House Selling During a Divorce

If you’re currently going through a divorce, please accept our sympathies.

Whether there are children involved or not, it’s no doubt a very stressful time for both of you.

If you’re thinking about the sale your matrimonial home, it’s important to think carefully about your plans and weigh up the options.

This guide aims to help you in the right direction.

Please note that the content applies to England and Wales (not Scotland).

Also, there may be different rules apply if you’re dissolving a civil partnership.

Getting the Right Advice

First off, would strongly recommend speaking to a specialist family law solicitor.

The firm you decide to use should be registered at the Law Society and the Solicitors Regulation Authority.

However, be wary of the high fees and that you don’t end up paying for unneeded advice.

Things tend to get more complicated if:

• One of you earns more than the other;
• You have been married for a long time and have assets (property or otherwise) together;
• You have complicated financial affairs;
• The ability to earn income after the divorce becomes more difficult for either of you;
• You have young children;
• Your financial position pre-divorce was not equal to your spouse;
• One of you has a medical condition and living alone post-divorce would be a financial struggle.

In such situations, it’s sometimes worth getting mediation – especially if you need someone independent involved in the process.

Whilst generally cheaper than using a solicitor, you should bear in mind the extra costs of doing this.

Although it’s often tough, the best way to deal with things is through effective communication.

Such a ‘do-it-yourself’ approach would save £1,000’s on legal and mediation fees, not to mention the stress.

Perhaps you can have a couple of consultations with a divorce solicitor who can make sure everything is on track.

Of course, emotions are high but we would encourage you to think as rationally as possible.  This avoids any regrets down the line.

Do you Have to Sell Your House if You Get Divorced?

Not necessarily.

As discussed below, there are many ways to deal with the property once you have decided to divorce.

For instance, one of you can remain in the property instead of selling.  You can then come to a suitable agreement as to the future sale of the house.

Perhaps you can wait until the mortgage is paid off or your children are older.

Or you could pass the property onto your children once they are old enough.

At the same time, selling now may be a better idea, especially if you both want to make a fresh start.

You may also be able to take advantage of an up-market (and pull out more money).  Selling when the housing market is slow is always more difficult.

Ultimately, it’s a case of discussing what you both want to do.

Again, we stress that you should try and avoid these things being taken to court.  The costs of doing so really are astonishing.

Is it Better to Sell a Home Before or After a Divorce?

When to sell your house would be another decision that only you and your husband/wife can make.

Much will depend on the relationship you choose to remain with your spouse.

Arrangements regarding your children is also a major consideration.

Selling Your House Before the Divorce

If, for example, you were to sell the marital property before the divorce, you can decide the best course of action.

Both of you can take your agreed shares from proceeds of sale and make a clean break.

Selling Your House After the Divorce

Selling after a divorce could lead to confusion and maybe a lack of motivation for your spouse to move out.

One of you could change your mind, your life could change and things could get messy.

At the same time, if you do not wish to disrupt your children’s lives, then this course of action is completely understandable.

Either way, we hope you can come to some kind of amicable win-win agreement.

Should you have already decided to sell, please check out the section below.

Understanding and Protecting Your Property Rights

It’s in both of your interests to protect your rights to the property.

This means that either partner cannot sell, transfer or increase the mortgage without the other knowing.

It also means that neither of you can be pressurised into leaving the property.

Checking Your Home Rights

You’ll probably already know about how your home is owned.  It may be you and your spouse individually, jointly or by someone else.

But, if there’s any doubt, head to the HM Land Registry e-services website where you can check:

(a) That the property is registered; and

(b) Whose name is on the Title Register (deed)

Note that there is a fee of £3 to download the record.

If you see that your name is not on the Title Deeds, you can register your interest via the Land Registry.

This is through what’s known as a ‘homes rights’ or a ‘matrimonial home rights’ notice.

You’ll need to fill out the HR1 form on the Gov.UK website.

You can then protect your rights with a Class F Land Charge.

The Family Law Act 1996 governs this process and states that:

• Only a court order can force you to leave (both of you will be fully informed before anything can happen);
• You will be informed of any intention to sell by your ex-spouse;
• In the event of any action from the mortgage lender, like repossession, you’ll be first to know;
• You can cover any mortgage payment shortfall if your ex-spouse stops paying.

You may also want to register a restriction, also via the HM Land Registry.

Your solicitor will advise you better but this means any sale or action taken against the property will be legally inadmissible.

Note that this option is only available if the property is not the family home.

