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Housing Options after Divorce or Separation

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A very informative guide written by LittleMrMike


The objectives of this article can be summarised as follows:

· To outline the various ways in which a court can deal with what can often be the most contentious issue in any divorce; namely what is to happen to the former marital home (FMH);

· To give a broad outline of the various factors which the Court must bear in mind when considering what order to make;

· To help people facing separation to make a more informed choice;

· To provide a resource for people who cannot afford a lawyer and are forced to conduct their own case.

The article seeks to give you some arguments which you can use, and give advance warning about some of the arguments which may be used against you.

The article assumes no previous legal knowledge on the part of the reader and technicalities are avoided where possible.

At the outset it is important to emphasise:

· This article applies to England and Wales and was revised in April 2014;

· References in this article to ‘spouses’ include couples in civil partnerships and same sex marriages;

· There will be a special section dealing with the position regarding unmarried couples, whether of the same sex or not.

At the outset, we can say that there are certain basic ideas that must always be kept in mind.

· The primary objective is that both parties have somewhere to live or sufficient resources to secure suitable accommodation.  Where dependent children are involved, ideally the non-resident parent should have accommodation large enough to permit staying contact.

· This does not necessarily mean that spouses who were formerly owner occupiers before the divorce must necessarily be owner occupiers after it.  For various reasons, it can easily happen that one, or both, end up in rented accommodation.  Divorce usually involves some reduction in lifestyle.

· It is most unlikely that either spouse will be ‘awarded‘ the right to live in the FMH if (s)he cannot afford to do so with the aid of such resources as (s)he has or could acquire.  These resources could include borrowing, social security benefits (especially housing benefit and tax credits) maintenance (both child and spousal) wages and earnings of any description, or other assets which could be used to fund accommodation.  This list is not exhaustive, but by now you will have the general idea.

· The presence or otherwise of dependent children will usually be a matter of crucial importance.  The need for a home for the children is given statutory force in Section 25(1) of the Matrimonial Causes Act 1973.

· In certain instances this factor has led to orders being made which, on the face of it, would strike most people as unjust.  Thus, it could, potentially, be used to give the children (and indirectly the person with care) the right to live in a house which was originally provided by the other spouse and was brought by that other spouse into the marriage.  An extreme example as to how this can work in practice was C v C (http://www.familylawweek.co.uk/site.aspx?i=ed233) though it has to be remembered that in this case the payer was a man of very considerable means and this case is not typical.

· Readers must remember that what a court can do, and what a court will do in practice, are not necessarily the same thing.  In particular, you must remember that the house is usually considered as part of an overall review of the parties’ assets and needs.  As we shall see, what happens to the house can be one element (though obviously an important element) in a ‘package deal‘ or a ‘trade off‘ which could involve a combination of pensions, maintenance, and other assets; the question you need to address is, whether the package, taken as a whole, is fair to both parties, or at least as fair as it could be.

· No cases are ever exactly the same.  In an ideal world, cases with identical facts should have identical outcomes, but sadly this is not always the case.  Different judges can and do have different views.  There is some anecdotal evidence that practice may vary in different parts of the country.

Owner Occupied Houses

Where the FMH is owner occupied, the property may be in the joint names of both spouses, or it may be in the sole name of one spouse.  Where the latter applies, the reason may well be that the property was owned by one spouse before the marriage.

Where the property is in the sole name of one spouse the owning spouse may attempt to sell or mortgage the property without the knowledge or agreement of the other.  By contrast, where the property is jointly owned, both the spouses must concur in a sale.  So if, as sometimes happens, one joint owner wants to sell and the other wants to stay, the only way to resolve the dispute if mediation fails is to seek a court order.

For the reasons given in the previous paragraph, the non-owning spouse should register matrimonial rights as a matter of urgency.  This subject is dealt with in more detail in another article in the Wiki Library, “A Guide to what to Consider Before Starting Divorce” (search under “Divorce Finances”) and for this reason is not discussed further here.

