Divorce and Separation - what happens to the house?

Divorce and Separation – what happens to the house?

When couples separate, making decisions as to what happens to the house can be fraught with difficulties. Perhaps the simplest of solutions would be to sell the house and divide the proceeds equally between the parties. However, the house will form only part of the matrimonial property, all of which must be considered when dealing with a fair division of matrimonial property.

What constitutes matrimonial property?

Matrimonial property is made up of money, property and other assets acquired jointly or individually during the course of their marriage. That means there are two important dates to consider. The first of these is the date of the marriage and the second is the “relevant date”. This is the date when the parties finally separate. The relevant date is particularly important because that is the date generally used to determine the value of the matrimonial property when discussing its division. One exception to this is a house bought as the family home before the date of marriage will be considered to be matrimonial property. However, gifts received or an inheritance during the course of the marriage will not be considered matrimonial property unless these are used to buy something that becomes matrimonial property. A common example of this is when an inheritance us used to buy or contribute towards the purchase of a house. Any debts need to be taken into account when determining the value of the matrimonial property.
How is the matrimonial property divided?

Section 9 of the Family Law (Scotland) Act 1985 sets out the basis on which a court will determine the division of matrimonial property. These principles are:

• The net value of the matrimonial property should be shared fairly;

• Fair account should be taken of any economic advantage enjoyed or disadvantage suffered by either party;

• The cost of caring for children under the age of 16 years should be shared fairly between the parties;

• Someone who has been financially dependent on their spouse should be awarded financial provision to allow them to adjust to the loss of support;

• Financial provision should be made to prevent someone suffering serious financial hardship.
It is important to realise that the division of the matrimonial assets should be fair. This does not mean it has to be equal. However, looking at an equal division of the matrimonial property is generally a good starting point.
In order to justify an unequal share of matrimonial property, special circumstances have to apply. Examples of these are:

• The source of funds used to acquire the matrimonial property;

• Where one party has put matrimonial property out of reach;

• Where one party has lost matrimonial property;

• If any matrimonial property is used for business;

• The expense of valuation and transfer of property;

• If there is a prenuptial agreement.

Economic advantage and disadvantage

When we look at an unequal division of matrimonial property, we have to consider any financial advantage gained or financial disadvantage sustained by the parties. You should also be aware that both parties can be financially advantaged in some areas but financially disadvantaged in other areas. That means a detailed case needs to be made for each party in an effort to reach a resolution of differences. Most of the time, agreement is reached between the parties through negotiation, mediation, collaborative practice, or arbitration. Indeed, court might well be the last resort but sometimes necessary in certain cases, such as where domestic abuse may be involved.

As far as the family home is concerned, where there are children involved, the bias or preference is to lean towards the parent with care retaining the right to live in the family home. This might be through a transfer of property order or an agreement or order that the parent with care resides in the property until the children reach a certain age, after which the property be sold, and the proceeds divided between the parties. However, this tends to lead to arguments about affordability and whether the parent who does not have care of the children becomes financially disadvantaged if, for instance, they also have to find all or part of the mortgage whilst also having to fund alternative accommodation.
So, what happens to the house?

This is a complex and complicated area of law. So, if you are considering separation or divorce and you want to know what happens to the house (and other matrimonial property) we would urge to seek advice from a solicitor.

If you need help with your separation or divorce, please contact us.