You should also confirm the specifics of how your own the property, in other words:

• Whether you both own the property equally as joint owners.  If either of you were to pass away, it would be the other that inherits their share (regardless of what’s said in the Will);
• Whether you both own the property as tenants in common.  The property is shared between you and your spouse.  It’s usually divided 50/50 but the share can sometimes be different.  You can pass on your share whichever way you wish in your Will.

It’s best to speak to a solicitor should you wish to change your legal ownership status.

Providing that your spouse is on the same page, the process is not too complicated.

Does Length of Marriage Affect Divorce Settlement?

Yes, if you have been married for longer, then it’s usually not as simple as simply splitting property and other assets two ways.

The law assumes that in a long-term marriage one spouse relies on the other’s income.

Once divorce happens, the lower-earning spouse can get a greater share of the assets.  It’s deemed unfair for one to have a lower standard of living than the other.

As expected, the children’s welfare will also come into play.

If one of you already owned the house before the marriage, this may also affect things.

Here, the spouse that brought the house into the marriage is likely to get a higher share.  How much is open to debate.

What is a Long Term Marriage?

As society has changed and more couples stay together for less time, this isn’t always clear.

1-5 years is generally considered to be a short-term marriage.  Medium-term is between 5 to 15 years.  Long-term is anything above 15 years.

Note that, if your divorce case goes to court, the judge may take into consideration any period you lived with each other before getting married.

Can a Judge Force You to Sell Your House in a Divorce?

The short answer is yes.

If your case has already gone to court, then the judge will look at all the surrounding circumstances.  This may include:

• If you bought the house together;
• The amount of equity in the house;
• Ages of the children you’ve had together;
• Who will be raising the children after the divorce (i.e. the primary caregiver);
• The future welfare of your children (ensuring they have a secure home);
• The reasoning behind the divorce;
• Both of your incomes / financial circumstances after the divorce;
• Whether it makes common sense to sell.

The judge’s role will be to think objectively within the confines of the law.

If it is ruled that the house must be sold, both you and your spouse must follow the court order.

You may choose to appeal, but the costs will mount up.

Dividing a House in a Divorce

Whether you choose to keep the house will often depend on a range of financial and practical factors.

One of the main ones, for example, is if there is a mortgage (and how much remains, if so).

There are also a number of other (often unexpected) considerations.  Some of which include:

• The length of your marriage and your respective ages;
• The level of your individual income, earning capacity and other financial responsibilities;
• Whether there are children that are under 18 and who they will reside with after the divorce;
• How the couple’s assets came to be.  For example, if you originally bought the property and it became the matrimonial home, then this can affect the financial distribution;
• Whether the property’s ownership is split. If so, what were the shares when you first bought it?
• Other assets and business interests owned by either of you;
• The health of both spouses…

Ultimately, it often comes down to affordability and how much equity you have in the matrimonial home.

If you decide to divide there are several ways to do it…

The Husband or Wife Pays The Mortgage After the Divorce

The idea here would be for the house to remain in both of your names.  However, the spouse that moves out will cover the mortgage costs.

This tends to limit the disruption.  Your children, for example, can remain at the same school and be close to their friends.

Much will depend on how much equity there is in the property.

The mortgage-paying spouse’s ability to cover the costs is obviously also an important consideration.

The Downside…

Paying out for a mortgage for a property you’re not living in may be a bitter pill to swallow – especially if you’re not under the same roof as your children.

This also may limit your ability to buy another home.  With the extra outgoings, renting may be the only option.

One of the Spouses Pays The Mortgage + Takes Full Ownership

A slight variation to the above, one of you would transfer the property entirely into your name.

You would then move out but still remain liable for the mortgage obligations.

In this scenario, you’ll have constant outgoings but will still benefit from the long term financial gain of owning the property.

Depending on where you are in the country, property prices tend to double every 10-20 years.

Another benefit is that any risks to your credit rating would be minimised when you break ties.

If you are the one remaining with the children (and no longer the co-owner of the property), make sure that some kind of legal agreement is put in place.

You’ll need to be notified if there are any issues, such as missed payments or if your ex makes a decision to sell without informing you.  There are legal mechanisms for this to be in place.

A separate agreement should also be in place in relation to repairs and maintenance.

Both Husband and Wife Cover the Mortgage + One Moves Out

With many couples funding the mortgage together on the basis of two incomes, the above two options are not always feasible.

Another way to do things is for one of the spouses to remain in the property and both contribute towards the mortgage costs.

The property would stay in both of your names and you will both be responsible for making sure payments are met.

Alternatively, perhaps you could come up with some kind of share of the mortgage payments based on what you can individually afford.

Bear in mind that this may have unintended complications down the line, especially as you still will both have financial ties with each other.

One Spouse Buys the Other Out

A good way to simplify things and make a clean break is for one of you to buy out the other.