Where the property is in joint names then you need to find out whether the house is held as joint tenants or as tenants in common.  The chances are, with married couples, it will be a joint tenancy.  To find out, you will need to look at your land certificate or, more accurately, at the office copy.  You may (and should) have a copy anyway if you are the owners, but if not, it is relatively easy (and not expensive) to inspect the Register and/or get a copy via the Land Registry website.  By the way, joint tenancies and tenancies in common have nothing at all to do with tenancies in the sense of rented property.  One fine day, perhaps, someone will come up with a more sensible name.

What you can expect to find is wording something like this: “The Purchasers shall hold the property hereby transferred upon trust to sell the same… and to stand possessed of the net proceeds of sale and the net rents and profits thereof until sale upon trust for themselves as beneficial joint tenants”.  If you find the highlighted words, then that settles it.  If this is the case, you (or for that matter your spouse) may want to consider a process known as severance, to convert the joint tenancy into a tenancy in common.

The whole subject of joint tenancies and tenancies in common is dealt with in the article referred to above.

The options open to the courts in relation to the FMH can be summarised as follows:

· Immediate sale of the FMH and division of the proceeds.

· Ordering the FMH to be transferred outright to one spouse.  There are a number of variations on this theme; the non-owning spouse may have a charge on the house; in plain English, what this means is that the spouse who owns the property may have to pay a lump sum (which should be a percentage of the value) if and when certain specified events occur, for example, the house is sold, or the owning spouse re-marries.  The owning spouse may have to pay the other an immediate lump sum (in other words a buy-out).  It is possible for the Court to order an outright transfer with no compensation; but orders of this kind are not common.

· One possibility is that, if the property is already in joint names, it remains in joint names, but the order will allow one spouse to live there to the exclusion of the other.  Here again, the order will provide for the property to be sold at some time in the future, followed by a division of the proceeds.

These options will be discussed more fully later.

Orders for Immediate Sale

This kind of order is likely to be appropriate in the following circumstances:

· If the parties agree (obviously);

· If the Court wants to bring about a clean break.  Where there are no children involved, the neatest way to achieve this may be to sell the house, divide the proceeds, and both parties start from scratch, with the mortgage on the FMH paid off;

· If it is clear that neither party can afford to live in the FMH.  In that case, there is little alternative but to sell and allow both parties to move into rented accommodation when housing benefit is available;

· If there is sufficient equity in the property to allow both parties to buy separate accommodation on their own account, with the aid of borrowing or other assets, if necessary;

· If it is clear that one party would be left with a house larger than what (s)he reasonably requires – especially if the other would not;

· If one (or both) spouses have already secured accommodation.

As a general rule of thumb, a sale is less likely where there are dependent children involved.

The obvious question is: if the property is sold, how are the proceeds to be divided?  It may sound trite to say, “it all depends”, but, unfortunately, that is the fact.

There are a number of factors in Section 25 of the Matrimonial Causes Act 1973 to which the Court must have regard.  You can find the most recent version of this act on the www.legislation.gov.uk website.

At this juncture, it is appropriate to say that this section is probably the most important statutory provision in the whole of family law.  A family court is obliged to have regard to these factors.  Not all of them apply in every case, of course, and the judge has a pretty wide discretion as to how much weight (s)he will attach to each of them; but if you are doing your own divorce, you really should invest a few minutes in reading Section 25.

Applying Section 25 to this type of situation, the kind of questions will include:

· How are the parties, and in particular any dependent children, to be re-housed?

· How might a move affect the children’s welfare?

· To what extent can the parties raise capital by borrowing?

· What is the parties’ relative income position?  The spouse with the lower income, and therefore the lower borrowing capacity, may get a larger share then the other to compensate;

· How was the purchase of the FMH financed in the first place?  If it is clear that one party provided all or most of the capital, the split may reflect that.  However, the need of the parties for accommodation may in practice take precedence over such considerations.

· How long was the marriage (including pre-marital cohabitation)?

· Are there any disabled or sick people in the household with special needs?

There are three areas where care is required:

· Where a party is on legal aid, consideration needs to be given to the possibility of having to repay the statutory charge, and how that liability might be transferred to some other house.

