Divorce is one of the most challenging life events your clients can face, and the financial and legal complexities of dividing shared assets often add to the stress.

The family or shared home might represent one of the most significant assets, both financially and emotionally. Its importance can be heightened when there are children involved, making the division a particularly delicate and complex part of the divorce process.

While assisting with the intricacies of splitting a shared home won’t remove the emotional challenges, it can offer your clients partial relief and reassurance.

Read on to find out about four common approaches to dividing a shared home during a divorce.

1. Both parties keep the home

A straightforward option for your divorcing clients is to retain joint ownership of the family home, allowing one party to continue living there while the other moves out. This arrangement can be particularly beneficial for providing stability for children until they leave home.

This option can also be good if one party wishes to remain in the home but lacks the financial resources to take over the mortgage independently.

In this situation, obtaining a Mesher Order could be useful. A Mesher Order is a court order that postpones the sale of the family home until a specified event occurs, such as children turning 18 or leaving home.

To secure a Mesher Order, clients will need legal assistance from you as a solicitor.

The terms of the Mesher Order will dictate how mortgage repayments are managed until the agreed trigger event occurs.

So, both parties will likely also benefit from working with a financial planner to fully understand the implications of the arrangement, and how it will be incorporated into their long-term plans.

2. Both parties sell the property

Another option is for both parties to sell the family home and divide the proceeds according to their respective stakes. This approach allows each divorcee to use their share of the funds to purchase new, separate properties, providing a clean break and severing future financial ties to the property.

While this solution offers financial simplicity and clarity, it can be emotionally challenging, particularly if the home holds sentimental value or if children are involved.

If the couple has a joint mortgage, a financial planner can help them evaluate their options for future mortgages. Whether they intend to apply individually or with a new partner with a different income, it’s important that they understand the financial implications of their situation.

Tools like cashflow modelling can help assess how new mortgage repayments and income flows could affect their budgets, ensuring they can continue to manage their finances effectively.

For those who mutually agree to sell their property, your services as a solicitor may be required to draft the necessary paperwork and secure a financial consent order to formalise and legally bind the financial arrangements.

3. One party buys the other party’s share of the property

If one party wishes to retain the family home, they may choose to buy out the other’s share. This can be achieved through a cash payment, by taking on the existing mortgage, or by offsetting the cost with other assets in the divorce settlement.

This option can be particularly appealing for couples with children, as it helps provide continuity and stability by allowing them to remain in the family home.

The partner seeking to keep the property may need to increase their mortgage to finance the buyout. To do so, they will need to demonstrate to their lender that they can afford the full mortgage independently.

A financial planner can help in this process by evaluating the client’s financial situation, assessing the affordability of the increased mortgage, and exploring potential lending options.

It’s important to note that both parties remain liable for the mortgage repayments until the party keeping the house secures a new mortgage and ownership is fully transferred.

As a solicitor, you’ll be on hand to help them navigate the legal complexities of the property transfer, draft a buyout agreement, and ensure that the arrangement is fair and protects both parties’ interests.

4. One party transfers part of the value of the property to the other

In some cases, one party may choose to give up a portion of their ownership rights while retaining a partial stake in the family home. This arrangement allows them to receive a percentage of the property’s value when it is eventually sold.

In this scenario, you will likely need to draft legal agreements that clearly outline the terms of the shared ownership. These agreements ensure both parties’ rights and interests are protected and clarify the conditions under which the property will eventually be sold and proceeds distributed.

Financial planners can also help by using cashflow modelling to project the potential financial outcomes of shared ownership. This can help each party understand how this decision will affect their long-term financial goals, enabling them to make an informed choice that aligns with their circumstances and objectives.

Ultimately, this option requires careful legal and financial planning to ensure it benefits both parties and provides a clear path forward.

Get in touch

To find out more about how we can work together for the benefit of our divorcing clients, get in touch.

Email info@blueskyifas.co.uk or call us on 0118 987 6655.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate cashflow planning.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.