For the majority of people, their most significant asset is the family home. So, it is not surprising that when couples separate, questions about what will happen to the family home are usually top of the list.
In most cases the home will be dealt with in one of two ways – either it is transferred to one spouse- the other receiving a cash sum or other asset – or it is sold and both spouses receive a share of the sale proceeds.
Where a property has to be sold, external factors can affect how quickly the house is sold. Recently these have included the Covid-19 pandemic and the UK stamp duty holiday. You may then find yourself wondering whether it’s best to finalise your divorce before your house is sold, or not.
Rebecca Massam, Partner and Collaborative lawyer in the family law team with Warners in Sevenoaks says ‘agreements between separating couples can be reached at any point, and we can advise on what you will need to consider in each scenario.’
If you are in agreement that the house should be sold, and a division of the equity would mean that you are both able to rehouse, then there is no reason why you couldn’t go ahead and put the property on the market as soon as possible. If however the equity in the house is limited, and you cannot agree on how it should be divided, then it might be sensible to wait. This would avoid a situation occurring where you lose potential buyers, or where the funds have to sit with a solicitor until an agreement is reached.
On the other hand, having a deadline to work to can sometime focus the mind, and can mean that you and your spouse may make more of an effort to settle any disputes.
Occasionally an agreement may be reached between spouses, or a court order made, stipulating that there will be a delay in selling the home until a certain event has occurred. This could be, for example, when the youngest child of the family reaches the age of 18 or finishes full-time education.
These types of agreement are increasingly less common, with most people preferring to put final arrangements in place as soon as they can. Sometimes however, there can be an unforeseen delay or obstacle to prevent a sale of the home straight away. This is commonly due to the house being on the market without a purchaser being found.
Lessons from the case of Derhalli v Derhalli
In the recent case of Derhalli v Derhalli [2021] the husband and wife had reached an agreement over their matrimonial finances, which involved Mrs Derhalli receiving several million pounds upon the sale of the matrimonial home in West London, which was in the sole name of Mr Derhalli. The consent order was approved in 2016 but the house was not actually sold until 2019 due to a delay caused by the Brexit vote.
During these three years, Mrs Derhalli remained in the home. When it came to be sold, her former husband sought to recover a rent from her to cover this period. He argued that he should be entitled to £5,000 a month rent which amounted to around £600,000. Mrs Derhalli did not agree and argued that she was entitled to remain in the home until it was sold.
The Court of Appeal examined the consent order and found that there was nothing to prevent Mrs Derhalli remaining in the former matrimonial home until it was sold.
The situation would have been different if a clause had been included in the agreement stipulating his wife must pay a rent if she continued to reside in the home. Both parties would also have saved extensive legal costs and time had the agreement stated what would happen in the event of the house sale being delayed.
If the delay in the sale of the house had been caused deliberately by Mrs Derhalli preventing a sale, then Mr Derhalli could have returned the matter to court much sooner.
Considerations when selling a matrimonial home after divorce
Not only will you want to consider who will reside in the property until sale, but you should also give some thought to other questions which may arise, such as:
- Who will pay the mortgage and rates, and should these be recovered from the equity prior to any division?
- Who will maintain the property and cover the cost of any repairs?
- Who can have access to the property?
You should bear in mind that there can be other difficulties to consider if the house is to be vacant until it is sold, as it will still require a level of maintenance and heat and may be harder to sell if it falls into disrepair.
How we can help
Obtaining early legal advice on your divorce and finances is always important to ensure you obtain the best outcome possible for you and your family.
We are able to advise you on what needs to be included in your agreement should you wish to finalise matters prior to the matrimonial home, or any other assets, being sold.
We can also advise you on how you can sell the matrimonial home before you finalise any financial agreement should that option best suit you. This may be your preferred option if you have a buyer lined up and the housing market is uncertain.
If you sell before a financial agreement is reached, then the proceeds of sale will usually be held by agreement between solicitors pending finalisation by way of a consent order court direction.
In addition, if like Mrs Derhalli you are not the legal owner of your home, we can take additional steps to secure your rights. This may involve us registering your interests at the Land Registry to help prevent your spouse selling or borrowing further against the house.
For further information on any aspect of relationship breakdown or divorce, please contact the family law team on 01732 747900 or email [email protected]. Warners has offices in Sevenoaks and Tonbridge in Kent.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.