· Where one party is receiving means tested benefits (e.g. income support) capital in excess of £16,000 will disqualify a claimant completely, and capital between £6000 and £16000 will reduce it.  But if the capital is used to buy a house this is unlikely to matter, as the value of the house is normally ignored if it is used as a residence.

· If the FMH is a former council house, a sale may trigger a claim for repayment of the discount.

Orders for a Deferred Sale

Mesher Orders

If you have not heard of Mr and Mrs Mesher, you probably will by the time the divorce courts have finished with you.  It was their little squabble that gave rise to the type of order that we will now proceed to consider; and their name was immortalised by having the order named after them.

There are sometimes cases (usually, but not necessarily, where there are dependent children involved) where for one reason or another, the house is needed as a residence (almost invariably for the wife/mother) for some time, and that need is such that the mother will be given the right to live there for the time being, and the other party, though retaining some interest in the house and/or the proceeds of an eventual sale, cannot realise that interest and/or enforce a sale, until the occurrence of certain events, usually known as triggering events.  When one of these occurs, the property will have to be sold (though a buy-out may sometimes be possible) and the proceeds of sale divided.

So as a first step let us consider the various possible triggering events.

· Death of the occupying spouse;

· Re-marriage of the occupying spouse;

· (Possibly) cohabitation of the occupying spouse for a period, say, 12 months.  This is perhaps somewhat controversial; the argument being that the children still need a home even if Mum gets herself a new boyfriend, and that consideration outweighs the non-occupying spouse’s need for cash;

· The youngest dependent child reaching the age of 18 years or (possibly) completing a first undergraduate degree;

· Voluntary vacation of the property for a given period;

· Sale of the property.  However, a well drafted order should make provision for the possibility of the occupying spouse moving home and the new home is then held on similar terms.

Triggering events are a matter for negotiation but the above are the most usual.  This list does not purport to be exhaustive.

So should you have a Mesher Order at all?

· Mesher Orders have been criticised on the grounds that they merely put off a difficult decision till a later date.  They can mean that the wife is forced to seek accommodation at a time in her life when she may be vulnerable and/or short of cash.  Notwithstanding these objections, there will be cases where it is really the only viable solution to the problem of finding a home for the children.

· If the house has to be sold sooner or later, it is arguably better to put off the decision until the children have flown the nest.

· A Mesher Order does at least give the occupying spouse time to plan for the day when the property has to be sold.

· It does not deprive the non-occupying spouse of his interest in the property altogether.  The writer admits to getting more than a little narked when the eventual realisation of the non-occupying spouse’s share is described as an unmerited windfall rather than as the delayed realisation of an entitlement which, for reasons of public policy, he is not allowed to realise at the time of the divorce.

· As we have seen, a Mesher Order is less likely to be made if the occupying spouse is not likely to be able to be in a position to secure accommodation on eventual sale.  It is also less likely if the house is larger than the occupying spouse reasonably requires.

· If the equity is substantial, sufficient to re-house both parties when the property is eventually sold, a Mesher Order can often offer the best solution.

Deferred sale of the FMH can have capital gains tax implications for the dispossessed spouse on eventual sale and legal advice should be sought.

If the dispossessed spouse is in financial trouble, then there is a risk that if he goes bankrupt the trustee can force a sale and over-ride the Mesher Order.  Although the occupying spouse’s share would not be affected, it does rather defeat the object of housing the children.  The authority for this is Vivienne Joan Avis v (1) Charles Hamilton Turner (Trustee in Bankruptcy of the property of Edmund Charles Avis) (2) Edmund Charles Avis [2007] EWCA Civ 748.  The moral is, think very carefully about a Mesher Order if your husband is likely to go bust.

An order of this nature needs to be drafted fairly precisely to state who is to be responsible for repairs and insurance.  In the writer’s view, legal advice should be sought; do not attempt to deal with this by yourself.  As stated, the possibility of moving house needs to be considered also.

It is usually worthwhile putting in a clause giving the occupying spouse the right to buy out the other’s share.