Again, this minimises the level of disruption.

Usually, the spouse remaining in the property buys the other out.

The other spouse can use this money to purchase or take out a mortgage on another property.

The children’s home environment also doesn’t change enormously.

If you’re in this position, ensure that you have enough savings to keep up with the extra overheads and reduction in the income that will be coming through to cover things.

Either way, an agreement can be put in place that ensures that any equity gains can be passed on to the children at a later date (see below).

This would mean that there would be no complications should either of you decide to remarry.

Sell Up, Pull the Money Out and Move on

Although there’s likely to be disruption and stress, this can be the best way to move forward.

The house can be put on the open market or through a quick cash sale service like Property Solvers, for example.

You must get a professional surveyor to visit the property (accredited at the Royal Institute of Chartered Surveyors).

Assuming the property has been the family home, you would be able to pull out the proceeds tax-free.  The idea will then be to split the money.

You can both then buy two separate homes. Then, if you have children, it can often sense for both of you to buy properties close to each other.

Note that if you’re selling a buy-to-let property, there may be Capital Gains Tax liabilities to consider (use our CGT calculator to see how much you may owe).

Transfer a Share in the Property to the Spouse that Moves Out

This is another way for both of you to eventually benefit from equity gains and minimise the level of disruption.

Both can contribute towards the mortgage and, upon sale, take proceeds when the property is sold.

Who gets what share and how the mortgage is paid is up to you both to decide.

This is legally binding and, therefore, neither of the parties can pull out.

Keep the Home until a Certain Point using a Mesher Agreement

A Mesher Agreement is informally known as ‘order for deferred sale’

Fairly similar to the above, both spouses will have a beneficial share in the property.

This means that neither of you can sell the property until an event is triggered, typically when children reach 18 years old.

A specific legal agreement will stipulate how the proceeds would then be divided.

How you pay any mortgage debts, maintenance and other household costs will be stipulated in the Mesher agreement.

The downside is that you’ll remain financially tied to your partner for a long time.  This may not be ideal if you want to move on sooner rather than later.

Use a Martin Agreement

This type of legal agreement also sets a date for eventual sale but is more common when the couple does not have children under 18.

Similar to Mesher Agreements, there’s a specific ‘trigger event’ as to when the house should be sold.

In some circumstances, this can be when one of you dies.

Other events could include if one of you were to remarry or cohabit with someone else.

Mortgage Payments After a Divorce

Many mortgage contracts state that you should advise them of the divorce.

Normally, if both of your names are on the mortgage deeds, then the same responsibilities will remain after the divorce.

Essentially, you still have financial obligations under the mortgage contract.

So if one of you were to move out, and the other stops paying the mortgage then there’s a risk your credit file could get damaged.  Or worse, the property could get repossessed.

Remortgaging Your House After a Divorce

If you are planning to remortgage or swap to a different lender, then this will require both of you to sign off and agree to the new terms.

It is rare that a mortgage lender will allow one mortgagee to change the terms of the loan without both parties’ permission.

The lender will want to check that the remaining spouse will be able to afford the mortgage.

Or they may request that you sign a new mortgage under different terms (albeit for the same property).

Divorce Settlement Dictates that One Spouse Pays the Mortgage

As part of the divorce settlement, one of the spouses continues to pay the mortgage.

If this is the case, your ability to get a mortgage of your own may be limited.

Unless your earnings are high, mortgage companies will take into account the fact that you would be responsible for two mortgages.

Taking Your Name Off the Mortgage After Divorce

Sometimes, one of the spouses may choose to take his/her name off the mortgage.

Perhaps, you can pay down some of the mortgage balance as part of the settlement so the costs are more manageable for the remaining spouse.

Again, this comes down to the specific financial circumstances.

It ultimately means that both spouses can make a clean break and not worry about what each other is doing.

The other spouse can then potentially look into buying a new property.

Getting a New Mortgage After a Divorce

The Mortgage Market Review back in 2014 made the entire mortgage application process a lot more complicated.

These days you would normally need to put down a deposit of at least 25% to buy.  There are lower deposit mortgages out there, but the criteria and terms are a lot stricter.

The positive is that residential mortgage interests rates have never been lower and there are many great deals out there.

You’ll be required to jump through more hoops and the mortgage company will request information on:

• The amount of deposit you’ll be able to put into the property.
• Your post-tax income;
• Your credit rating (remember to check this for yourself via Experian, Equifax or ClearScore);
• With you have other debts both against assets (secured) and credit cards, loans etc. (unsecured);
• They may also look into your spending habits and other personal circumstances.

Expect to pay down a minimum 25% deposit.  There are some lenders that will accept less but this often based on you having a high salary and will come with higher mortgage rates.

