Finances On Divorce – What Is A Mesher Order?

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When parties separate through divorce, one of their main concerns is what happens to the family home. This is understandable, particularly since it is often one of the most valuable assets and holds crucial memories for the parties and any children alike.

What Orders can a court make?

So what orders can a court make in respect of the family home? A court can make an order that the home is sold and that the net sale proceeds are divided between the parties in specified amounts. The court can also make an order that the home is transferred from one spouse to the other. But what happens when neither option is practical? For example, when the parties have young children and therefore wish to remain living in the home, and/or when the primary caregiver is not earning an income and so does not have a mortgage capacity to repurchase. Well, in these circumstances, the parties could consider a ‘Mesher Order’, the name of which originates from the case of Mesher v Mesher and another [1980].

Mesher Orders Explained

A Mesher Order is an order in which a trust of land is created and the parties hold the family home as tenants in common in defined shares. The order will specify that one party, usually the primary caregiver, will occupy the family home pending a sale. It will also specify what contributions each party must make towards the mortgage payments, maintenance and upkeep of the home, insurance and so forth, although it is not a given that the non-occupying spouse will be ordered to contribute.

The sale of the family home will be postponed until a particular trigger event occurs. Common trigger events include:

• the youngest child of the family reaching 18 or finishing full time education;

• the sale of the home;

• the remarriage of the occupying party; • the cohabitation of the occupying party

(usually 6 months);

• the death of the occupying party;

• a set date agreed by the parties; or

• further order of the court.

Upon the first to occur of one of the triggering events, the family home will be sold and the net sale proceeds divided in accordance with the trust. Or, if the parties agree, the family home could be transferred to one of the parties following a buyout.

Advantages of Mesher Orders

A Mesher Order provides a secure home for the occupying party and any child living with them. It avoids the stress and disruption of moving home at what is probably an already very difficult time for the family. If there is a child or children to the marriage, it avoids removing them from the environment that they are most familiar with, from friends who live nearby or from a school they attend. Furthermore, the parties will know fairly clearly when the sale will take place and can plan accordingly.

Disadvantages of a Mesher Order

The obvious disadvantage of a Mesher Order is that the parties will be tied to each other financially after the relationship has broken down. It may therefore be difficult for them to move forward with their lives.

For the occupying party and any child or children living with them, they will be placed in an uncertain position when the family home is eventually sold. They may not want to sell the home. They may not be in a financial position to repurchase. They may struggle to obtain a mortgage because of their income or their age or both.

For the non-occupying party, their capital will be tied up in the family home for what could be a very substantial amount of time. This may prevent them from repurchasing, particularly if they are already named on the mortgage of the family home and are contributing to the mortgage payments. A Mesher Order may also have capital gains tax implications and specific tax advice may need to be sought.

General

If you or your spouse are seeking a divorce and considering a Mesher Order, it is always a good idea to seek independent legal advice from a qualified solicitor on whether it is the right option for you, or whether there are better options available.

This article was wriiten by Yasmin Khan-Gunns | @londonfamilysolicitor
Family Solicitor BLM, London

PHOTO CREDIT: GRANIT ARCHITECTS

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest. Specialist legal advice should always be sought in any particular case.

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