The next question that has to be considered is how the net proceeds of sale are to be divided up when the house is eventually sold.  It needs to be remembered that the proportion is fixed at the time of the order and cannot normally be changed later.  So to some extent the Court has to look into the future.

There is one argument that the split ought to be 50/50 or something close to it.  The arguments in favour of this view are:

· The yardstick is equality in any event and the longer the marriage the stronger the presumption;

· The non-occupying spouse may have been unable to realise his share for a long time, and the longer the time, the stronger the case for an equal split;

· The non-occupying spouse may have been paying a considerable sum in maintenance over the years;

· The occupying spouse has in any event time to prepare.

Arguments for an unequal split are likely to be concerned with the parties’ housing needs.  In particular, it may be argued that one spouse needs a larger share to buy him/herself suitable accommodation.

Martin Orders

Next we deal with the comparatively rare Martin order, again named after the case which spawned it.  It is similar to a Mesher order and the triggers can be:

· death or re-marriage of the occupying spouse;

· voluntary vacation for a specified period;

· co-habitation for a given period; and

· sale.

You will note there is no reference to the sale becoming enforceable at a given point in time and therefore a Martin order can be, in effect, a home for life for the occupying spouse.

This order is pretty drastic and is likely to be appropriate only in the following circumstances:

· The non-occupying spouse is securely housed and is unlikely to need cash to secure accommodation;

· The house is not too big for the needs of the occupying spouse;

· (Generally) where there is a significant imbalance between the means of the parties.

Because the occupier has a house for life, she will not need cash when the property has to be sold, which may be after the other spouse has died.  In such a case it is rare for the split in favour of the occupier to exceed 50%.  In addition, it is rare for a Martin Order to be made in addition to an order for substantive spousal maintenance.

We can more or less dismiss the so-called Harvey Order (where the occupying spouse pays an occupation rent to the other).  You are about as likely to encounter this as you are to see a dodo nesting in a tree.

The Problem of the Mortgage

When a property is in joint names, and has a mortgage on it, there can be subsequent problems if one of the joint owners is not allowed to occupy the house, or even worse, deprived of his interest altogether, and yet still be legally liable to pay the mortgage.

It has already been observed that if one spouse has the right to occupy the FMH to the exclusion of the other, (s)he must expect to be responsible, as between the former spouses, to make the mortgage payments.  If the spouse in occupation is not able to make these payments, an order along these lines should not be made at all.

The problem is that, when the mortgage was originally taken out, both parties jointly borrowed a certain sum of money and agreed to repay it over a period.  This can be enforced by the lender as a matter of simple contract and the liability will be known in law as joint and several – which in plain English means the lender could sue either spouse, or both.  This is not affected by the fact that one of the spouses does not live there.

Furthermore, the Court cannot order a lender to release the non-occupying spouse from his/her obligations under the mortgage.  So in theory, if the spouse in occupation defaults, the former spouse could be sued as well.

Unfortunately, there is little that can be done about this, given the state of the law.  Where this applies, then the question has to be asked as to how the spouse out of occupation can protect himself.

The answer is, unfortunately, not a lot, but the following are possibilities.

· As previously noted, anyone faced with this possible situation should at least be very sure that the other spouse has the means to make the payments.

· It is usual for the occupying spouse to covenant to “use best endeavours” to secure a release of the other from the mortgage.  In the writer’s view, this should be expressed as a continuing obligation, and not merely as an obligation to write a letter to the lender asking for release, and when that request is refused, then that is it and no more need be done.  It could happen, say, that the occupying spouse re-marries and the combined incomes may be enough to induce the lender to substitute the new partner.  Or perhaps, over time, the mortgage debt may shrink to the point where the lender will be happy to agree to release the former spouse.

· It is also usual for the spouse in occupation to agree to indemnify the other on the event that the non-occupying spouse gets sued.  This may not be much use in practice but it may, just possibly, be useful.  It is still a debt and can be enforced like any other debt – if the means are there against which to enforce.

