COMMENT: Covid-19 has created uncertainty and disruptions in all areas of life. For couples going through a separation, they have had to face additional uncertainty as they try to secure property valuations in an ever-changing property market.
The family home is considered relationship property, regardless of whose name is listed on the title. This means that at the end of a qualifying relationship, the home's value will need to be divided between the parties.
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It is common for one party to buy the other out, especially when young children are involved. Buying out the other party allows the children to remain in the family home and provides them with some stability in an otherwise confusing time.
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Usually, the parties will seek an expert valuer to assess the property and that will be the amount agreed. However, in a rapidly changing property market, the timing of the valuation can make a big difference in how much one party must pay the other.
The parties must reach an agreement about the home's value in order for one party to buy out the other. The couple can choose to value the home however and whenever they like, as long as both parties agree.
Normally the separating couple would undertake a market valuation, sometimes separately if they did not agree with the values, and this can be an expensive process.
We tend to find that those valuations are relevant for six months. After that time, an update is usually required. If the market is moving quickly, this period may be shorter. The suitable length of time will need to be assessed on a case-by-case basis.
For those couples who are unable to reach an agreement and whose dispute ends up in court, the date of the value of the property is pegged to the date of the hearing, as required by section 2G of the Property (Relationships) Act 1976.
For those filing an application in the Court, there is likely to be a delay of 12 to 18 months to get a hearing. In the current heated market, this would mean further rises in the value of the property and could mean neither party is able to mount a buy-out.
If a court application becomes necessary due to disputes unrelated to the home, separating couples could ask the court for an urgent interim order for sale to enable a buy-out at the current value instead of the value at the future date of a substantive hearing. For this, parties would need to obtain a market valuation and be sure they had sufficient funds for a buy-out.
Generally, if you enter into an agreement instead of applying to the Court, then the relevant valuation would be at the time you enter into the agreement. Your agreement would usually include valuations which have been carried out as close as possible to the date you sign the agreement.
For those who wish to buy out their partner it is important to resolve matters quickly and preferably by agreement so they can reach a resolution as soon as possible.
- Jeremy Sutton is a senior family lawyer, specialising in divorce cases where there are significant assets, including family trusts and complex business structures
