The Marital Home during divorce

 

by Matthew Phillips

In divorce, unless parties are able to agree matters between themselves, the court will decide an appropriate financial settlement. For the majority of divorcing couples, the main asset will be the matrimonial home.

When deciding matters, the court will aim to provide a home for both parties if at all possible whilst in all cases the paramount concern will be the welfare of any children involved and the provision of a suitable home for them will be uppermost in the judge’s mind.

The court and judges must consider the factors set out in section 25 of the Matrimonial Causes Act 1973 when deciding appropriate outcomes and settlements. This involves a consideration of all the circumstances of the case and often puts the Court in a difficult position as it tries to achieve a number of aims including providing a home for any minor children and who they shall live with, providing homes for both parties and applying a fair division of the family assets which not be possible in all cases.

The Court can make a number of decisions regarding the marital home. It can order that the house is sold and the proceeds divided equally or in whatever percentage the judge deems appropriate, order a transfer of the property to either party with or without the payment of a lump sum to ‘buy out’ the other party or create a trust of land.

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When deciding an outcome, the court will consider a number of factors including whether there is sufficient equity in the home to provide new homes for the parties. If there are young children involved, the court must consider how moving house might affect the children and how best to minimise disruption. The parties’ mortgage raising capacity will be a relevant factor if one party wish to ‘buy out’ the other as this would often only be possible if they have sufficient earnings and borrowing capacity to take over the existing mortgage and raise money to pay a lump sum to the other party. If either party cannot do so, then a sale would be the most likely outcome.

The court can order the family home to be transferred into either party’s name, with or without a lump sum being paid to the other party. A transfer could be part of a clean break settlement and it may be that the house is transferred to a party instead of receiving ongoing maintenance. Again, issues such as the amount of equity in the property, the parties’ respective abilities to raise a mortgage and keep up repayments will be highly relevant. There are very many options.
Although it is the least common way of dealing with the family home, the court can a trust of land. The two most common types of orders are Mesher orders where the property is sold and equity released upon a certain event such as the youngest child reaching 18 years of age or leaving full time education or Martin orders where the property is sold and equity released upon the death of one party.

These types of orders are increasingly rare as there is an unfairness in one party having to wait a number of years for their share of the equity to be made available. It is also uncertain as house values may increase or decrease dramatically in the years between the making of the order and the sale of the marital home. The court will only make these types of orders in certain circumstances where usually there are no available alternatives to the parties.