Orders for Sale – Family Home
Typically, the main asset for divorcing couples is the family home, which may need to be sold to achieve a fair division of the assets and to meet the parties rehousing needs. However, the current pandemic and the resulting practical and economic impact on the property market is causing significant issues for divorcing couples. This blog assumes that the divorcing couple have a concluded agreement which provides for an Order for the sale or transfer of the family home and any other matrimonial property.
It has been suggested that the housing market is expected to see a massive spike in activity once the lockdown rules are relaxed. The guidance from estate agents is that there is still mileage in placing a property on the market, leaving it on the market and/or looking for a new property to move to upon a divorce. However, uncertainty of property values, viewing properties and/or being able to secure a mortgage are significant bars to this optimism.
What is the government saying about selling property amidst Covid19?
On the 26th March the government advised that you should delay selling/moving while measures were in place to fight coronavirus. They suggested that if contracts have already been exchanged parties were advised to work together to agree to delay matters. Completion of sale was not forbidden but it was not encouraged. However, updated guidance was issued on the 13th May to make clear that people who wish to move home can do so. The guidance provides important public health information to ensure that moving home and key activities around this, such as viewing property, can happen safely.
Will the Court allow an extension to the deadlines within the Order due to Covid19?
Given the issues highlighted above, parties who are currently implementing financial remedy orders may need to agree extensions to dates for sales, transfers of property and lump sum payments.
Many financial settlements will have involved the parties securing a mortgage offer with a view to buying a new property or buying out the other parties’ interest in the family home. Typically, mortgage offers are only valid for 6 months. Another possible complication is whether a renewed mortgage offer will be given and if the mortgage will be offered on the same terms if one or both parties income has been impacted by Covid19.
We are confident that the Courts will grant coronavirus related requests for extensions to deadlines when necessary but anything beyond an amendment to the implementation of the Order will not be straightforward.
What Orders can the Court vary?
The variation of Orders where reliance has been placed on pre-Covid19 valuations has been explored in associated blogs. In brief, it is very difficult to vary capital Orders based on a change in circumstances. At present it is too early to tell what the long-term impact will be on the housing market or whether economic impacts of the Covid19 pandemic were unforeseen or unforeseeable. We anticipate a flurry of cases through the Courts but whether they will be run as “Barder cases” or a backdoor approach to variation under section 31 of the Matrimonial Causes Act (“MCA”) remains to be seen. For more information on “Barder cases” please my previous blog “Is my Financial Order final”.
What Orders can the Court vary, and can the Order for Sale/transfer be delayed?
Section 31 of the MCA defines the types of Orders which can be varied by the Court, these are:
- Income orders (interim maintenance, child maintenance and spousal maintenance)
- Lump sums by instalments
- Settlements of property (including Mesher Orders)
- Orders for sale (process not distribution of sale proceeds)
- Pension sharing order (if pre-Decree Absolute)
For the purpose of this blog, I am only going to focus on varying orders for sale. An order for sale can be discharged, varied or suspended. The power to vary an order for sale can be invoked to keep a party out of their money for an appreciable period. The court has the power to revisit the ”territory” of an Order for Sale but not the substantive order that it supports. For example, they could be asked to vary the date by which the property should be sold but they cannot vary the amounts which the parties should be receiving, unless a Barder challenge is being mounted. Some Orders will have the division of the sale proceeds set out as percentages and others as a fixed sum. If there is an issue with the division of funds, this would have to be dealt with by an application on Barder principles. A much tougher hurdle to overcome.
What if the Order contains an undertaking to the Court and this can no longer be complied with?
An undertaking is a solemn promise that a litigant volunteers to the Court. The Court has no power to vary the terms of a voluntary promise. If you need to vary an undertaking, then you would need to apply to the Court to be released from it. It is always prudent to make an offer of a further undertaking in different terms. The Court has the power to grant or refuse the application for release. Where an undertaking can be framed as a financial order, in the same way as varying a financial order, it is hard to conceive of grounds for release, unless there has been a significant change of circumstances since the undertaking was given. It is unknown whether Covid19 would satisfy that criteria but again, we are likely to see these cases coming through the Courts.
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