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Will my home have to be sold if we divorce?

29 Jun 2011

Nicola Matthews, Partner in the Family Law team at Hay & Kilner Solicitors, provides the answer.
The decision to divorce and the possibility of having to move house is one of the most stressful situations we may face in our lifetime. The family home is regarded by the Courts as an asset along with all the others owned by the couple. Whether it will have to be sold will depend on the total value of assets available to the couple.

Therefore you must start by making a list of the value of all assets and liabilities of both spouses. With regard to the family home, most estate agents are happy to provide a valuation. You then need to find out how much is outstanding on any mortgages and loans secured against the home, and deduct this figure from the value to give you the equity.

Add the equity to the value of other assets which can easily be turned into cash, such as savings and investments and deduct all debts, which aren’t secured on the home. You should now have a figure for the net value of the liquid matrimonial assets.

Many people also have assets, which cannot be easily turned into cash, such as pensions. These assets are treated slightly differently for that reason but it is still important to know what they are worth. In the case of pensions, ask your pension provider for the cash equivalent transfer value of your pension fund.

The starting point is that both parties receive half of net assets, but either party may be able to put forward a case that they should receive more than half. The factors the Court will look at are: –

  • income and financial resources available including whether either party is in a position to increase their earning capacity, for example, the home maker may be in a position to return to part or full time work;
  • needs, obligations and responsibilities of each party;
  • standard of living enjoyed before the breakdown of the marriage;
  • age of each party;
  • duration of the marriage;
  • disability of either party;
  • contributions which each of the parties has made including looking after the home or caring for the family;
  • conduct of each party, but only if so bad it would be unfair to disregard it; and
  • value to each party of any benefit (for example, a pension), which, by reason of the break up of the marriage, that party will lose the chance of acquiring.

Suitable accommodation for children of the family is high on the list of priorities. If the parent with whom the children are likely to live wants to stay in the family home and the equity in the property amounts to 50 – 66% of total net assets or less, that parent has good prospects of being able to stay in the property. If there is a mortgage on the property the mortgage lender needs to agree to that parent taking over the mortgage in their sole name. Whether they will do this depends on the person’s income, with some lenders only taking salary into account but others including maintenance received from the other spouse and/or state benefits including tax credits.

If the equity in the property is more than 66% of net assets but the parent with whom the children will live cannot find a cheaper property in their local area, they may be able to remain there but the ownership of the property may stay in joint names of both parents, even though only one of them is living there with the children. When that parent remarries or the youngest child turns 18, the property is sold and the proceeds split between the parties.

If the equity in the property is more than 66% of net assets and the parent and children can reasonably move to a cheaper property, they will be expected to do so.

If there are no children and the home is roughly equal to half of the value of net assets, one party may keep the home and the other party may take the other assets. If the home constitutes a high proportion of total assets it may have to be sold and the proceeds split unless one party can raise the money to buy out the other’s share.

These are very general rules of thumb and it is best to consult a specialist family lawyer at an early stage to obtain precise advice tailored to your particular circumstances.

Nicola Matthews is a Law Society Family Law Panel Member, qualified Collaborative Lawyer and local chair of “Resolution”, an association of specialist family lawyers who adopt a firm yet conciliatory approach to family cases. For further information contact Nicola on 0191 232 8345 or email nicola.matthews@hay-kilner.co.uk

Please note:
This article is not legal advice; it is intended to provide information of general interest about current legal issues. Please contact us to discuss how the contents of the article may affect you.