What happens to the house in divorce? The 6 options explained

When it comes to divorce and property, the matrimonial home is usually one of the first assets that are discussed by divorcing parties.

There are primarily three ways to deal with a divorce house split;

1. Sell the property and split the proceeds
2. One party buys the other out and refinances to remove the other from the loan if there is a mortgage
3. Share the house

Options 1 & 2 achieve a clean break financial order, but while sharing the marital home after getting divorced will mean there is no clean break, it can be the easiest and least expensive option.

How can a property be divided in a divorce? (Your options)

Whether the matrimonial property is jointly owned, or the deeds are just in the name of one spouse, both divorcing parties will normally have a certain degree of entitlement to any equity.

Let’s look in more detail at six different ways to divide property in a divorce.

1. Sell the property

One of the most popular ways of separating the equity held in the marital home is to put it on the market and split the proceeds of a sale.

This is perhaps the most straightforward option and helps to achieve a clean break, whereby there are no ongoing obligations for either spouse towards each other beyond the date of their divorce.

A big advantage of selling the property is that any money released from the sale can be put down in the form of deposits on new mortgages, or else used for rental payments as both former spouses get back on their feet.

But selling up may not always be a good option. Recently purchased property that is quickly sold may actually result in a financial loss.

Furthermore, if the property has gone down in value since it was purchased, this will leave the owners in a state of negative equity – in which case it’s often best that they wait until the market improves before trying to sell up.

2. One party buys the other out

If either divorcing party wishes to remain living in the property, and have sufficient financial resources, they might offer to purchase any equity held by their former spouse. If there is still a mortgage on the property, this will necessitate reconfiguring the mortgage agreement (see below).

The advantage of one person buying the entirety of the property from their ex-partner is that, just as in the case of selling up, it results in a clean break. Furthermore, it’s often a cheaper option compared to the costs associated with selling and buying a new home.

However many divorcing couples will struggle to raise the funds required to buy the whole property, particularly in the current buoyant housing market where housing prices keep rising year on year.

Also, the memories of a marital home where the marriage has failed will be off-putting to many people.

3. “Charge back”

A divorcing couple can agree for the legal and beneficial ownership of the property to be transferred to one of the spouses.

However, rather than a transfer of property ownership without any conditions attached, it is possible to register a charge against the title deeds which requires a portion of the proceeds of any future sale to be shared with the other former spouse.

This type of transfer of equity is commonly called a transfer with a “charge back”. A transfer with a charge back can be useful where one party wants the security and flexibility which comes with holding the legal title of the property, but their former spouse still wants to retain a share of the equity.

There will typically be a “trigger event” in the case of a transfer with charge back arrangement – such as the youngest child of the family reaching 18 years of age –  in which case the property will need to be sold and the relevant portions of proceeds divided up.

4. Mesher order

A Mesher order is similar to a “charge back” arrangement, except for the fact that the title deeds of the property are not transferred into the sole name of one party.

In effect, both former spouses will continue to own a legal share in the property, but one party will be entitled to sole occupation until a “trigger event” occurs, at which point the property will be sold and the proceeds divided between the former couple.

It’s also worth mentioning another order, similar to the Mesher order – called a Martin order. The rules of a Martin order are essentially the same as Mesher order, except that it provides for an indefinite postponement of the sale of the property.

Although there will often still be certain trigger events, these are uncertain (eg remarriage or voluntarily vacating the property) and will often allow the former spouse to remain living in the property for the rest of their life.

5. Share the house

Certain modern marriages may end because a relationship has morphed into a friendship. Although the change in feelings between the couple might precipitate a divorce, if they continue to stay friends it can be possible for them to carry on living together.

If they have recently bought a house together, it will often be practical to continue to share the property, either temporarily or even indefinitely, as housemates and friends.

Although the decision to share a marital home after getting divorced will mean there is no clean break, it can be the most straightforward and least expensive option. It may also be necessary if they are unable to obtain separate mortgages or pay individual rents.

6. Reconfigure existing mortgage

In the scenario where it is not possible for one party to buy their ex out, and where the property was purchased so recently that selling up is not a viable option, it might be prudent to continue with a joint mortgage, at least temporarily.

But if the divorcing couple intends to carry on paying into a joint mortgage, it may nevertheless be necessary to change the details of the mortgage in order to reflect the terms of a financial settlement.

One example of reconfiguring a mortgage may be to alter the share of the equity that is held by either spouse. This could mean changing the co-ownership structure from that of “joint tenants” to one of “tenants in common”. It will be necessary to discuss any such intentions with the mortgage provider and/or a lawyer.

How to split the house without going to court?

The court will generally need to be involved in some capacity when deciding a divorce house split.

This may simply be a matter of issuing a consent order to provide legal standing to any property settlement agreement reached.

Though it’s possible to split the home without obtaining a consent order, this will open up the possibility of either party later on changing their minds and breaking the agreement.

Under these circumstances, the court would have no powers to enforce the agreement you’ve reached if a consent order isn’t obtained.

There are three key stages to creating a property settlement agreement:

1. Negotiation – Either informally between both parties or through mediation.
2. Agreement – The agreement reached is formalised in a document and signed by both parties to confirm the terms. The contract can also include other aspects of financial affairs, not just the property settlement.
3. Consent order – To ensure the settlement is legally binding and enforceable it needs to be turned into a consent order.

Court orders: what are my options?

A divorcing couple will need a consent order drawn up by a solicitor to provide legal standing to any financial settlement that involves dividing up a marital home.

If the couple cannot agree on how to split the property, the court can make a property adjustment order. This order sets out how the matrimonial home should be dealt with following the divorce.

Court orders can include:

• Transfer of property – the court might require full ownership of the matrimonial home to be transferred to one spouse. This may involve transferring a mortgage across.
• Sale of property – a court can decide that the best solution is to put the property up for sale and divide the proceeds between the divorcing parties.
• Mesher order – this provides for the postponement of the sale of the family home, allowing one of the divorcing parties to remain living in the property for a certain period of time or until a ‘trigger event’. For example, a Mesher order can allow a former spouse to remain living in the property with the children until the children finish full-time education or reach the age of 18.
• Martin order – this provides for an indefinite postponement of the sale of the property. The former spouse who is granted residency in the home under a Martin order will often be able to carry on living there for the rest of their lives, subject to certain ‘trigger events’ such as re-marriage or if they voluntarily vacate the property.

A family court can impose a Property Adjustment Order as part of the overall financial order.

However, this will normally be a result of a failure to agree on how to deal with the property between themselves or via mediation.

What happens to property owned before marriage?

The court can choose how to divide up the property, irrespective of whose name is on the title deeds, whether or not there is a joint mortgage, or even if one party owned the property prior to the marriage.

If a couple can decide how to divide up the property, they will still need to get a consent order which contains details of their agreement regarding the property.

For example, if they have agreed to sell up and split the proceeds, this will be stated in the financial consent order to legally formalise the agreement reached.

Final thoughts & conclusion

Splitting property in divorce is never easy and there is no right or wrong way to go about it as it entirely depends on the individual circumstances of each couple.

When working out a fair divorce settlement, a family home will always need to be considered and separated accordingly.

If you would like help with having your property settlement formally drafted into a financial consent order, our solicitors can save you time, stress, and money.

Unlike high-street solicitors our services are fixed fee, giving you peace of mind over the true cost of dealing with your property and finances when getting divorced.