Selling a House in Divorce

Joanne Wescott

A guide to amicably selling a house during divorce

One of the biggest issues in divorce is what happens to the house. The family home is often the most valuable asset in a marriage, and it can be a contentious issue when deciding what to do with it.

One option is to sell the house and divide the proceeds between you. This can be a good option if:

• You do not need continuity of living arrangements for the children.
• One spouse cannot afford to buy the other out or would not qualify for the mortgage on their own.
• Wealth is tied up in the home and you cannot practically re-house yourselves without selling up.
• You want to take advantage of an up-market and thus increase the sale proceeds.
• You want an immediate clean break.

Selling is not the only way of dealing with a house in divorce, however, and other options may be a better solution for your family. Ultimately, it is a case of discussing what you both want to do. A divorce solicitor can help you understand your legal rights and guide you through the decision-making process.

How is the family home divided during divorce?

There is no fixed formula for determining who gets the family home when couples divorce. Instead, decisions about ownership and living arrangements are based on:

• Who owns the property
• Contributions made towards buying or maintaining the property
• Where children will live and who takes care of them
• Any care needs for either spouse
• What would be fair for both sides in the settlement

This post explains more about how courts approach the question of who gets the house in a divorce.

Do I have to sell my house in a divorce?

The honest answer is, it depends.

Early in the divorce, your solicitor will ask you to fill out Form E making full and frank disclosure of your assets. The next step is to consider how those assets should be divided to achieve a fair financial settlement.

Sometimes there are not enough assets in the pot to keep the family home from being sold. In this case, you and your ex may have no practical alternative than to sell the property and divide any equity between you.

Selling is only legally required where a judge orders it. They may do this after financial remedy proceedings, which is where a judge decides the financial settlement because you and your ex could not agree, or in a Consent Order, where a judge “legalises” the divorce settlement you negotiated with your ex-partner.

Until then, you can explore alternative options for keeping the house. But you should be prepared to sell if there is no other way of achieving a fair financial settlement.

Can one spouse force the sale of a house in a divorce?

Where the home is owned jointly, one spouse cannot unilaterally force a sale of the property. Both spouses must agree to sell it, or you will need to obtain a property sale order from the court.

Compelled sales against the wishes of one spouse are relatively uncommon. Most couples mutually agree what to do with their joint home when separating. It’s only when both spouses remain entrenched in their position that obtaining a court order may be the only way out of the deadlock.

Courts do not order sales of the family home lightly, however. A judge will need solid proof that it is the best or only solution.

What if one spouse refuses to cooperate with the home sale?

If the court orders the sale of a home and one spouse refuses to cooperate, there are steps the court can take to ensure the process goes forward. This could involve:

• An injunction to stop the obstructive spouse from blocking viewings.
• A power of attorney for the willing spouse to manage the sale.
• As a last resort, evicting the uncooperative spouse.

Failing to comply with a court order could be seen as contempt of court, so it’s important to get legal advice if you are dealing with this situation.

What are the alternatives to selling the house in divorce?

Selling the house in divorce is often a last resort for many families. Other types of property adjustment order may achieve a better result. Your divorce lawyer will explore all options with you before going down a particular route, including the following:

Buy out: One of you buys your ex-partner out and has the ownership legally transferred to them. This can be a tax-efficient way of transferring ownership and, in many cases, may not involve payment, but a balancing out of the share of assets. You will need to get a solicitor to handle the transfer of equity process, like the conveyancing team here at Osbornes.

Part transfer of ownership: Instead of a whole buyout, there’s a rearranging of ownership shares. This is an option when you want to keep the property and benefit from its future value but need some cash to move on.Your solicitor can help create a tenancy in common with an unequal division of ownership.

Mesher order: A Mesher is a court order that allows one spouse to live in the home until certain criteria are met, usually the children reaching a certain age or completing education. When the trigger event happens, the house is sold and proceeds get divided between both parties according to their agreed shares. How you pay the mortgage and bills in the meantime will be stipulated in the Mesher agreement.

Martin order: Similar to a Mesher order, a Martin order allows one party to live in the matrimonial home for life or until they remarry. It is typically used when there are no dependent children involved.

Key considerations when selling a house during divorce

Before you agree to any type of property settlement, it’s important to consider all the factors that could affect your financial future. These may include:

• Your matrimonial home rights. You have the legal right to live in your family home even if it is owned by your ex-partner. Registering these rights at the Land Registry will prevent your partner from selling or mortgaging the house without your knowledge.
• Your buying power. Talk to your mortgage lender as soon as you can if you are separating. Whether you qualify for the mortgage on your own is a key consideration when deciding whether the home will need to be sold.
• What the property is worth: As part of your financial disclosure, you will need to state the current value of the property. An independent professional survey is recommended over an estate agent’s estimate as the former is based on objective market factors and is more likely to be accepted by the court.
• How will you cooperate with your ex: Ideally, divorcing couples should handle property sales cooperatively, with joint decisions on things like appointing estate agents and readying the home for sale. However, for some couples, this could be a big ask. Make sure to communicate effectively and consider involving a neutral third party, such as your solicitor or mediator, if you reach an impasse.

Tax considerations when selling your house in a divorce

The tax implications of selling your house in a divorce can be complex, but the tax regime is generally set up to make divorce-related sales and transfers as tax-neutral as possible.

Generally, you won’t pay capital gains tax (CGT) on the profit made from a property sale even if you have moved out and the house is no longer your principal residence. If you’re applying for a transfer of equity as part of the divorce financial settlement, you won’t normally have to pay stamp duty land tax on the portion you are buying from your partner.

However, it’s always a good idea to speak to an expert when it comes to tax and divorce. There may be special circumstances that make a difference such as owning more than one property. Our specialists can help you evaluate the potential tax implications before you make any decisions.

Contact Osbornes Law about selling your house

To speak with one of our solicitors, contact us by:

• Filling in our online enquiry form; or
• Calling us on 020 7485 8811