Overview
It may be possible for the joint owners to come to an agreement about each party’s long-term rights to the home without involving the courts. The obvious advantage of reaching an agreement rather than using the courts is that it is likely to be quicker, cheaper and offer more flexibility. This is the case regardless of whether or not the couple are divorcing or seeking a dissolution of a civil partnership.
Family mediation can help separating partners resolve disputes about children or financial matters out of court. It is a voluntary process where they can meet safely in the presence of an impartial and independent mediator to discuss disputes. It does not aim to help them get back together, but to help them manage their future better.
When there is a relationship breakdown, married couples and civil partners can make any type of agreement concerning what will happen to their home. Below are the most common types of agreement.
One partner buys out the other
The couple may agree that one of them buys the other’s share in the property and becomes the sole owner. This is done by a solicitor drawing up a deed of transfer of title from the two joint owners to one of them. The partner who is to become the sole owner may need to obtain a further mortgage to pay off the other partner’s share. If there is a joint mortgage already, the lender’s consent has to be given to the transfer.
Both joint owners agree to sell in the future
One of the most straightforward agreements is where the joint owners agree to sell the property and divide the proceeds at a later date. It may be possible for the couple to agree what share each partner holds in the property. This could be done by looking at how the matrimonial court would divide the property in making a property adjustment order. Alternatively, it could be related to who has contributed a greater share of the mortgage payments or put up the money for the initial deposit when the property was purchased. If there is any dispute about establishing and quantifying the shares, then this would have to be resolved by the courts. These property law principles apply equally to married couples, civil partners and cohabiting joint owners.
By an application to the Family Court
Where it is not possible for the couple to reach an agreement about the long-term future of the property, or if it is not practical to seek one in the first place, for example if there is domestic violence or one partner has disappeared, the court can make the decision. Long-term property rights may be settled using matrimonial/family law or property law.
In matrimonial/family law, the courts have wide powers to reallocate or transfer ownership of property regardless of legal ownership or beneficial interests, ie the courts have the power to adjust property rights.
In property law, the courts can adjudicate where there is a dispute over who owns what proportion of the property or grant an order for sale of jointly owned property.
Where there are children, either partner may apply for a transfer of ownership in the interests of a child under the Children Act 1989.
In deciding who gets what, the courts need not reflect how the property is held or was acquired, but must take into account all the circumstances of the matrimonial situation.
The courts must have regard to the following matters:
- the welfare of any child of the family under 18. However, note that case law has also shown that the courts are entitled to consider local authority rehousing obligations to either spouse or civil partner
- income, earning capacity, property and financial resources of the parties
- financial needs, obligations and responsibilities each party has or is likely to have in the future
- standard of living during the marriage or civil partnership
- age of parties and duration of marriage or civil partnership
- any physical and mental disabilities of either party
- contributions (and future contributions) to the welfare of the family
- benefits lost on divorce or dissolution of the civil partnership, including pension rights
- conduct if unjust to disregard it, for example, violent physical conduct.
The court also has the power to order payment of lump sums or periodical payments from one spouse or civil partner to another (ie maintenance).
The more common types of order include:
- sale and division of proceeds: a sale may be agreed between the spouses or civil partners as part of their divorce settlement, and be ratified by the court. It is usually referred to as a ‘consent order’. If there is no agreement, the court can determine the shares to be held and make an order for sale. This is more likely where no dependent children are involved. The court may order a sale if both parties could repurchase or, alternatively, if neither could afford to remain in the matrimonial home. The court should not order a sale, nor a partner consent to a sale, if the parent who is to care for the children would be made homeless
- deferred interest orders such as a ‘Mesher’ order where the court can postpone the sale of the home until a trigger event occurs, such as the youngest child reaching the age of 18 or until remarriage, death or cohabitation of the parent who is caring for the children. Alternatively, the court could grant a ‘Martin’ order, which also defers a sale and allows one party to remain in the home, where there are no children
- transfer from one party to another: this can happen where one party buys the other out, or places a charge on the property for a specified share of the proceeds that will be repaid when the property is sold. The court decides how much should be paid, determinable by section 25 criteria (see criteria for determining what orders are made, above) and not by what legal or equitable share each person has in the property.