

Hopefully the information we’ve given you here helps you make your next step in this uncomfortable time a better informed one. The emotional turmoil from a relationship breakdown is bad enough on it’s own so whatever small degree of stress you can alleviate by knowing your rights and knowing your options is a welcome one.

It might be easier said than done but the cleaner and the more amicable a split you can work out with your ex-partner, the best it is for all parties, for many reasons.

Any children involved will benefit from not having too much conflict added onto the inevitable upheaval they will face. You minimise the stress (both emotionally and financially) of having your affairs and your assets mulled over across the court-room. And, just as important, it’s just so much better for your own mental health.

So many emotions arise from the fall-out of  a relationship disintegrating- denial, guilt, a sense of loss, despair, anxiety, fear, depression and, of course, anger. And it’s the latter that can be most destructive. It has the potential to poison your rationale and your decision-making, and the end result is usually a bad situation made worse.

Whatever decisions you make, if you can find a way to put any lingering bitterness to one side and bring a cool head to the table when it’s time to make your decisions moving forward, you are giving yourself the best possible chance to come out the other side with as little scar tissue as possible.

While these are the legal standpoints and likelihood’s, every couple and every family have their own unique circumstances and it’s in your best interests to consult a qualified, experienced solicitor to talk through you the specifics of your particular situation. They can explain in more detail the laws as they affect you and help you avoid any costly mistakes- and further heartache- down the line.

Whatever decisions you make and whatever happens we wish you the best of luck navigating one of the biggest challenges life can throw at you. And after all these warnings and all these cautionary tales we’ll end with something a little more hopeful for your fresh start.

“You don’t have to see the whole staircase, just take the first step”

Martin Luther King