Mesher Orders Explained
5 May 2022 | Joanne Wescott
What is a Mesher order?
A Mesher Order allows the sale of the family home to be postponed in the event of a divorce, either for a fixed time or until a trigger event happens. It is typically used when one party wants to stay in the family home with the children but cannot get a mortgage or make monthly payments independently.
In this situation, a Mesher Order will enable the property to remain in the divorced couple’s joint names until the sale is triggered and for both parties to remain on the mortgage.
What are trigger events?
Common trigger events might be:
- The children leave home
- The children finish their full-time education
- The youngest child reaches 18
- The person living in the family home decides to remarry or cohabit with their new partner
What are the advantages of a Mesher order?
Advantages of a Mesher Order can include:
- One of the main advantages of a Mesher order is that it allows the parent with custody of the children to remain in the family home. This can provide stability for the children by allowing them to continue living in a familiar environment, maintain relationships with friends and avoid disruptions to their education.
- A Mesher order defers the sale of the property until a trigger event occurs. This can be an advantage when selling the property immediately would result in financial loss or when the property market is unfavourable. Delaying the sale can allow the property to appreciate, potentially benefiting both parties when it is sold.
- In cases where one party contributed significantly to the purchase or maintenance of the property, a Mesher order can ensure that their investment is protected. The order can specify the proportion of the property’s value that each party is entitled to when it is eventually sold, considering their respective financial contributions.
- A Mesher can be tailored to the specific needs and circumstances of the parties involved. This flexibility allows the parties to have a degree of control over the timing and terms of the property’s eventual sale.
- They offer certain tax advantages. For example, in some cases, deferring the sale of the property can result in lower capital gains tax liability for both parties. Principal Private Residence (PPR) is tax relief on Capital Gains Tax whilst the property is in the Trust. Whilst one beneficiary lives in the property, the other beneficiaries can use PPR relief on another property and not be caught by PPR on the Trust property while the trust exists. This applies whether the property under trust was created by a Mesher Order or otherwise. There is a potential CGT charge on the spouse not occupying the property after termination of the Mesher Order and sale of the property rather than from the time of creation.
What are the disadvantages of a Mesher Order?
While Mesher Orders can provide stability in the short term, they may not offer the best long-term solution. Disadvantages of Mesher Order include:
- Keeping you financially tied to your ex for longer than you might like
- The stability in your living arrangements is only temporary, as the marital home will still have to be sold later on
- It ties up your capital for a significant number of years, which can make it harder to get a mortgage on another property
- Capital gains tax liabilities for the non-occupying partner if they have bought another home as their primary residence
Are there any alternatives to a Mesher Order?
When it comes to the family home, a Mesher Order is just one of many options. Alternatives include:
- Selling the family home and splitting the money
- One partner buying the other out
- Transferring some of the ownership to one partner; the departing spouse would then own a smaller share but would get some of their equity out of the property straight away
It is always a good idea to seek professional advice from an expert family solicitor who can discuss the options and establish the best way forward.
How do you get a Mesher Order?
If you and your partner agree on a Mesher Order, your solicitor will draft the Order into the financial settlement agreement. The agreement will then go to the Judge for approval.
If you and your partner cannot agree, then one of you would need to apply to the court for a Financial Order, which could include a request for a Mesher Order. The judge will review all the financial documents and make an order regarding the finances at the end of the court proceedings.
For a free, confidential discussion with a divorce lawyer, call 0207 485 8811 or complete an online enquiry form.
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