Posted by Emma McMorrow, Associate
What happens to the matrimonial home when a couple gets divorced?
In divorce proceedings where spouses are unable to agree terms, the family court has the power to decide upon an appropriate financial settlement which meets the parties’ needs. For many separating couples a significant part of their financial settlement will be concerned with the matrimonial home.
The matrimonial home is often the most valuable asset available to the parties and of course, everyone needs somewhere to live; the family court will be concerned to provide a home for each spouse. However, it is the welfare of any children and ensuring they have a suitable home which will be the primary concern for the judge. The court is obliged to consider all circumstances of a case and certain statutory factors. As a result, the court can find itself in a difficult position as it tries to achieve multiple aims that may be incompatible.
When it comes to the matrimonial home, the court has the power to do a number of things, including:
- ordering that the property be transferred to one of the spouses, with or without the payment of a lump sum to buy out the other;
- ordering the house to be sold so that the proceeds can be divided between the parties in whatever percentage is appropriate in the circumstances;
- creating a trust in connection with the matrimonial home.
Transfer of the property
The court can order the matrimonial home to be transferred into either spouse’s name and such a transfer could involve the receiving spouse paying the other a lump sum to buy out their interest in that property. A transfer could be part of a clean break settlement or it may be that the house is transferred to a party in lieu of any ongoing maintenance payments. When considering whether a transfer is a viable option, issues such as the amount of equity in the property, the parties’ respective mortgage raising capacities and ability to keep up with the monthly repayments will be relevant.
Selling the matrimonial home
Another option would be to sell the matrimonial home. When considering whether this is the most appropriate course of action, the court will consider a range of issues including whether there is sufficient equity in the home to provide two new homes for the separating parties, the parties’ respective abilities to raise a mortgage and when there are minor children involved, the impact a move may have on their wellbeing and how best to minimise any potential disruption.
Trust of land
There are certain situations where this is the most appropriate option. For example, where a house needs to be provided for one of the parties until the children conclude their education and there are not the financial resources available to achieve this another way.
One such arrangement is known as a Mesher order. This involves the matrimonial home being sold and the equity released upon the occurrence of a specific event, such as the youngest child reaching the age of 18 or leaving full time education, be it secondary education or university. Another option would be a Martin order. This involves the matrimonial home being sold upon the death of the party living there.
Orders of this nature can be tricky to manage. For example, there are the issues associated with one party having to wait for their share of the equity being released and available to them. However, there are some circumstances where this is the only option.
Whether the financial settlement is agreed between the parties directly, or directed by the court, the terms of that settlement should be incorporated into a formal court order.
If you have any questions for our specialist Family law team, please contact us today.
0800 923 2074 Email us
Family law solicitors who combine expertise with understanding