Who should keep the house?

When couples come to negotiate the financial outcome of their divorce, commonly their matrimonial home is the most valuable asset.

When clients come to us to seek advice, many questions emerge very quickly;

Will the house have to be sold?

How will the proceeds of sale be divided?

Can one spouse buy out the other spouse’s interest in the house?

These questions have to be considered very carefully in light of all the financial information. Sometimes, when finances are tight and it isn’t possible to house both spouses from the proceeds of sale of the matrimonial home so another option has to be considered; a Mesher Order.

A Mesher Order means that the sale of the family home is deferred for a specific period of time. These orders are made when children are involved and they allow one spouse and the children to remain living in the family home until a “trigger date” in the future.

The “trigger date” is usually when the youngest child reaches 18 or finishes secondary/tertiary education (whichever is later). There are other common triggers including the remarriage of the spouse who remains living in the house, cohabitation for a period (usually 6 / 12 months), or a specific date in the future.
Although only one spouse lives in the family home pending its sale, the house remains in both spouses’ names until the date of sale. Upon sale at the stipulated time, the proceeds of sale will be divided either 50/50 or in unequal shares. Consideration needs to be given to a potential future Capital Gains Tax liability for the spouse who has moved out of the property.

There are disadvantages to Mesher orders, not least because they lead to ex-spouses being bound together financially for a long period of time which is contrary to the family court’s general aim. Mesher orders simply postpone the inevitable sale of the property for a later time, but the spouse who remains there has to move in the end, often at a time when maintenance is coming to an end. For the spouse who isn’t living in the house, his / her capital is tied up in that property for many years which often leaves them needing to rent in the meantime.

However, sometimes the court has to use a Mesher order as a last resort, particularly where there are children who need to be housed. The welfare of any minor children is the family court’s paramount consideration.

If you have any queries about this article please contact jonesnickolds on 0203 405 2300 or contact@jonesnickolds.co.uk