Remember to add in the extra costs that come with buying a house:

• Survey costs
• Legal fees
• Stamp duty (England and Northern Ireland) / stamp duty (Wales) / stamp duty (Scotland)
• Removal costs
• Insurance (building / contents)
• Utility bills and council tax

Before you go househunting, it’s always a good idea to have a mortgage in principle in place for home sellers to take you more seriously.

Guarantor Mortgages

If you are keen to take over the mortgage but worried about affordability, you may consider using a ‘guarantor’.

This is where a trusted person – usually a close relative although sometimes the ex-partner – guarantees the payment of the mortgage if you ever were to fall into arrears.

Note the guarantor would have to undergo a full vetting process.  This would almost be as if he/she is going through the mortgage process him/herself.

How to Sell Your House After a Divorce

We hope that you and your spouse can arrive at a reasonably harmonious solution.

If the house sale comes a part of the divorce settlement, you may need to think of the best way to do things.

In this last section, we highlight the main channels you could explore…

Sell Using an Estate Agent

If you have more time to sell, approaching an estate agent is the best way to get the optimum price for your house.

However, estate agency sales generally take longer.  Check out our local house market insights tool to see how long property transactions are taking in your area.

At the initial stages, it’s also hard to know when the sale will happen.

Below are a handful of tips to help you on your way…

• Have a think about whether you want to use an online estate agency, go for a more traditional approach or somewhere in between;
• Watch out for ‘too good to be true pricing’ (check out the Property Solvers Express Sale service for some information on how we can get you an offer within 28 days);
• Make sure the agency will get your house good exposure, especially if you’re in an over-saturated area.  Make sure it will appear on the main portals like Rightmove, Zoopla and Prime Location (see where our own agency advertises here);
• Go for a sole agency sale (multiple agency sales often sends confusing messages to the market);
• Remember to look at the estate agency’s online reviews (here are ours);
• Check out the estate agent’s knowledge of the market and previous performance.

Selling at Auction 

If you’re looking for a quicker sale, putting your house up for auction can be a wise decision.

Over the last couple of decades, auction houses have widened their remit to take on all types of properties.

You’ll generally have to wait longer compared to a quick cash house sale (see below).

However, you’ll be safe in the knowledge that, once the hammer falls, the buyer must move forward.  Pulling out will mean heavy financial penalties.

Although criticised by some industry commentators, there is also is the ‘modern method of auction’.  This is somewhere in between an estate agency and auction house sale.

Advantages

• Auction property buyers are ‘business-minded’.  Like homebuying companies (like ourselves), hey often want to buy as quickly as you want to sell;
• You won’t usually be dealing with buyers who will waste your time, especially after the hammer falls;
• If the property has structural defects, you should be able to sell (albeit at a lower price);
• Any buyer will have their finances in place.  Typically, most auction houses will give them 20-25 working days to complete;
• It’s unusual for sales to fall through after a successful bid on your property.  The buyer will have to pay a 10% deposit + fees which will be lost if completion doesn’t happen;
• The price agreed at the fall at the hammer (usually above your ‘reserve’) will not change.

Disadvantages

• Auction sales take longer than people assume.  First, you’ll have to list your property before it gets marketed.  Prospective buyers need to view and check the legal pack.  Popular auction houses often have a waiting list so you may end up waiting further to get into the catalogue.  Once the hammer falls, you’ll then have to wait for a month to complete.  The reality is that it can take 3-4 months in total to actually sell at auction;
• Auction houses normally run 2 or 3 open days for potential buyers.  Whilst you don’t have to be there, it can cause some disruption;
• The costs of selling, in terms of legal and estate agency fees, are much higher (often double).  If you don’t sell on the day, some auction houses charge extra fees to relist;
• The bigger auction houses often charge for room hire, using their online platform and other supplementary advertising fees.  Therefore, always read the small print;
• Remember putting a property at auction doesn’t guarantee a sale.  There’s a 25-30% chance that your property won’t sell, especially if you’re over-ambitious with the price;
• Just like estate agents, auction houses are eager to win your business.  Sometimes this will mean they may over-value your property.  The result is that you fall into the pile of unsold lots on auction day.  The good ones will have your best interests at heart.

Quick House Sale Company 

If you’re looking for a swift and hassle-free sale, using a company like Property Solvers may work well for you.

Most firms in our industry will cover your legal fees.  As it’s a private sale, you also won’t have to worry about estate agency fees.

The trade-off is that the purchase price is likely to be in the region of 75% of the current market value.

Most will want to undertake a formal valuation (using a surveyor) and base the purchase price on that.