When a couple divorce, a question of key concern is what will happen to our family home? This is because the family home is usually the couple’s most valuable asset, both financially and emotionally. Due to the importance of the family home, it is given special treatment by the Courts.
A divorcing couple may be able to reach an agreement amicably on what will happen to the family home on divorce. However, for such an agreement to be binding, it must be converted into a Court Order and the Judge will need to be satisfied that the agreement reached is fair in the eyes of the law.
In a situation where a couple cannot reach an agreement as to what will happen to the family home, the decision will be in the hands of the Court. The Court has an overriding objective to do what is fair in the circumstances of that particular case and to consider the housing and income needs of each party and any children of the marriage.
What follows aims to give an insight into the particular treatment given to the family home by the Courts on divorce.
As mentioned in our earlier blog How does a Judge decide who gets what on divorce? When determining how assets are to be divided between spouses, the Court must first consider which assets are “matrimonial” (those which reflect the parties’ endeavours during the marriage) and “non-matrimonial”. The family home is nearly always considered to be a matrimonial asset because of its special status, although it will depend on the facts of each case. When determining what Order to make in relation to the family home, there are several factors that the Court will bear in mind.
When determining what should happen to the family home, the Court’s first consideration is the needs of any children of the marriage. Where at all possible the Courts will want to ensure that children have a suitable home with each of their parents, but each case will be driven by the resources available to achieve this.
There is a common misconception that the party who contributes the majority of the funding into the family home will have their interest in the property automatically protected on divorce, but this is not the case.
Courts are much more forward looking than backward looking. A Judge will seek to see how the needs of the adults and children can be met going forwards. Usually, the fact that one spouse contributed more to the purchase of the family home will be overridden by arguments as to needs going forward. The Courts have made it clear that the domestic contribution by the homemaker is just as valid as the financial contribution made by a breadwinner and there must be no discrimination on the basis of gender.
However, if the divorce is not ‘needs-driven’, meaning that the Court considers the parties’ assets to be in excess of their respective requirements, then the Courts may consider in more detail unequal contributions made towards the acquisition of the property. In such circumstances, a departure from equality may be appropriate, considered in the round with the other circumstances of the case.
The Court will also consider the financial resources that each party to the marriage has or may have in the foreseeable future. The Court will have regard to the parties’ individual incomes and any other financial resources that they might have or will have in the future. Income is also significant because it can determine mortgage capacity, and thus a party’s ability to find alternative accommodation following the breakdown of the marriage.
The Courts will also consider the earning capacity of the respective parties. For example, if one party to the marriage stopped working in order to act as primary carer for children who have now grown up, then this party may be regarded as having an earning capacity and may be expected to take reasonable steps to acquire an income. However, the Court will of course bear in mind factors which may mean that a party will not be able to meet their potential earning capacity, for instance, if they are approaching retirement, or are lacking the necessary skills.
Similarly, the age of parties to the divorce is relevant when determining what is to happen to the family home because age will significantly affect a party’s earning and mortgage capacity, which in turn, affects their ability to find alternative suitable accommodation following the breakdown of the marriage.
The duration of the marriage is another factor considered by the Courts when deciding what is fair. Over time assets can come to be regarded as more “matrimonial” in character, depending on the circumstances of the case, which in turn can impact the final Order to be made.
Finally, when determining the future of the family home, the Court will also have regard to other factors set out in section 25 of the Matrimonial Causes Act 1973. These factors are set out in more detail in our earlier blog – How does a Judge decide who gets what in a divorce? and include the parties’ financial obligations, the parties’ standard of living during the marriage, any physical or mental disability of either party and the conduct of each party. But ultimately, the Court will use its wide discretionary powers to do what is fair in the particular circumstances of the particular case.
The legal title to the family home may be held in one of several ways; as joint tenants, tenants in common or solely in one party’s name, or sometimes even in neither party’s name. However, it should be noted that when a couple divorces, the way that the family home is owned will not affect the powers of the Court, unless a third party has an interest in the property in which case the extent of their interest will need to be ascertained.
On divorce the Court has the power to make one of the following Orders in relation to the family home:
If there is a joint mortgage (both of your names are on the mortgage) on the family home, then you will be jointly and severally liable for mortgage repayments until the mortgage has been paid off and this is regardless of whether or not you still live in the property. However, this does not necessarily mean that both parties should pay half of the mortgage repayments each and divorcing couples may wish to reach an agreement in relation to mortgage repayments.
If the divorcing couple wants to sell the family home, then the mortgage should be paid off using the proceeds of sale. Alternatively, the mortgage can be transferred into one of the parties’ names but the person remaining will need to prove to the lender that they can afford the mortgage. This is because the lender has first charge over the property and is permitted to reject a transfer of names from the mortgage.
Finally, both parties may continue to pay the existing mortgage jointly if they wish. Divorcing couples should discuss who will be responsible for mortgage repayments as early as possible to ensure that payments are met and continue to be met following the breakdown of the marriage. It is vital to take legal advice to gain a full understanding of ongoing liabilities and what indemnities you should each be seeking, particularly if you are planning to maintain a mortgage in both names in the longer term.
At The Divorce Surgery, our barristers are experts in family law and deal with matters concerning the family home and divorce on a daily basis. They are therefore equipped to offer impartial, expert advice to divorcing couples in relation to the family home tailored to the particular circumstances of your case. Our approach enables divorcing couples to reach a fair agreement in relation to the family home without the need for expensive and time-consuming litigation.