Another problem is that the fact that the occupying spouse remains liable on the former mortgage may prevent him getting another and he may be forced to rent.

Outright Transfer of the Matrimonial Home

Transfer without any compensation at all is not a common order but it might be appropriate in limited circumstances:

· If the equity in the FMH is very small or perhaps even non-existent.  There is, of course, nothing wrong with the idea of living in a house with negative equity if you can afford to do it.

· In those rare cases where there is more than one house, it might be reasonable to give the spouses one home each.

· It may be that one spouse contributed a large percentage of the cost of the FMH in the first place and awarding the house to that spouse outright may be entirely fair.

The writer does not pretend that this list is exhaustive.  But giving the FMH to one spouse outright in most cases would be unfair to the dispossessed spouse and there is the additional problem of re-housing him/her – which is clearly that much more difficult if (s)he is deprived of an asset without any recompense.

The compensation may take the form of a lump sum – in effect a buy-out, the amount of which will depend upon the spouse’s ability to make the payment and the other’s need for it.

Another possibility is that, in exchange for the loss of the house, one spouse gets a larger share of the remaining assets.  So for example, the husband may keep his business unscathed.  A wife may “trade off” long term security for immediate needs, most commonly by foregoing any claim on the husband’s pension or taking a smaller share.  There are all sorts of possibilities; but one in particular does merit a warning.

That is, that one spouse (usually the wife) gets the house and the compensation is the cancellation of maintenance.

Before the CSA came into being it was quite common for wives to take the FMH outright in return for the cancellation of child support.  You must now avoid such an agreement because it would be unenforceable.

It is still legally permissible to trade off the house for the reduction or cancellation of spousal maintenance.  Whether such an agreement is worthwhile from the point of view of the payer of SM depends partly on the amount of SM he might have to pay and over what period – and also, of course, how much equity he will be giving up – bearing in mind that the other spouse will usually have some interest in it.

Be aware, however, that there is a risk that the spouse getting the house may re-marry, in which case the compensation would, in the light of events, seem quite inadequate (because spousal maintenance ends on the re-marriage of the recipient).  It would be possible for a divorcing spouse to state, perfectly truthfully, that she had no intention of re- marrying.  But the general intention may be there.

Rented Property

Rented property is still property and in some cases can be transferred just like owner-occupied houses can.  But the subject is perhaps not quite so emotive, for the obvious reason that the spouses do not own the property, and so, if one spouse is forced to leave the FMH, at least (s)he hasn’t lost anything.

Nevertheless, if the FMH is rented then it may still be required as a residence for one spouse or the other.

The rights of a residential tenant depend primarily on two things :

· The tenancy agreement; and

· The general law.  Sometimes the general law can over-ride the tenancy agreement.

Almost without exception, the first thing you need to consider is: what type of tenancy is it?

This can sometimes be an involved question and require specialist knowledge to answer it.  But since we are trying to avoid technicalities, let us look at the general picture.

Where the landlord is a public authority, a housing association, a charity, or some public or semi-public body, the chances are that the tenant will have a secure or assured tenancy, both of which carry with them a high degree of security and are relatively easily transferred – even if the tenants are not married but merely cohabiting.  As an aside, note that tenancies can only be transferred if the property in question is, or was, the FMH.

But if the landlord is a private individual the odds are heavily that the tenancy will be assured shorthold.  In this case the tenant’s rights are, at least in theory, much more limited, but many paddle along happily for many years and in practice, if not in law, are reasonably safe.  But in this case it’s important to make sure that the landlord agrees to the transfer – because if he doesn’t, he can get possession reasonably quickly with no questions asked.

In most cases it is advisable to read the tenancy agreement to make sure that a transfer would not contravene the terms of the tenancy.

It is usually a good idea for the spouse who leaves to have his/her name removed from the tenancy agreement to make sure the tenancy is in the sole name of the occupying spouse – otherwise (s)he could continue to be liable for the rent.

This concludes our review of how the courts deal with the marital home on divorce and we now move to the more difficult issue of unmarried partners, whether of the same gender or otherwise.

