For most couples who divorce, their main asset with be the family home. So it is important to establish its value as soon as possible when you separate, because it is an essential factor when determining the financial settlement. But what happens if you cannot agree on the property value, and what is the best or cheapest method? Read our guide to find out.
Who should I get to value our family home for the divorce?
A turbulent divorce can benefit from a professional valuer, as it can help reduce arguments going forward. Many couples depend on estate agency valuations to determine their home’s worth, sometimes obtaining two or three before deciding to average the results and arriving at an agreed figure. Although caution should be exercised, as the estate agent’s suggested price may be a marketing goal rather than an achievable sale price.
If court proceedings are issued, a judge will enquire about the necessity of property valuations at the first hearing. If the parties agree on the value, their agreement may be noted in a court order to prevent further argument. But in the absence of agreement, the court may order a formal valuation by a surveyor, who is usually appointed as an independent single joint expert.
Who decides which single joint expert should provide the valuation?
Generally, it is up to both parties to agree who to appoint as single joint expert, but if they cannot agree, the court may select the expert from a list prepared by the parties, or it can direct how the expert is selected.
The single joint expect must adhere to a strict set of instructions, either agreed between the parties solicitor’s or ordered by the court. Here are some things you should look for in a valuation expert:
- Registered valuer
- Specialist matrimonial property valuation
- Has knowledge of the property markets
- Adheres to the RICS Valuers Code of Conduct
- Experienced in producing reports for the court
- Experienced in court proceedings
Once the valuation has been provided, in order to establish the true value of the property it is necessary to deduct the mortgage, any associated penalties or early redemption charges, and the notional costs of sale, usually 2% – 3%, to reach the net value.
The next stage will be for the parties or the court to decide how the property should be dealt with. Typically, this will be either a transfer of the property from one party to another, a sale, or the property being held in trust with an interest to be realised at a later date, such as when the youngest child leaves full-time education.
What happens if our house changes value during the divorce?
Naturally, house prices fluctuate, going up and down depending on a variety of market forces in play at the time. But what happens if the property market crashes during negotiations or shortly after reaching a settlement? Can it be reopened?
In limited circumstances, it may be possible to ask the court to change an order made before an intervening event. However, this must be so significant that it “fundamentally undermines” the basis on which the settlement was reached. This is commonly referred to as a “Barder event” after a case decided in 1987. Historically, fluctuations in the housing market or a crash have not been considered by the court as “unforeseeable” and have occurred regularly over the decades. These are considered fundamentally foreseeable and therefore not a Barder event. That said, each case is different, and you should seek legal advice if you find yourself in a similar position.
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