Article in the North East Times
When a relationship breaks down, it has the potential to take everything down with it. The foundations upon which a former life have been built can feel as if they are being pulled away. For many families, the most significant issue is likely to be the house, or former matrimonial home. After all, it’s not just bricks and mortar, it’s a home, an emotional investment, a box full of memories, a key to security and often the biggest financial investment made within the relationship. What will happen to our home is often the first question that we are asked by clients when they come to see us.
At Major Family Law we will advise you at the outset of all your options. Each case is different and the options will depend on a number of factors. If you’re not married, then your respective rights and entitlements can differ greatly from those of a married couple, even if you have children. The assets are, on the face of it, retained by the person who’s name they are in.
For married couples and those in a civil partnership, the options are wider, and whose name the house is in is largely irrelevant because the property is usually considered to be a joint asset. There is no specific formula in matrimonial proceedings for calculating how the finances should be divided, and whilst there is a broad starting point of 50:50, there are then a number of factors which are taken into account which may to lead to a departure from that division.
From a practical point of view, if there are children involved, the parent who will be caring for the children on a day to day basis may well need to remain in the property. The well-being and needs of the children will be a primary concern for couples attempting to agree the terms of a financial settlement. One option is for one party to remain in the property for an agreed period of time, deferring the sale. This is known as a Mesher order and can ensure stability for any children of the family. Obviously this will need to be a financially viable option for both parties.
Where the house is in joint names, the mortgage will also be in joint names. The party leaving the house is unlikely to want to remain tied to the mortgage. It may also cause difficulties obtaining a further mortgage. However, the bank (the mortgagee) must give its consent to remove that party from the mortgage and that will only be the case if the party remaining in the property can show sufficient means to keep up repayments.
So the house may need to be sold and the proceeds from the sale divided between the parties so they can each buy somewhere else. At the moment, this can present practical difficulties: the housing market is slow and there has been an increase in properties which are in negative equity. Selling at this point may leave both parties with continued debt and no means to secure additional housing. There have been increased reports of couples making the decision to separate or divorce finding themselves forced to continue living together when the family home takes time to sell.
On the flip side selling the house can allow a fresh start for each party and enable the whole family to begin the process of restructuring their life after separation sooner rather than later.
Dividing joint assets to stretch to two new households will quite often require a dip in standard of living for both parties, but there are solutions to the problem if both parties are willing to be realistic and make compromises.
The most important step when separating family finances is to be honest and try to agree a value of all assets including pensions and insurances early on. Here at Major Family Law we will ensure that you get expert advice at the outset, we will look at all the options available to ensure that fair and practical agreements can be reached. If you need advice contact us to book a free initial consultation on 01661 854582.
Anna Hunter is an Associate solicitor at Major Family Law and a trained collaborative lawyer. – twitter: @1ANNAHUNTER