What happens to the house at the end of a relationship when you separate or get divorced?
Divorce and separation always create a raft of complicated financial issues — many of which can settle through various legal processes. For instance, what happens to a house in a divorce? In most relationships, the family home is the single largest asset involved, and it is rarely straightforward deciding what happens.
Find out where you both stand legally and what you’re entitled to. One of the first steps to take involves protecting your ownership rights.
What’s the first thing I should do when selling a house because of divorce or separation?
Your first point of contact should be a solicitor. However, act fast if your name is on the mortgage and you aren’t making payments or splitting costs with your ex because you’re still liable for the debt until you remove your name or pay the mortgage off.
Contact the mortgage provider immediately to inform them you and your partner are breaking up, particularly important if you believe that your partner may not fulfil their obligations to keep up with payments. You can also apply to ban your partner from making any increases to the mortgage.
Protecting ownership rights when selling a house in a divorce
You legally own your home if your name is on the title deeds. It may be owned by you, both of you, or by someone else. Register your interest in the property, even if your name isn’t on the deeds.
England and Wales
Check the Land Registry for England and Wales to make sure your name is on the title deeds. If it isn’t, you can protect your position with a “matrimonial home rights notice.” You can do this by filling in an HR1 form on the GOV.UK website.
If your name is not on the title deeds, you can apply for a “matrimonial charge,” which means you must be informed when the property is sold or remortgaged, but you’ll probably need a solicitor to do this.
Protecting your property rights in Scotland if you’re not on the deeds is a complex issue, and you should seek legal advice or contact Citizen’s Advice for more information. While you have a right to live in the home, if you’re married or in a civil partnership, you’ll lose these rights if you leave the property for two years or more.
How Can a House Be Divided During a Divorce?
There are four main options available to you when it comes to dividing the value of the property during divorce proceedings:
- First, one person can buy the other’s share outright.
- Second, sell the property as quickly as possible and share the profit.
- Third, keep the property and legally change the owner.
- Fourth, transfer all or part of the property to one partner in the context of an overall financial settlement.
England and Wales
In England and Wales, you can defer a home’s sale with a “Mesher order,” which allows one partner to remain in the home until a particular event occurs, such as the child’s 18th birthday. A “Martin order” can also be granted whereby ownership remains split between both parties, giving one partner the right to stay in the home for life or until they remarry.
The divorce settlement would consider the family home’s value if you both bought the house after getting married or lived in it as a couple.
Children play a part in the division of property during divorce.
If children are involved in your divorce or separation, it’s best to resolve your differences and divide your assets amicably. However, if things reach the courts, you need to know where you stand regarding the family home.
The court will take the approach that children need a secure and stable home, which might affect who — if anyone — is allowed to remain in the property.
Many couples decide to sell their house after divorce and split the profits equally — giving them both money to put down on their next property purchase, involving downsizing to a smaller house or apartment.
What happens to a joint mortgage?
Many couples decide that selling the house after a divorce is the cleanest and most straightforward way to split as smooth as possible. However, there is also the option of transferring a joint mortgage to just one person. There are a few advantages involved in this course of action:
- Whoever stays in the home won’t need to rely on the other for the mortgage.
- Whoever resigns from the mortgage should be free to get another home loan elsewhere.
- Both people should be able to unravel themselves from the joint debt that ties their credit reports together.
What happens if I can’t afford the mortgage on my own?
Your home loan provider will only transfer your joint mortgage to you if you can demonstrate your ability to keep up with the monthly repayments. If you don’t have the income to cover it, you can apply for a guarantor mortgage, which involves someone else committing to the payments if you can’t. For example, you might agree with your ex-partner to become a guarantor — helping you speed up the process. Check with a mortgage broker to secure the finance necessary if you can buy your ex-partner out.
Are you selling the house after a divorce?
There is often a need to cash in assets quickly during divorce proceedings. So as well as making a clean break, selling your home fast means you will have the money for your next move as soon as possible.
Rather than take a gamble on the open market, you might be able to secure a sale within a few weeks by selling to a house buying specialist, especially if mortgage payments have stopped, as there is a risk of repossession. You don’t need to worry about marketing, property viewings, negotiations, property ladders or conveyancing. You could receive a fair offer based on the market value of your home, and it’s up to you whether or not to take up this offer. Accepting a quick sale could be what you need to speed up the stressful and emotional process of divorce.
Take control of the issue of property ownership from the moment you and your partner decide to call it a day. However, with regular communication, cooperation and sound legal advice, you should be able to protect your interests — and your biggest asset.