Selling a home after a relationship breakdown #SolicitorChat with The Law Society.

Going through a relationship breakdown can be a difficult time which can be more complex if you share joint assets such as a home. But what are the different types of home ownership couples may have? And how can a solicitor help separating couples sell their home? Alice Barrett and Bethan Campbell discussed this and more live on Twitter this morning during #SolicitorChat.

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What are the different types of home ownership couples may have? What rights to the home does this give each party?

There are two types of ownership that need to be considered – the legal ownership and the beneficial ownership. The legal ownership is simply the names that appear on the title deeds at the Land Registry. This can be in either joint names or a sole name of a party. The beneficial ownership can be held in two ways – either as Joint Tenants or Tenants in Common.

Joint Tenants – the beneficial interest is held in equal shares and on the death of either owner, the deceased’s share will automatically pass to the surviving owner, regardless of their will.

Tenants in Common – the beneficial interest can either be held in equal shares or unequal shares. On the death of either owner, the deceased’s share will pass in accordance with their will or if they do not have one, the rules of intestacy.

If a home is owned in joint names (regardless of how the beneficial interest is held), both parties have the right to remain living in the property on relationship breakdown. The home cannot be sold without the consent of both parties or a court order.

If a couple is married and the home is owned in the sole name of a spouse, the other spouse still has Matrimonial Home Rights which will need to be protected on the title to the property. This notice records the applicant’s right to occupy and prevents a sale of the property or further lending being secured against the property without the occupying spouse’s agreement.

These rights expire upon a Decree Absolute being pronounced but you can obtain an order to extend these rights should the financial matters not be concluded by this time. This is only available on a property that is occupied as the parties’ residence and the property cannot be owned with a third party (unless the third party does not own any beneficial interest).

Unmarried couples will need to establish a beneficial interest or obtain an occupation order (if appropriate) to acquire the right to stay in the home. Should there be children of the relationship, there may be further applications that can be made.

For married couples who are separating, the financial division of all properties (whether or not they are main residence) can be dealt with during the financial negotiations (irrespective of whether they are in sole or joint names).

What is an ‘occupation order’ and how can it impact separating couples selling a home?

An occupation order manages the occupation of the property and can exclude someone from the whole or part of it as well as confirming the applicant has a right to remain in the property. It can also exclude a person from the area around the home and deal with who has the right to enter the home for certain purposes.  They are used in situations where there has been or is risk to the applicant from domestic abuse.

The order can be applied for whether a couple is married or not and irrespective of whether a property is in sole or joint names. However, you must have lived in the property as your home and be an “associated person” to apply.

When making an order, the court will balance the harm that would be caused to either party if the order was or was not made. The court will have regard to the financial resources of each party and their housing needs.

An occupation order will be made for a limited amount of time and can have a power of arrest attached to it. If a power of arrest is attached, the police can arrest the restricted party upon any breach of the order taking place.

Is it best to sell a home before or after a divorce or civil partnership dissolution is finalised?

When a couple agrees that the family home should be sold, they often want to rush to get the property on the market. However, it is important to think about the practical implications if the home is sold prior to the financial settlement being finalised as well as whether a sale is in all parties’ best interests.

There are many factors that can impact upon the division of the sale proceeds or the timing of the sale. For example, the Court can order that the property is not sold for a number of years or that the division of shares departs from the legal/beneficial ownership and can depart from any declaration of trust. All of the circumstances of the marriage will be considered when considering the appropriate division of assets upon a divorce.

Should a sale be agreed it is usual that the proceeds of sale will not be released until there is an agreement as to the division of the matrimonial finances (if married) or the beneficial shares (if not married), which could potentially leave the parties without anywhere to live or access to funds.

If the property is unlikely to sell quickly, it may be prudent to market the property whilst negotiations are ongoing, on the basis that an offer cannot be accepted or the transaction completed until the financial settlement is concluded.

It is often the case that we advise parties that it is best not to sell a property until the whole settlement has been agreed and approved by the Court for married couples or the beneficial shares have been agreed for unmarried couples. However, we advise on a case by case basis.

If the home is in one party’s name but the other party has made financial contributions, are they entitled to any equity of the home?

For married couples, a spouse may have rights over and a potential claim to the equity of a property which is in the other spouses’ sole name, whether or not they have made a financial contribution.

For unmarried couples, if one party has made a financial contribution such as paying towards the purchase price, the mortgage or improvements to the home, then they may be able to establish an interest in the property. If a beneficial interest is established, this would make them entitled to some of the equity.

If separating partners can’t reach an agreement when dealing with equity shares of a house, how can a solicitor help?

If the parties are married, it is important that all of the assets/income/liabilities and the circumstances of the relationship are taken into account rather than the property alone. A solicitor can provide advice as to how divorce law operates, what should be taken into account and what would be a fair outcome. This advice can facilitate negotiations or discussions if a couple attends mediation.

For unmarried couples, a solicitor will need to advise as to whether there is a beneficial interest. The shares of the equity in the property will be determined by establishing the division of the beneficial interests of the parties.

Should there be a dispute as to the occupation of the home, a solicitor can advise as to whether an occupation order or matrimonial homes rights notice is appropriate. A matrimonial homes rights notice can be registered against the property to protect a party during any negotiations.

It is important that you seek some initial advice upon a marriage/civil partnership breakdown or if not married, upon a relationship breakdown when a property is owned, in order to ensure that you fully understand your rights.

If you require any further information selling your home after a relationship breakdown, please contact our Residential Property or Family team.

The contents of this article are intended as guidance for readers. It can be no substitute for specific advice. Consequently we cannot accept responsibility for this information, errors or matters affected by subsequent changes in the law, or the content of any website referred to in this article. © Mundays LLP

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