For many couples who separate and enter into either divorce or dissolution proceedings, their main asset will be the family home.
It is not unusual for couples who separate to disagree as to the value of the family home. It is important to establish the value of the property prior to entering into discussions as to what should happen to the property on separation, as the value of the property is often essential to determining what the outcome may be.
If a separating couple do not agree the value of a property the easiest and the cheapest method to adopt is to obtain a variety of market appraisals from local estate agents, for example, three to five, and seek to agree a value based on their indication. This may help a couple mutually agree the value of a property.
If a couple can still not reach an agreement based on market appraisals then an expert will need to be considered. The Family Court does not treat estate agents as “experts” for the purposes of valuing a family home for divorce or dissolution purposes. Instead, the Family Court would usually suggest that a surveyor be instructed. An expert surveyor will consider the condition of a property, any other relevant factors in the local area, planning issues, environmental issues and also comparable properties. It is not unusual for a surveyor to speak to local estate agents to get a sense of the local market. The cost of a surveyor’s report can vary widely depending upon the value of the property.
Once a valuation has been agreed, or provided by a surveyor, to establish the true value of that property it is then necessary to deduct the mortgage, any penalties associated with the mortgage or early redemption of the mortgage, and also notional costs of sale (typically 2%-3%). We then will have a net value of the property for the purposes of negotiation.
The next stage will be for the parties to seek to agree how the property should be dealt with upon divorce or dissolution of a civil partnership. The outcome will typically be a transfer of the property, a sale of the property or the property being held on trust, i.e., jointly owned by the proprietors with an interest to be realised at a later point in time, such as when the youngest child reaches eighteen (known as a “Mesher Order”). The other party may receive a lump sum in respect of their share of the property. The Family Court has extremely wide discretion when determining how to deal with the family home upon divorce or dissolution of a civil partnership. However, the starting point will always be to determine what the value of the family home is.
If you require advice in connection with divorce or dissolution of a civil partnership, please do not hesitate to contact one of our specialist family lawyers.