Who Legally Owns Your Marital Home?
Often when families separate it is not just a separating of the finances of husbands and wives that have become entangled. In some cases, one or both parties are heavily reliant on payments from their parents or family members, or the marital home they live in is owned by a parent.
The way courts treat this “support” depends on how the money is paid and how the properties have been dealt with during the marriage. It is important to get early advice if there are issues involving a trust or a potential third-party claim over your marital home, or any other property within the marriage, to ensure any claim you have is protected at the earliest opportunity.
Trusts and parents who financially support their married children
It is not uncommon for parents to assist with deposits for the marital home, legal fees, or for a husband or wife’s assets to be tied up in a trust. It is important to consider if your parents are going to assist financially what formal and informal agreements are to be made. This is also key if your parents are assisting you with payments during separation. The court will give different weight to family loans depending on whether they are considered “soft loans” which do not need immediate repayment, or “hard debts” which do. Having a written loan agreement and clear evidence of the transfer of funds, particularly if they are secured against a property, will often make a significant difference when the court is determining whether or not those debts need to be cleared immediately upon divorce.
In the well-known case of Thomas v Thomas  the court emphasised that the court can, in appropriate cases, make a lump sum or other financial remedy order, which relied upon a party continuing to receive funding and support from a third party. In essence, even though a husband or wife may on paper not have assets in their own name, the court can make an order reflecting that they nonetheless have access to wealth by way of being a beneficiary under a discretionary trust or that the generosity of a third party is likely to continue. This is a carefully balanced exercise and the court will not make an order against a third party or put undue pressure on them to act. But on occasion judges may use “judicial encouragement… to third parties to provide the maintaining spouse with the means to comply with the court’s view of the justice of the case.” In cases involving a trust, the court has to be clear that the trustees are likely to respond to judicial encouragement.
Property owned by a parent or third party
If one of the assets to the marriage is owned either wholly or in part by, for example, a parent or a trust fund, specialist advice is crucial. The court has a duty to join third parties to a court case at the earliest opportunity where a dispute arises between a spouse and a third party about the ownership of a property. This will in most cases enable the court to make orders against the third-party including filing evidence as to how they wish the property to be handled within financial remedy proceedings.
If your martial home is owned by a person other than you or your spouse, your solicitor will need to look back on the history of the property. This is key for advice given as to your claims over the property. It is helpful to think about the answers to the following questions:
- Why was the property purchased?
- Who legally owns the property according to the title deed and why?
- Was there any oral or written agreement reached when the house was purchased?
- Who was party to those discussions?
- Did you have legal or other advice when the property was purchased, or any written agreement reached?
- Did the way you use the property change at any stage?
- Did your intentions change at any point?
- How was the house financed both initially and subsequently?
- How have you arranged your finances and the outgoings in respect of the property?
There are different costs rules which come into play when a third party is brought into proceedings. Advice should be taken prior to proceedings where possible given the civil rules which come into play require parties to mediate or use other forms of dispute resolution with third parties in advance. There are cost issues if this does not take place.
This is a particularly complex area of law and taking early steps to resolve any issues by way of mediation is positively encouraged by the court.
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Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.