Property adjustment orders

Property adjustment orders are court orders made during divorce or dissolution of civil partnership proceedings.

While these orders can technically apply to any type of property (investments, businesses, personal possessions), for most people, they primarily concern the family home - typically the most valuable and emotionally significant asset in a relationship.

It's very common, especially when children are involved, for one spouse to want to retain the family home to provide stability and continuity. However, several practical hurdles often complicate this desire :-

• Mortgage affordability on a single income

• Lender requirements for the departing spouse to be released from mortgage liability

• The need to compensate the departing spouse for their share of equity

• Ongoing maintenance costs (insurance, repairs, etc.) on a reduced household income

• Balancing immediate housing needs against long-term financial security for both parties

These practical challenges mean that while keeping the family home is often the preferred outcome for the primary caregiver of children, it isn't always financially viable without careful planning and sometimes compromise on other aspects of the financial settlement.

Property adjustment by agreement or court order

Property adjustment orders can be made:

• By consent - when both parties agree on how property should be divided, they can submit a "consent order" to the court for approval. Most property adjustments are handled this way, avoiding the costs and stress of contested proceedings.

• By court judgment - when agreement cannot be reached, the court will decide how property should be divided after considering various factors including needs, contributions, and resources.

Even consent orders require court approval to ensure they are fair and reasonable, though the court rarely interferes with agreements reached between parties with legal advice.

Common divorce related property adjustment orders

• Transfer of Property - One party transfers their ownership interest in property to the other. Typical scenarios include where the family home transferred to the parent with primary care of children based on buying out the other spouse's share, often using a lump sum from other assets or pension offsetting. A transfer with a mortgage remaining in place will require lender consent.

• Sale of Property - property is sold and proceeds divided between parties because neither party can afford to maintain the property alone or when a clean financial break is desired. This approach is common when there are no dependent children.

• Deferred Sale Orders - property remains jointly owned, but sale is postponed until a future event (e.g., youngest child reaching 18). Creates ongoing financial entanglement but sometimes necessary to balance housing needs of children with fairness to both parties. Types include Mesher Orders where sale triggered by specific events (child reaching 18, completing education, etc.) or Martin Orders: One party (often older spouse after long marriage) has right to occupy for life or until remarriage

Property adjustment where parties cannot agree

When deciding on property adjustment orders, courts consider the the welfare of any minor children as the primary consideration. After that the statutory checklist includes :

• The financial needs, obligations, and resources of each party

• The contributions made to the family welfare and home

• The duration of the marriage and age of the parties

• Standard of living during the marriage

• Any physical or mental disability

• Conduct of the parties (only in exceptional cases)

Negotiating property adjustment

Most property adjustment orders are agreed through negotiation rather than imposed by courts. In practice, a desire to retain the family home often requires compromises in other areas of the financial settlement. This negotiation process often involves "horse trading" between different assets:

• Pension offsetting - one spouse may keep a larger share of their pension in exchange for the other retaining the family home

• Business interests - a business owner might retain full ownership of their business while the spouse receives a larger share of property assets

• Investments and savings - may be divided unequally to enable one party to retain the family home

• Property valuations - parties may have different views on the home's current market value

• Pension complexities - determining the "true value" of pension rights, especially defined benefit schemes

• Business valuation disputes - different valuation methods can produce significantly different results

• Future value uncertainties - difficulty in comparing assets that will be realised at different times (property now vs. pension later)

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