The two main options open to separating couples in deciding the future of the marital home are usually sale or transfer of ownership to the other party. On that basis either both or one of parties will bid farewell to the family home. However, what happens to couples who cannot agree what happens and how should any equity be divided?
The starting point for the court when considering the future of a marital home and the equity accrued is a 50/50 split. This principle of equality is now well established in family law and applies to the property of married couples irrespective of in whose name it is owned. Certainly in simple cases where there are no minor children, or any reason to suggest a more staggered distribution of funds is necessary, this is likely to be the outcome.
However, there are circumstances when deviation from equality is appropriate. Section 25 of the Matrimonial Causes Act 1973 sets out a list of matters that the court must take into account when considering the distribution of marital assets, including what should happen to the family home.
First on this list is the welfare of any child of the family. This includes a child of both parties or a child of one party who has been treated as a child of the marriage. The priority to consider the child’s needs usually continues whilst they remain in full time education.
Accommodation is usually the paramount consideration in assessing the needs of a child. Often there can be persuasive argument that for the purposes of stability the former marital home should be where a child continues to live. The parent with care of that child would therefore also remain resident in the property. This is often the wife.
There are other reasons why the court may decide that one parent should stay in the marital home with a child, for example if the property has little value and so a sale would render the parent with care of the child with insufficient funds to re-house. In these cases the party leaving the property, usually the husband, can be left committed to the mortgage until such a time as either the wife can release him or one of a series of predetermined events are triggered, such as the child reaching 18 years or completing full time education.
If the marital home has a high level of equity and there is evidence that the parties could both re-house comfortably if it were to be sold the court may consider an order for sale forcing both parties out of the property but with funds to secure alternate accommodation. The division of funds following the sale in these circumstances may not be 50/50.
The court must also take into account other Section 25 criteria such as the income, earning capacity and capital of both parties. The needs of each, their ages and responsibilities, contributions etc are also relevant. As such every case is individual and the court is bound to find a fair settlement based on all of the circumstances of the case. Although in the short terms this may mean that one party has to vacate the marital home the terms of any final order will be constructed to provide long term parity.
Where there are recognised circumstances under Section 25 the equity in a marital home may not be divided equally. For example 60% or 70% of the equity within a property may be determined as appropriate for a wife to retain to reflect the contributions she will make whilst in sole occupancy and caring for the children. In the alternative this greater level of equity for a wife may offset imbalance in earning capacities or pension provision.
It is clear that what may seem a simple choice in who should stay in the former marital home is actually a complex decision based on many factors.
Karen Brennan is a family law expert in these matters at Cartwright King solicitors. Call her on 0121 270 1988 to discuss how to achieve the best possible solution or email email@example.com