New Paragon 80% BTL products for individuals Ltd co and LLPs15:29 PM, 21st August 2019
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Divorce Advice for Landlords isn’t the cheeriest of subjects I’ve ever written about, however, this article was inspired by a lady who sent me a readers question article to consider and with whom I subsequently had a very long conversation with over the telephone.
We agreed that I would not post her Readers Questions article, but that I could use the outline of her story and the advice I provided to her as the basis of an article which might prove useful to other landlords in a similar position.
In this example there are no children involved so that makes things a lot easier. The agreement to divorce is amicable and both are in agreement to share everything equally. It’s when the solicitors get involved the problems usually start.
In this case there are 4 rental properties and a business to be divided. Mr Landlord had agreed to resign from the business and to sign it over to his wife. This is the potential first problem. The business will have a value, either positive or negative. It would be highly unusual for a business to have a value of exactly zero. Therefore, I have suggested that the business is valued and can be used in evidence at a later stage. Same for the four rental properties. You will need to prove to a judge that everything has been shared fairly. Your own estimates may not be accepted so prepare a package of documentation, which you both agree upon if at all possible, to present as evidence.
Unless you’ve been through a divorce before it’s unlikely that you will understand the processes.
I feel well qualified to write this article having worked as a mortgage broker, financial adviser, at a law firm and having also been through a divorce myself whilst owning a business and a buy to let property portfolio. However, I must point out that I am now retired from giving professional advice and this article should be read as guidance only. Please seek professional advice from a practising and fully insured and regulated adviser.
Where to start?
It’s best to agree as much as possible before instructing solicitors as it saves arguments and fees later, for example:-
I recommend the Collaborative Law process as it avoids much of the correspondence from solicitors which can often be misconstrued and cause arguments. Instead, both parties meet around the same table with their lawyers to agree the deal which will be put to the court. This is called a 4-way meeting. The job of the lawyers is to mediate and to advise whether a judge is likely to agree that what has been agreed is fair. If a judge doesn’t agree then a divorce settlement will not be granted.
My advice for choosing a law firm is to avoid those offering legal aid wherever possible. They tend to carry heavy case-loads and churn though matters very quickly. I don’t think collaborative law is available on a legal aid basis either. Obviously you may not have a choice, but if you do then these are the criteria I recommend for choosing your lawyer
The person applying for the divorce will hand over the marriage licence and a divorce petition will go to the Court explaining the grounds for the divorce. The other partner will receive a copy of that petition. Assuming all is agreeable in terms of the grounds for divorce a “decree Nisi” will be issued by the Court. The grounds for divorce are a sensitive issue for most people so make sure your ex agrees with what’s being sent before it is sent if at all possible. Nasty surprises of any nature can damage an otherwise amicable split so easily, therefore, be extra careful and considerate if you are the one filing for the divorce.
Both partners will then have to complete a very long form declaring all income, assets and liabilities. These will be presented to your respective solicitors and copies will be exchanged between your solicitors.
If you do choose a collaborative divorce process that’s when a meeting will be arranged between both partners and both lawyers, this is the 4-way meeting mentioned above. They will document what’s been agreed in terms of who gets what, this is called a draft consent order. If the lawyers think a judge will not accept what you have agreed they will explain why. When both parties agree to the consent order this is referred to a judge.
I do not recommend doing this until the consent order is agreed by the judge and a court order is subsequently granted. A court order may well involve ordering mortgage lenders to take names of mortgages which ordinarily they might not agree to. The judge will also order equity in properties to be transferred as per the consent order. If these aspects of separating assets are court ordered the transactions will not attract Stamp Duty and may well be far more efficient than refinancing in terms of fees and retaining favourable mortgage conditions, especially those arranged pre-credit crunch. Court orders deal with future liabilities for CGT on sale very efficiently too.
A judge will usually grant a period of time for his order in respect of dividing assets to be executed. It is possible but not advisable to obtain a decree absolute until all assets and liabilities have been dealt with in accordance with the order of the judge.
Solicitors make more money when you disagree with each other. They are very good at creating mistrust, intentionally or not, but either way it racks up their fees rather nicely if you do fall out half way through the process. Please bear this in mind, especially
if when your lawyer tells you that you might be entitled to get a bit more out of the divorce than you have agreed. If when they do this, ask them to raise it at the 4-way meeting, that’s possibly the last you will hear of that suggestion. Remember, the solicitor acting for your spouse is probably telling his client exactly the same thing. Draw your own conclusions from that! The bottom line is that if you are both happy with what you have agreed and a judge can be convinced it’s fair there is no need to fall out. Easier said than done, trust me I’ve been there! Also remember that the wheels of justice grind very slowwwwly.
The final step is that either of you applies for decree absolute, when this is granted you are then divorced and legally entitled to re-marry.
I make it sound so easy don’t I?
Sorry, it isn’t!
We are human beings and we have emotions, good and bad.
Good luck if you are going through this and I hope the above helps in some way.
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