Unmarried Partners

At the outset one has to admit that the law in this area is somewhat of a shambles.

There is still an enduring myth that people who cohabit for a long time become spouses by default, as it were, and acquire the same rights as they would have had if they really were married.  But this is quite wrong; the “common law marriage” does not exist.  In most cases it makes a great deal of difference to the outcome whether the parties are married or not, and can it be stressed again that “marriage” includes civil partnerships and marriages where both parties are of the same sex.

There used to be a time when cohabitation outside marriage was very much frowned on, and anyone doing it could expect disapproving glances and no end of tut-tutting.

But not any more.  Nowadays it has become a commonplace and almost universally accepted as a norm.  But legislation lags behind these social changes.

But life goes on, and courts are constantly having to deal with cases where cohabitations break down and the courts still have to sort out the vexed question as to who gets what.

Over time, the courts have used a number of principles with strange sounding names like proprietary estoppel, constructive trusts and resulting trusts.  If you think that sounds like a mouthful, you’re right.  But the general idea is that it can be possible, for example, for someone who is not a legal owner of the FMH to establish an interest in it by making a contribution towards the deposit, helping out with the mortgage payments, financing improvements to the property and so on ad infinitum.  Or, alternatively, if the parties have shares in the FMH of 50%, it could perhaps be altered to 60/40 or some other figure.

So the law relating to unmarried couples is largely dealt with by general property law, and the Matrimonial Causes Act 1973 is not relevant.

In general, the law is largely governed, firstly by sections 14 and 15 of the Trusts of Land and Appointment of Trustees Act 1996.  This is also a bit of a mouthful, so it’s usually called TOLATA.

Secondly, there have been two very important decisions: Stack v Dowden [2007] UKHL 17 and Kernott v Jones 2011 UKSC 53.


Where a property is jointly owned, it can easily happen that one joint owner wants to sell and the other does not.  In cases like this, the remedy for the party who wants to sell is to apply to the Court for an order for sale.

This article does not seek to go into the legal technicalities.  However, as a general rule of thumb, we can make a few basic propositions:

· If there are dependent children involved it is likely that the Court will defer a sale until the children have attained their majority;

· If there are no dependent children the Court is likely to order a sale; but

· The Court may postpone a sale for a short time to give the parties time to prepare for a move.

It must be made clear that these are only general rules and legal advice should be sought in all cases.

Other General Propositions

As a general rule of thumb :

· Where one party is the sole owner of the property, the starting point is exactly that – the owner has 100% rights;

· Where the property is jointly owned the starting point is that the parties own in equal shares;

· If the deeds say that one party owns, say 75% and the other 25% then that is what their shares will be;

· If either party wishes to displace these basic rules the onus is on him/her to demonstrate why.

This is usually achieved by establishing contributions, for example, providing part of the initial deposit, helping with the mortgage, improving the property and so on – but not contributing to household expenses.

So, for example, in Kernott v Jones, the property that was the subject of the dispute started out by being owned jointly.  But the Supreme Court decided that Ms Jones was entitled to 90%.  The facts of this case were, almost certainly, not typical.  But it demonstrates that it can be done.

The above is a very condensed summary of a very complicated and involved subject and in all cases, legal advice is necessary.

Can an Unmarried Partner Have Any Rights of Occupation?

If property is in the sole name of one of the partners, then the other will have no right to remain there and can be excluded by giving reasonable notice.

There are a few exceptions to this.  Some of them are so rare in practice as to be hardly worth a mention.  Where domestic violence is an issue, it is possible for one partner to apply for an order to protect him/herself and children, which could include the exclusion of the violent partner.  However, such an order only provides short term protection and does not create permanent rights.

The only provision which may be of any use is the Children Act 1989 , Section 15 and Schedule 1.  This provision is hardly ever used with married couples, but where the parties are unmarried, it is possible for either parent to apply for an order under this section which enables the Court to make a transfer of property order for the benefit of a dependent child or enable the parent with care to continue to occupy the house until the child is no longer dependent.  This is something of a specialised nature requiring legal advice.

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