Properties can often be the most valuable assets to deal with in a divorce or separation, and they often have the most sentimental value too. Those things alone are enough to make negotiation difficult, but when you add in uncertainty caused by Covid-19, Brexit and changes to stamp duty and mortgage deals it can be difficult to know where to start. Here are a few tips and strategies to help you work things out.
Knowing where to start
Sometimes, things are so unpredictable that the stress of negotiations is overwhelming. It can be surprisingly helpful to acknowledge the difficulties that this uncertainty causes, even if this is the only thing you can agree on.
If you’re really struggling, take a step back and make a list of everything that is certain and go from there. If you can narrow down the list of issues which are causing you difficulty you can then begin to tackle them one by one.
Knowing the value of a property is the first step towards having constructive negotiations. Even if you’re not planning to sell, you will want to agree a value to use for the purposes of your calculations. As a starting point you might want to have your property valued by an estate agent. It can be useful to obtain 3 valuations so you can take an average.
If this doesn’t help you find a value that you both feel is appropriate, a good option is to agree to instruct a Surveyor as a Single Joint Expert. In this case, a joint letter of instruction should be prepared and their fee should be shared. All correspondence with your Surveyor should be open so you can both have confidence that they are able to give you a neutral, realistic valuation.
Even once you’ve got a fair valuation, remember that property prices can always change. If you’re planning to sell a property and share the proceeds, consider whether or not you want to base your negotiations on a percentage split. Doing so means that you each share the risk or reward of a change in value in line with the proportions of your shares which can sometimes be the fairest approach. However, this causes uncertainty, and some people need to agree a fixed sum or set a base line figure to ensure that they will be able to meet their needs in the future.
If you and your partner’s name are on the mortgage for your existing property, it’s important to have an early discussion about how this will be paid during your separation. You and your ex-partner will be jointly and severally liable for repayments so if one does not pay their share, the other can be held accountable for the entire amount.
You do not have to split the mortgage equally between you, but you should come to an agreement early in the process about what division is reasonable and organise the logistics of how it will be paid. In many cases, at least one of the parties will be looking for a mortgage in their sole name in the near future and arrears on the joint mortgage can affect their credit score.
Firstly, you should consider whether you want to push ahead with getting valuations as soon as possible. We usually find it’s better to have more information, rather than less.
There can be good reasons to wait before actually selling or transferring a property. For example, if you are waiting for children to finish a key stage in their education, or if you would be heavily penalized under a fixed term mortgage. You can still negotiate now, and your agreement can still be incorporated into a Court Order which will set out the timescales and steps to be taken.
If you are going to defer a property transaction, give careful consideration to what will happen in the meantime. What are the risks involved in waiting to realise an investment? Who will pay the bills in the interim? What happens if there is a significant change in the property value?
Always be prepared for the possibility that things could take longer than you expect. This makes it easier to be flexible if things don’t go completely smoothly.
Finally, make sure you discuss any concerns with your solicitor so we can help guide you through the process.
Buying New Property
It’s understandable to feel eager to purchase a new property, particularly if you have already moved out of the marital home. It can feel necessary for building a new life or creating a stable second home for your children. However, if your divorce is not yet finalised, make sure that you discuss any plans to buy with your solicitor before moving forward.
If you have not yet reached a financial settlement, it is possible that any property you buy could still be classed as a marital asset. Your spouse could potentially claim against the equity in the new property or gain a greater share of other assets. For this reason, it can sometimes be sensible to keep your finances as static as possible during the divorce process.
If you are still keen to buy a new property, your solicitor may be able to help you to do this in a way that minimises the risks, or to come to a binding agreement about the new property with your spouse out of court.
If you would like to arrange an initial consultation with a member of our specialist family law team, please do not hesitate to contact us on T: 0117 3751780 or E: email@example.com.
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